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Private placements

3K views 7 replies 4 participants last post by  HaroldCrump 
#1 ·
New member, first post.

I recently parted ways with my advisor and am doing research and looking at moving towards an all index portfolio. Still in the early stages, reading up and transferring to a direct investing account, staring at a lot of DSC too! So far I've been reading this forum, couch potato, BG Intelligent Investor and RF Power of Passive Investing. I'm now looking into asset allocation.

My question is regarding asset allocation and ROI Funds. Most of what we own is clearly either stock or bond, Cdn, US or international, but between my wife and I we have significant holdings in LSIF, in particular ROI Funds, a fave of my previous advisor. It's about 15% of our total holdings. The website for ROI indicates that most of the money is invested in 'private placements' or loans to businesses. What kind of asset is a private placement? Is it similar to a high-yield bond?

Since I can't sell these funds for a while without tax implications I need to fit them into my new portfolio. Any input is appreciated. We also have a bit of Vengrowth (now Covington) which and I would be curious how to treat that.
 
#3 ·
I agree with Keith. You should probably consider these funds as equity. If you have made allocation to small-cap stocks, consider LSIF funds as part of small-cap allocation.

Also, if I were you, I would redeem these funds as soon as I can. These funds are not very good products for retail investors: high cost, high risk and very illiquid.
 
#4 ·
I'm attempting to calculate the weighted allocation of these funds, which has led me to the annual report for 2011. Certainly they are entirely equity, which is rather hilarious as our former advisor treated them as entirely bonds. His rational IIRC was that they are mortgages and REITs.

Anyway, on to my follow up question. ROI 104 is 33% Whiterock REIT so I'm certainly thinking that should fall under REIT allocation. Then there's actual equity ownership of various Canadian companies, which I will allocate thusly. But what about mortgages and secured debentures? Is it somehow split between equity and REIT/real estate?

Another approach would be to treat this fund separately from my portfolio in terms of asset allocation due to the high illiquidity since it can't be rebalanced. Of course I will be redeeming as soon as possible, once per year for the next few years.
 
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