By Scott Ronalds
I saw the new Bond flick, Skyfall, the other day and walked away with a smile on my face, knowing that the British Secret Intelligence Service (also known as MI6) is still well positioned to save the world from evil villains and vixens.
Being immersed in this industry for the past decade and a half, I’ve developed a bad habit of relating all things to investing, including 007. When Bond was sipping his famous vodka martini in the movie, I was wondering if shares of Diageo (Smirnoff, Ketel One) were shaken last week. When a psychotic ex-agent was hacking into Britain’s mainframe, I thought of the challenges and opportunities that lie ahead for software and computer security companies. When 007 discovered that his parents’ estate in Scotland was up for sale, I got thinking about the U.K. property market. You get the picture. It’s a real problem.
Taking it one step further, I started considering what kind of investor James Bond would be. Surely he would have a high tolerance for risk and an appreciation for global diversification. He’s got ice water in his veins and has been schooled by MI6 in discipline and patience, so emotion shouldn’t get in the way of good investing behaviour. As for his personal situation, he’s single, reasonably young, doesn’t have any dependents and earns a good salary (with some nice perks). And it’s reasonable to assume that he has a healthy government pension from his years of service to the crown. All of this means he can take on more risk in his portfolio.
So what kind of asset mix and Steadyhand portfolio would be suitable for the secret agent? I’d recommend a heavy equity weighting, with a bias towards foreign and small-cap stocks. A dash of corporate bonds would provide some income and credit exposure. And perhaps a bit of cash for a buying opportunity in the market or an unexpected emergency. You never know when you’re going to need a new jetpack or submersible Aston Martin.
I’d steer Bond towards the following fund mix:
5% Savings Fund
15% Income Fund
20% Equity Fund
35% Global Equity Fund
25% Small-Cap Equity Fund
The estimated long-term asset mix of this portfolio is 16% fixed income, 48% foreign equities, and 36% Canadian equities. It wouldn’t be appropriate for many investors. But we’re talking about Bond here. James Bond.