Stop me if you’ve heard this before, but yesterday the Bank of Canada left interest rates unchanged — again. This is of interest to DIY investors only because it drives the kinds of rates you can expect from high-interest savings accounts and the like. I’ve updated the page that tracks some HISAs and cash-like ETFs over here.
The overnight rate remains at 2.25%. That makes 6 straight rate announcements with no change. The next one for the Bank of Canada happens on September 2nd. Next up is the US Federal Reserve on July 28,
I cover what I hold in my retirement portfolio every month (latest update is here), but as you can see, I only hold ETFs. What’s underneath the ETFs? Let’s take a look!
Calculating this is straightforward:
Use the percentages I have of each ETF from the June update
Look at the “Holdings” section of ETF or in the case of AOA/XGRO/XEQT, “Aggregate Underlying Holdings”1 and write down the percentages of each stock. I stopped when I accounted for 20% of each ETF.
Multiply (1) by (2) and add them all up.
By doing this exercise, I can now account for the 20 companies that make up 20% of my retirement portfolio:
These 20 companies are really the tip of my personal investment iceberg — my aggregate retirement portfolio has at least 32,000 holdings, since that’s what’s actually inside AOA, the one ETF I own with the most holdings2. But the fate of these 20 companies will have an outsized influence on the overall performance of the portfolio. The only surprise for me is that there is only one company outside North America in the list. I would have expected one or two more.
It will be interesting to see what kind of differences I see once I complete kicking USD out of my retirement portfolio and go back to a list of only seven magnificent ETFs. I’m not sure there will be big changes, given that I’m keeping my asset allocations constant throughout, but I’m expecting some differences3. We’ll see come January 2027, I guess.
Just for fun, and given my recent article on the SpaceX IPO, I wanted to know how much I held of that particular company. AOA hasn’t included it yet4, but XGRO and XEQT have already. As of June 30, 0.02% of my portfolio is invested in SpaceX.
In most cases, as of June 30. VFV only shows to May 30. ↩︎
XGRO has 22000, for reference. I think the extras in AOA come mostly from fixed income (bond) products since they have broader geographic coverage. ↩︎
The biggest changes won’t be visible since they occur in the bond side of my holdings. AOA and XGRO have very different approaches to this part of the market, but as it’s only 15% of my retirement holdings, they don’t show up as a “top” holding in my retirement portfolio . ↩︎
And won’t until SpaceX is profitable. AOA includes IVV, which is an S&P 500 index fund, and the S&P 500 requires companies to be profitable before inclusion in that index. ↩︎
“Fractional Shares” allow you to buy less than a single share of the stock or ETF that supports it. Fractional shares ensure that every last penny of cash in your account is actively invested, which, in my view, is a Good Thing. Non-interest earning cash isn’t helping you meet your retirement goals.
Questrade currently holds the majority of my retirement savings, mostly because they were offering free money last year to move accounts over to them1.
They provided support for fractional US ETFs over a year ago, to great fanfare, with Canadian ETFs “coming soon”. It would appear that “soon” is “now”. There’s no way to see which Canadian ETFs have support for fractional trading in any sort of list, but here’s the status of the Canadian ETFs on my magnificent seven ETFs list2, which you can see if you ask for a quote of any symbol you’re interested in.
I’ve tested it out, and the one flaw I’ve found is that you cannot enter a dollar amount for a trade when using the Edge Web version of the Questrade platform. You’re free to do the math yourself and enter a decimal number of shares when using Edge Web4.
Wealthsimple also offers fractional ETFs, and there I have found no restrictions. Questrade is catching up, but still behind Wealthsimple in this regard.
And if you are considering Questrade yourself, you can earn a bit of free money if you use my referral code: 755609544498867 ↩︎
These are the ETFs that make up the lion’s share of my retirement portfolio. ↩︎
Fractional VFV is particularly valuable since its unit cost is north of $100. ↩︎
Which you are forced to do if you want to make trades on accounts for which you are the authorized trader. ↩︎
This is a monthly look at what’s in my retirement portfolio. The original post is here.
