Index mutual funds are also more user-friendly than ETFs, as you can place orders using dollar amounts (rather than number of units), even when markets are closed. Use the information and ideas to form and shape your own opinion. I’ve included the Vanguard and iShares Asset Allocation ETFs under the “light” portfolio option. You will need to be comfortable doing your own buying and re-balancing of the stock and bond funds. Index mutual funds have higher annual fees, but they have no transaction costs and tend to be more user-friendly. Many investors make their choice based solely on management expense ratios (MERs), ignoring all the other factors. Information on which this report is based is availabl e Research & commentary; Vanguard voices; Tools; Events; ETF education centre; Practice management; Advisor's alpha; Fee-based practice; Client relationships; Contact us Commodity ETFs are an important part of an investor's portfolio. A blog designed for Canadians who want to learn more about investing using index mutual funds and exchange-traded funds. Model ETF Portfolios. Model portfolio #2: Canadian Portfolio Manager. Model portfolios; PFIC statements; Our benchmarks; About our index ETFs; About our factor ETFs; About our asset allocation ETFs; About our mutual funds; Advisor resources. Ideas & Insights. Vanguard FTSE Canada All Cap Index ETF, 20 per cent; iShares Core MSCI All Country World ex Canada Index ETF, 40 per cent; BMO Aggregate Bond Index ETF… The performance of the SPDR S&P 500 ETF … This is the most cost effective way to create a sensible investment portfolio. 8 Wellington Street East 3rd Floor Toronto, Ontario M5E 1C5. The suggestions below include portfolios built from ETFs and index mutual funds. This level of diversification can help reduce your overall investment risk while making it easier to manage your portfolio. The Modern ETF Portfolio defeated the Investors Canadian Equity Fund by winning all three rounds by a wide margin! All Rights Reserved. Top ETFs for Canadian Investors. —when used in combination—cover nearly all aspects of the U.S. and international stock and bond markets. The model portfolios include two-fund options for 30%, 50% and 70% equities. You should know what goes where with respect to RRSP vs TFSA vs non registered amounts and accounts. Justin is a CFA Charterholder and a CFP Professional. A balanced portfolio with three ETFs. These all-in-one low-cost ETF portfolios serve as a fund of funds with each one built using several underlying ETFs and essentially serving as a basket for tens of thousands of securities. Remember that your ability to save and to stick to a plan with discipline is much more important than keeping costs to an absolute minimum, especially if you’re new to DIY investing. Back for the eighth edition, our star panelists reveal their top 50 picks among Canadian, U.S., international, fixed-income and all-in-one exchange-traded funds. Model Portfolios Option 1 – iSHARES ETFs Option 2: TD e-Series Funds TD’s e-Series funds are among the cheapest mutual funds in Canada and are an excellent alternative to ETFs for investors who make small, regular contributions to their portfolios, since they’re free to buy and sell, and you can set up automatic monthly contributions . But if you’re a DIY investor like me then you can lower your costs even further by building a portfolio of index funds or ETFs on your own. Most investors will find one of these options suitable for their situation. ETF Model Portfolios. The Vanguard and iShares asset allocation ETFs are both excellent choices, and their differences are relatively minor. This meant we had to utilize ETFs traded in the US stock exchange, like VTI and VXUS. Assuming an equal amount invested in all seven ETFs, the average performance over the past year is 14.1%. Canadian investors may find it difficult to find an advisor who advocates index investing. PWL Wealth Centre new. The e-Series funds were formerly available only to TD customers, but since 2019 they’ve been offered through any online brokerage. The good news is there are many low-cost, broadly diversified and tax-efficient ETFs available to DIY investors. Zero to $9.99 per trade, depending on the brokerage, Portfolios may include non-Canadian bonds, mid- and small-cap stocks, and emerging markets, Portfolios include Canadian bonds, large and mid-cap stocks, and developed markets only, Easy to set up for as little as $25 per month, Requires placing orders (based on number of shares) on a stock exchange, Orders can be placed in dollar amounts at any