How to spring clean a portfolio

Warren discusses a few ways that investors can review their investments before summer hits full stride.

The Victoria Day long weekend has arrived and for many Canadians that means spending the next three days sweeping out the cottage cobwebs or cleaning up the backyard patio in preparation for lazier summer days that lie ahead.

But “May Two-Four” — as some Canucks like to call it – can also be a good time to polish up a portfolio and put a new shine to it. After all, it’s probably been a few months since some investors have reviewed their nest egg and once summer officially hits stride at the end of June, it may be a few months more before they take the time to really look at it again.

Here are three ideas that may help spring clean a portfolio:

1. Dust off your statements

If you haven’t reviewed your investment statements in a few months, you may be surprised to now see your performance over time and how much you paid in actual dollar terms for advice received. These new regulatory disclosures may be eye opening for some but should give many investors a sense of empowerment to become more engaged with their finances. In particular, it could potentially shine a light on some of the higher cost products in your portfolio and lead investors to assess other alternatives, including iShares ETFs that may help reduce fees while providing similar market exposure.

2. Declutter your viewpoint

It usually helps to stay informed about what’s happening on financial markets and the past few months have been no exception given many of the economic and political events that have unfolded since the beginning of the year. Brushing up on the latest insights from some of your favourite market commentators and/or setting up a quick call with your advisor may sharpen your perspective on topics that could have an impact on your investments including Canada’s ballooning housing market, the U.S. Federal’s Reserve next move, or President Trump’s latest tweet. In turn, that focus may help you better identify some of the potential opportunities being missed in your current portfolio and those potential risks that you may want to avoid.

3. Weed your portfolio

After reviewing your statement and focusing your viewpoint, consider taking a closer look at the actual holdings in your portfolio. Does your asset mix still jibe with your long term objectives and overall risk tolerance? Or does it require some rebalancing to get it back on track? A good advisor should be able to help answer these questions, but tools and calculators found online including iShares Core Sample Portfolios can be put to good use as well. A well-diversified portfolio is not just a matter of choosing a mix of stocks and bonds and then leaving it to grow. It’s important to understand how the various components work together, how they might be expected to perform over a given time horizon, and what risks might be embedded in them.

Warren Collier is a managing director and head of iShares Canada. He is a regular contributor to The Blog

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