Portfolio Construction
The retirement portfolio is spread across a bunch of accounts:
5 RRIF accounts
3 for me (Questrade, Wealthsimple)
2 for my spouse (Questrade)
2 TFSA accounts (Questrade)
4 non-registered accounts, (1 for me, 1 for my spouse, 2 joint, all at Questrade)
The view post-payday
I pay myself monthly in retirement, so that’s a good trigger to update this post. On June 30 before the markets opened, this is what it looked like:
The portfolio is dominated by my ETF all-stars, (and if not an all-star, they are probably on the Magnificent Seven ETFs list). But the observant reader will start to see some changes from last month as my strategy to Kick USD out of my retirement portfolio starts to take effect. The contributions of AOA and ICSH (both USD funds) to my retirement portfolio are notably down and SCHF has disappeared entirely — SCHF was the last bit of USD in my non-registered accounts. ZMMK, XGRO and VCN, on the other hand, have gained in importance to make up for the USD-denominated departures. And ZST (ultra short-term bond fund) and VFV (S&P 500 US Index fund) have begun to make an appearance; you’ll see more of these funds in future months. My ETF all-stars post has been updated accordingly.
Plan for the next month
The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.
The moves I made to start reducing USD in my portfolio have quickly allowed me to get to my recently revised target allocations I have for each asset class:
5% cash or cash-like holdings like ICSH and ZMMK
15% bonds/income (most are buried in XGRO and AOA, rest are in XCB)
23% Canadian equity (mostly based on ETFs that mirror the S&P/TSX — HXT and XIC); this is up from the old 20% target
37% US equity (dominated by ETFs that mirror the S&P 500); this is up 1% from the old target
20% International equity (mostly, but not exclusively, developed markets); this is down 4% from the old target
With the asset class splits under control, next month will see more moves to get rid of USD in my portfolio. There’s only USD in my RRIF accounts now, all invested in AOA and ICSH. These positions will be reduced by 1/6th in July as my target is to be fully USD free by the end of the year.
My timing for starting the conversion looks to have been pretty decent; the USD/CAD rate moved significantly in my favour this month. I don’t expect that to last!
Overall
Part of using VPW1 as a strategy is the need to calculate your retirement net worth on a monthly basis. And once again, a new all-time high:
My VPW-calculated salary continues to increase, albeit at a more modest rate, as expected.
Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
As a self-directed investor, it can be challenging to avoid the constant noise of the latest and greatest moves in the industry. A sample of the kinds of things that have landed in my inbox lately will hopefully illustrate this point:
“Single stock SpaceX ETFs are coming”
“This 11% dividend is a screaming deal”
“This divvie is the ultimate ‘pick and shovel’ play on Elon, Inc”
“Should we have sold in May and walked away?”
The noise is nearly impossible to avoid; there always seems to be one company, one trend, one segment, one market, one product that’s just booming while your portfolio languishes.
What’s the reason this is so? Beyond the need for news sources to produce content, I mean? A peek at Blackrock’s “periodic table“1 of market performance gave me an answer, maybe.
This table illustrates the performance of thirteen segments of the market on an annual basis. What is evident is that the “hot” segment keeps changing. What was hot last year rarely repeats this year. Take for example this year’s darling, Commodities. This index can be found over at https://www.investopedia.com/terms/c/crb.asp and tracks (among other things) the price of oil, gold, copper, wheat…and I’m sure you’ve noticed the recent uptick in ETFs covering this space (or a subspace):
GlobalX has three new silver-focused ETFs (SLVX, SVCC, and SVCL) and three commodity producers ETFs (COMX, CMCC and CMCL)
BMO launched a covered call gold bullion ETF (ZWGD.T) and a hedged broad commodity ETF (ZCOM.F) this year
TD launched TCOM which looks like it’s achieving exposure to broad commodities markets through swaps and derivatives2
My sense is that all of these ETFs were launched in an effort to attract FOMO investors who are trying to ride the commodities wave this year. Commodities as a category aren’t a terrible thing to invest in, as the Annualized column shows — they have actually performed pretty decently over the past decade — but still behind US Equity, Emerging Market Equity, Japan Equity and European Equity indices.
There’s always going to be some segment that’s on fire in a given year. Predicting which segment that might be isn’t consistently possible, so my advice is to ignore the noise and don’t chase the latest shiny object. Over long periods of time, it’s hard to beat investing in boring index equity funds.
