portfolio construction
Adobe stock / master1305

The scenario

Michael, 45, is a moderately aggressive investor with a 15-year time horizon to retirement. He received a $10-million inheritance as well as an unexpected $10,000 employment bonus.

We asked two experts to suggest investment options for Michael.

The expert

John Fisher, president and chief investment officer with Bridgeport Asset Management in Toronto.

The philosophy

Fisher and his investment team replicate “pension-style” portfolios for clients by investing in a diversified mix of publicly traded stocks and bonds, private equity, venture capital, private credit, real estate and infrastructure securities. He seeks to generate a stable annual rate of return while minimizing risk and portfolio volatility.

The allocation: $10-million inheritance

The allocation is:

20% to large-cap U.S. equities. Among the securities Fisher recommended are:

  • Alphabet Inc. (NASDAQ: GOOG)
  • Autozone Inc. (NYSE: AZO), an automotive parts and accessories retailer
  • Constellation Brands Inc. (NYSE: STZ), a beer, wine and spirits producer
  • Kenvue Inc. (NYSE: KVUE), a consumer health company
  • L3Harris Technologies Inc. (NYSE: LHX), an aerospace and defence technology company
  • Fiserv Inc. (NYSE: FI), a payment and financial services tech company
  • CDW Corp. (NASDAQ: CDW), an IT solutions company

20% to large-cap Canadian equities. Among the securities he recommended are:

  • Brookfield Corp. (TSX: BN)
  • Colliers International Group Inc. (TSX: CIGI), a commercial real estate firm
  • Rogers Communications Inc. (TSX: RCI.B)
  • Alimentation Couche Tard Inc. (TSX: ATD)
  • Intact Financial Corp. (TSX: IFC)
  • Suncor Energy Inc. (TSX: SU)
  • Royal Bank of Canada (TSX: RY)
  • Constellation Software Inc. (TSX: CSU)

10% to North American small- and mid-cap equities. Examples include:

  • dentalcorp Holdings Ltd. (TSX: DNTL), a health-care services company
  • Clairvest Group Inc. (TSX: CVG), a private equity firm
  • Everetz Technologies Ltd. (TSX: ET), a video and audio infrastructure solutions provider
  • Parklawn Corp. (PLC.TO), which owns and operates cemeteries, crematoriums and funeral homes
  • Superior Plus Corp. (SPB.TO), a distributor of propane and distillates
  • Global Payments Inc. (NYSE: GPN), a payment technology and software company
  • Waters Corp. (NYSE: WAT), a scientific instruments and measurement company
  • Northern Trust Corp. (NASDAQ: NTRS), a financial-services holding company

15% to fixed income. Fisher recommended U.S. corporate bonds, such as:

  • Tripadvisor, with a 7% coupon, maturing on July 15, 2025
  • Triton International, 2.05%, April 15, 2026
  • Service Corp., 7.5%, April 1, 2027
  • Hub International Ltd., 7%, May 1, 2026

He also recommended Canadian corporate bonds, such as:

  • Mattamy Group Corp., with a 4.625% coupon, maturing on March 1, 2028
  • Parkland Corp., 4.37%, March 26, 2029
  • Vidéotron Ltd., 4.5% Jan. 15, 2030
  • Ford Credit Canada Co., 3.5%, Nov. 30, 2023

35% to private assets. For this part of the portfolio, Fisher recommended allocations to his firm’s open-ended funds, all of which are globally diversified and use third-party managers.

  • 15% to the Bridgeport Private Equity Opportunities Fund, which provides access to approximately 20 private equity and venture capital strategies.
  • 10% to the Bridgeport Alternative Income Fund, which provides access to approximately 25 income-generating asset strategies.
  • 10% to the Bridgeport Real Estate and Infrastructure Fund.

The allocation: $10,000 bonus

100% to cash for liquidity, held in the Horizons Cash Maximizer ETF (TSX: HSAV).

The expert

William Shaw, president and portfolio manager with Treegrove Investment Management Inc. in Toronto

The philosophy

Shaw’s firm applies value screens to identify securities that are potentially undervalued and then performs a traditional fundamental analysis on the chosen securities, concentrating on key metrics such as price-to-earnings ratios, price-to-book ratios, and cash-flow assessments. Treegrove sometimes uses ETFs to optimize efficiency and broaden exposure to a diverse collection of individual securities.

The allocation: $10-million inheritance

5% to cash, held in the NBI Altamira CashPerformer account. Shaw recommended the cash position “for opportunities to top up existing portfolio positions and for any potential liquidity needs.”

5% to inflation-protected bonds to hedge against inflation, held in the Vanguard Short-Term Inflation-Protected Securities ETF (Nasdaq: VTIP).

20% to short-term bonds, such as:

  • Government of Canada, with a yield to maturity of 5.069%, maturing on Aug. 1, 2024
  • Ontario provincial strip bond, 5.155%, March 8, 2025
  • Bell Canada, 5.255%, Aug. 12, 2026
  • Toronto-Dominion Bank (U.S. dollar-denominated), 5.11%, Sept. 15, 2027
  • Bank of Montreal, with a yield to maturity of 5.006% maturing March 1, 2028
  • Enbridge Inc., 5.319%, Oct. 3, 2029

20% to Canadian equities, such as:

  • Bank of Montreal (TSX: BMO)
  • Bank of Nova Scotia (TSX: BNS)
  • Canadian Natural Resources Ltd. (TSX: CNQ)
  • BCE Inc. (TSX: BCE)
  • Enbridge Inc. (TSX: ENB)
  • Linamar Corp. (TSX: LNR), a producer of industrial engineered products
  • Manulife Financial Corp. (TSX: MFC)
  • Nutrien Ltd. (TSX: NTR), a crop inputs and services company
  • Restaurant Brands International (TSX: QSR)
  • Rogers Communications Inc. (TSX: RCI.B)
  • TC Energy Corp. (TSX: TRP)
  • Teck Resources Ltd. (TSX: TECK.B)

25% to U.S. equities, such as:

  • Citigroup Inc. (NYSE: C)
  • Crown Holdings Inc. (NYSE: CCK), a supplier of rigid packaging products
  • Dow Inc. (NYSE: DOW)
  • Eli Lilly and Co. (NYSE: LLY)
  • General Motors Co. (NYSE: GM), a worldwide automotive company
  • IBM Corp. (NYSE: IBM)
  • Johnson & Johnson Inc. (NYSE: JNJ)
  • Microsoft Corp. (NASDAQ: MSFT)
  • Pfizer Inc. (NYSE: PFE)
  • Wells Fargo Co. (NYSE: WFC)

20% to European equities, held in the Vanguard FTSE Europe ETF (NYSE: VGK)

5% to emerging-market equities, held in the Vanguard Emerging Markets ETF (NYSE: VWO)

The allocation: $10,000 bonus

100% to the NBI Altamira CashPerformer account, which Shaw said “provides an excellent short-term interest rate” (4.55% for series A).