time, Not necessary with one-ETF portfolios; straightforward with two-ETF portfolios, May require manual tracking of adjusted cost base, Generally done at the fund level, requiring little or no work by the investor. A difference of 0.10% in fees works out to less than $1 per week on a $50,000 portfolio. Of course, nothing on this site is concrete advice. If you’re a self-directed investor you should know what you’re doing. Set-it and forget it is a myth (unless you’re investing in a single asset allocation ETF). Our Teams. If you’re still not confident enough to place your first ETF trades, watching these tutorials may help to reduce some of the anxiety. Note that the data include actual fund returns when available and index returns (minus fees) when necessary. Wealthing Like Rabbits: An Original and... Stop Over-Thinking Your Money! Model Investment Portfolio, Canada | PWL Capital. Vanguard FTSE Canada All Cap Index ETF VCN 7.0% 10.0% 13.0% 17.0% 20.0% 23.0% 27.0% 30.0% 33.0% ... Model ETF Portfolios as of June 30, 2019 RRSP & RRIF Accounts This table is published byJustin Benderfor your information only. The e-Series funds were formerly available only to TD customers, but since 2019 they’ve been offered through other online brokerages as well. Build a fully diversified portfolio with just 4 ETFs. The bad news is there are now too many choices. When you do need to rebalance your portfolio, let these downloadable calculators do the heavy lifting for you. Resources. Home | Getting Started | Disclaimer and Policies, Your Complete Guide to Index Investing with Dan Bortolotti, Model Portfolios Option 1 – Vanguard ETFs, Model Portfolios Option 2 – TD E-Series Funds. Rather than sticking to 3 funds, they highlight a 5-fund portfolio: Vanguard FTSE Canada All Cap Index ETF (VCN) iShares Core S&P U.S. Total Market Index ETF (XUU) iShares Core MSCI EAFE IMI Index ETF (XEF) The second model portfolio can be found on the Canadian Portfolio Manager blog. Both options include  several asset mixes: you should choose the one best suited to your risk profile. You should know the most optimal order on how to harvest your assets with respect to accou… Morningstar's ETF Model Portfolios are a series of diversified, model portfolios that use a passive investment framework to offer low-cost market exposure via exchange traded funds (ETFs). FR. © 2019 Canadian Portfolio Manager Blog. Our Old RESP Portfolios. Model ETF Portfolios as of June 30, 2019; Vanguard Asset Allocation ETFs ... 01/1998-01/2019: Monthly returns of the MSCI Canada IMI Index, minus 0.020833% per month Global Stocks (ex Canada) 01/1998-01/2019: Monthly returns of the MSCI ACWI ex Canada IMI Index (net div.) In the past year, we have seen Vanguard pioneer all-in-one asset allocation ETFs in Canada and closely followed by the other major ETF providers – iShares, BMO, and Horizons. Conservative investors should allocate more to bonds and less to stocks, while aggressive investors can do the opposite. Our model portfolios seek to provide broad exposure to Canadian, U.S. and international equities and Canadian and global investment-grade taxable bonds in an asset allocation framework. Vanguard’s model portfolios are strategic and index-centric by nature. Pay special attention to this number and make sure you can stomach a loss that large: the surest way to blow up your investment plan is to sell in a panic during a bear market. How do you decide whether ETFs or index mutual funds are right for you? These convenient products are less flexible and slightly more expensive than a portfolio built from individual ETFs for each asset class. Past performance is no guarantee of future results. TD’s e-Series funds are among the cheapest mutual funds in Canada and are an excellent alternative to ETFs for investors who make small, regular contributions to their portfolios, since they’re free to buy and sell, and you can set up automatic monthly contributions. When Baby T1.0 was born, the Canadian Couch Potato’s model portfolios used a five ETF fund approach for constructing a balanced investing portfolio. Table of Contents. If you are invested in the Investors Canadian Equity Fund, you are risking your financial well-being by paying outrageous fees for an underperforming fund. Vanguard Canada has provided this online questionnaire to help you determine the right asset mix for your different investing goals. The model portfolio PDFs include 25-year performance histories (to December 2020), including the lowest 12-month return during that period. Our Advisors. You should understand