ETF PROTFOLIO

A couple of weeks ago Rob Carrick from the Globe and Mail wrote an article explaining how to emulate the Canada Pension Plan's (CPP) portfolio using Exchange Traded Funds (ETFs). The article listed the CPP portfolio's investment mix (e.g. 25% Canadian equities, 34% International stocks, etc.) and gave examples of specific ETFs available to Canadian investors to replicate this portfolio. A summary of this portfolio may be found in the following Google spreadsheet.

I'm currently planning on replacing the mutual funds held in my RRSP with ETFs and found the article useful. I do, however, have the following reservations about the model portfolio:

1. International real estate has had amazing returns, especially over the last year. Historically low interest rates around the world have really inflated home prices. These may be due for a correction.

2. The private equity ETF is fairly new and I am skeptical of "trendy" financial products (think of all the technology oriented funds started during the dot com bubble). Private equity has been attracting a lot of attention and money lately (two years ago, the largest private equity fund was worth $6 billion; now the two largest firms -KKR and Balckstone- are worth around $15 billion each). I would hate to be the sucker that buys at the top.

These two reservations aside, the article is a good starting point for anyone looking to build their own ETF portfolio.