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This investor has been overweighting U.S. stocks and bonds

As a consultant at Bond Economics, Brian Romanchuk’s portfolio consists mostly of exchange-traded funds (ETFs), heavily weighted toward U.S. stocks and bonds.

Brian Romanchuk

Occupation

Consultant at Bond Economics (bondeconomics.com).

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The portfolio

Mostly exchange-traded funds (ETFs), heavily weighted toward U.S. stocks and bonds.

The investor

Before becoming an independent consultant, Brian Romanchuk worked at economic consultancy BCA Research and pension fund Caisse de dépôt et placement du Québec. He has a good understanding of macroeconomics and fixed-income analysis.

How he invests

Mr. Romanchuk was once a stock picker. But his returns were about the same as the market indexes, so he switched to ETFs to get the same performance with less work.

With ETFs, his focus is on investing in asset classes – but not in the active sense of making short-term trades between currency, equity and bond markets. Rather, he prefers "to sit in a fairly passive allocation and only adjust weightings when a good opportunity appears."

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Under his "passive macro" approach, he has been heavily weighted towards U.S. bonds and equities. The main reason is that he is bearish on the Canadian economy and dollar.

He sees the Canadian housing market cooling off and dragging down residential construction, a key prop behind current economic and job growth. Also, the waning commodity boom is not good for the economy and stocks.

The tilt toward U.S. assets has paid off over the past year, with the U.S. dollar up more than 15 per cent in value while U.S. stocks and bonds run ahead of Canadian counterparts. He is "now taking profits and moving towards a more neutral position."

Best move

Buying some energy-stock ETFs in 2002. "I knew that there was under-investment in the industry and energy prices would be robust as the global economy came out of the recession."

Worst move

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It was acting on a tip to buy the shares of a company attempting to commercialize aluminum foam technology. "I have an expensive block of aluminum foam in my shed to remind me of the value of stock tips," he adds.

Advice

"If you are doing anything other than low-cost passive investing … you need to see if you are performing any better than a simple, low cost and diversified passive portfolio."

Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.

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