It’s been a while since we last checked in on the the Grow Your Dough Throwdown. If you remember, Jeff Rose of Good Financial Cents started a challenge for investors to grow $1000 over the course of a year. Participants were to invest the money however so they chose to serve the following purpose:

1. Highlight different investing strategies and methodologies, and
2. Illustrate how simple investing is for beginners.

The latest results from the GYDT are out. How do you think my portfolio, the Index Strikes Back, is doing?

You’re My Only Hope

When I first got started with investing, I was overwhelmed by the number of options. I had no idea where to begin. Buying individual stocks was a non-starter; I figured if most professionals can’t beat the market over the long term, neither could I. I had read up on Management Expense Ratios and decided to avoid mutual funds altogether. I soon discovered indexing: a method of investing which doesn’t require specialized knowledge of the market or any individual company. It’s an approach to investing so simple that a 7 year old can understand it and it can make you a millionaire. In a nutshell, investing in index funds allows for broad diversification with low costs.

My contribution of $1,000 was invested in three TD eSeries Index funds, with assets allocated according to the following distribution:

[table]DESCRIPTION, ASSET ALLOCATION, FUND
Canadian equity, 20%, TD Canadian Index – e (TDB900)
US equity, 40%, TD US Index – e (TDB902)
International equity, 40%, TD International Index – e (TDB911)[/table]

By investing in the eSeries indexed funds, I am investing in 1664 companies operating in multiple industries spread out across the world. The entire $1000 amount was invested in equities may seem somewhat risky as there is none allocated to fixed income, but for the sake of education and given them amount involved, I think it’s worth the risk.

Hyperdrive Maintenance

Each of the eSeries index funds track different benchmark indexes, meaning that the value invested in each of the eSeries funds fluctuate at different rates. As a result, the initial asset allocation will begin to deviate from the original intent over time. As of July 31, the asset allocation is as follows:

[table]DESCRIPTION, ASSET ALLOCATION, FUND
Canadian equity, 21%, TD Canadian Index – e (TDB900)
US equity, 40%, TD US Index – e (TDB902)
International equity, 39%, TD International Index – e (TDB911)[/table]

If the asset allocation became further skewed, I could rebalance the money in the index funds to reset the allocation back to what was originally intended. In this case, there hasn’t been much of a deviation so there’s nothing to do here.

If it had been more skewed, I could, to illustrate, transfer/sell 1% (or more) of the TDB900 to buy TDB911, thereby restoring balance to the force. Keep in mind, though, with the TD eSeries funds, transfers and purchases need to meet a $100 minimum. With a portfolio this small, rebalancing will most likely be a moot point as the amounts to be rebalanced will probably be less than $100.

Punch it

Here’s the snapshot of the year to date performance, ending July 31, 2014.

[table delimiter=”|”]DATE| VALUE| PERFORMANCE
January 31, 2014|$1,017.46| 1.93%
February 28, 2014|$1,062.64|4.44%
March 31, 2014|$1,062.67|0.004%
April 30, 2014|$1,069.86|0.68%
May 31, 2014|$1,076.29|0.60%
June 30, 2014|$1,084.32|0.75%
July 31, 2014|$1,088.98|0.43%
YTD|””|9.10%
Note|””|*Calculated using Modified Dietz Method[/table]

Since March, the value of my investment hovered around the $1,060 mark for a couple months and jumped up to $1,088 or 9.10% YTD. Not bad!

The Competition

In March, I ranked 5th in the list of bloggers that reported their portfolio values. Three months later where do you think the Index Strikes Back will place? Oh the suspense!

[table delimiter=”|”]Rank #|Blog Name|Portfolio Name|June
1|PT Money, Signal Speculator||$1,258.51
2|Dough Roller|Buy it Like Buffet|$1,226.22
3|Planting Money Seeds|Super Boring Dividends|$1,112.74
4|Stacking Benjamins||$1,095.00
5|Urban Departures|The Index Strikes Back|$1,084.31
6|Frugal Rules||$1,069.13
7|Young Finances|Gemini Portfolio|$1,067.95
8|Canadian Finance Blog|Canadian Dividends|1,061.41
9|Investor Junkie|Grow your..Doh!|$1,043.04
10|Consumerism Commentary|Feemageddon|$1,000.16
11|Afford Anything|Blindfolded Monkey Experiment|$989.63
12|House of Rose|Purple Passion|$970.93
13|Good Financial Cents|Not-a-stock-picker portfolio|$961.12
14|Free From Broke|””|$940.81[/table]

I Find Your Lack of Faith Disturbing

Of the bloggers reporting in their June results in the GYDT mid-year update, my indexing portfolio sits unchanged in a very anti-climatic 5th position. I don’t know if anyone made any changes with regards to their $1000 portfolios, but I can say that I’m pleased with the performance of a portfolio I haven’t touched since its inception back in January. That, I believe, is the beauty of indexing: investing with a focus on long term growth with minimal costs and upkeep. The best thing to do for now will be to stay the course and see if the Index Strikes Back moves up in the rankings next time around.

Did you see that coming?