currency conversion charges and withholding taxes. This portfolio is composed of index ETFs, with Canada, USA, and International Indexes weighed equally, so by investing in this portfolio, we are stating two things: We believe that it’s impossible to pick individual stocks from each index, so we are simply purchasing the entire index Model ETF Portfolios as of December 31, 2018 This report is published by PWL Capital Inc. for your information only. NBIN My Portfolio +. For example, a balanced 3-ETF portfolio (such as 20% Canadian stocks, 40% global stocks and 40% Canadian bonds) could be recreated into a 5-ETF portfolio by multiplying the 40% global stock target asset allocation by each of the US, international and emerging markets stock allocation weights that we calculated in our previous blog. The increasing demand for all-in-one ETFs (also known as model ETF portfolios) in Canada should not come as a surprise. For those who want something in between, both firms also offer an all-equity ETF that can be combined with a traditional bond ETF in any proportion you want. Within the broad asset classes (Canadian, U.S. and international equities as well as However, they are much easier to manage, since all the rebalancing is done for you. Justin Bender is the author of CPM Blog and a portfolio manager with PWL Capital Inc. in Toronto. You should understand your personal tax situation. Since their appearance in early 2018, asset allocation ETFs have become the easiest way to build a balanced index portfolio at very low cost. The model portfolios include five suggestions ranging from conservative (30% equities) to aggressive (90% equities). Investors will require a working knowledge of the individual assets, asset allocation and the risk levels of their investment portfolio. Using a robo-advisor can be a great way to lower your investment costs, diversify your portfolio, and reduce the time you spend worrying about investing. Invesco Canadian Dividend Index ETF seeks to replicate the performance of the NASDAQ Select Canadian Dividend Index. Vanguard Growth Portfolio: All-in-one ETF: VGRO: 0.25%: 50%: iShares Balanced Portfolio: All-in-one ETF: XBAL: 0.20%: 25%: iShares Canadian Value Index: Canadian Equity: XCV: 0.55%: 10%: iShares Emerging Market: Emerging Market: CWO: 0.71%: 7.5%: Cash: Cash: 0%: The Bitcoin Fund: Specialty: QBTC: 1.95%: 2.5%: 100% Client Login. BMO Asset Management: 112 ETFs and $57.4B in … However, if you’re a more experienced investor with a larger portfolio, you may be able to save on product fees and foreign withholding taxes by turning up your portfolio’s complexity to “ridiculous”. You can build a globally diversified portfolio using four e-Series funds: one each for Canadian, U.S. and international stocks, and one for Canadian bonds. Asset allocations have been devised using Morningstar's strategic asset allocation framework and long-term capital market assumptions. The fund has a 95% exposure to Canada with the rest 5% being contributed by other countries. I’m going to stick with ETFs from the three largest ETF providers in Canada: BlackRock Canada: 130 ETFs and $68.1B in assets under management. Everything from gold to cotton to corn can be tracked with ETFs or their cousins, exchange-traded notes (ETNs). And MERs are not the only costs to consider. Most Canadian companies in the portfolio are liquid with high yields and have a sound track record of growing dividends. Vanguard and iShares offer four balanced ETF portfolios, with options for 20%, 40%, 60% or 80% equities. Costs are always important, but they need to be kept in perspective, especially when your portfolio is modest in size. These simple one-fund solutions are ideal for the majority of DIY investors. Information on which this table is based is available on request. First, let’s sort out the top ETFs from that list of 780 funds. They are “one-fund solutions” that hold several underlying stock and bond ETFs, allowing you to invest in a globally diversified portfolio with a single trade. He is currently working towards obtaining the Trust and Estate Practitioner (TEP) designation. Mutual fund products in Canada are some of the most expensive in the developed world, and ETFs are leading the charge in reducing fees for investors. Back then, there were no ex-Canada ETFs trading in the Canadian stock exchange available. You won’t go wrong with either option. While ETFs have lower management fees, they also carry higher transactions costs and can make portfolios more difficult to manage, especially for less experienced investors.