If you’ve been following my monthly updates, you will remember that I was in the process of transferring over a work RRSP into my direct investing RRSP account. A portion of the funds finally made it over, and I wasted no time and put the money to work. The funds were previously invested in a mutual fund with a 2.2% MER, that was performing slightly below it’s benchmark. So what did I buy?
The first thing I purchased was 1100 shares of XAW. This fund is not new to me, I already owned about 2600 shares. I use this fund for US & global diversification. It was an extremely low MER (0.22%) and is extremely diverse (over 8000 stocks across the world). The fund covers everything except Canada, which is perfect for me, because I use my TFSA for individual Canadian stocks AND I own one other fund that is purely Canadian equity (more on that later). XAW is a fairly new ETF, it was started in 2015 so there isn’t too much long term data on the performance. That said since the fund’s inception it has returned 8.31%. The fund also pays a distribution twice per year (June & December) and based on the last 2 payments this purchase should add $624.40 to my annual dividend income.
The next thing I did was add to my position in the RBC Canadian Equity Income fund. I purchased 1000 additional shares, bringing my total share count to 3294. Typically I am not a fan of mutual funds as they carry a higher MER, however this fund has performed exceptionally well for me, it is diversified, and pays a monthly distribution. The fund holds 86 Canadian companies (mostly blue chip dividend payers) and RBC allows the fund to DRIP shares each month. The fact that this is a “series D” fund*, means the MER is lower than the normal series A fund. It is still higher than most ETF’s, but it’s much more reasonable (at 1.04%). Over the last 10 years this fund has beat the benchmark and returned over 11% annually! This purchase will add $1218.00 to my annual income, thus allowing me to drip an additional 3-4 shares each month.
*Series D funds are available to direct investors. They offer all the same holdings as the series A fund, however you must purchase them yourself.
Lastly I initiated a position in NFI Group by purchasing 500 shares. The timing may have been a bit of a gamble, as they are expected to announce earnings today. Last month the management team had come out and said they expect to miss on earnings. The stock plummeted and I am hoping the downside is already priced in. I still think long term this will be a great hold. I wrote a bit more about NFI Group HERE. I also kept some cash leftover in case the price comes down further after the earnings are released. The purchase of 500 shares will add $850 to my annual dividend income.
So although these purchases weren’t from any new capital being injected into my portfolio, I believe they will perform better than the fund they were previously invested in, the fees will be lower, and they will add an extra $2672 to my passive income!