Tag: vcn

The magnificent seven ETFs

RobHLeave a comment

Since my investment strategy is to own the market via passive index investing, I know that some of my retirement savings are tied up in those famous seven tech stocks1. But that’s not what I’m talking about.

For a year or so I’ve been talking about my ETF All-Stars, but I’ve come to the realization that the list isn’t complete. I discovered that I could do better in terms of where I hold certain assets, I’ve now also realized that I need 7 total ETFs to achieve my investment objectives across non-registered, TFSA and RRIF accounts. These seven ETFs are 90% of my retirement portfolio. The other 10% are found in the non-registered account and are legacy investments. Over the next 5 years, these legacy investments will disappear altogether.

Here’s how the seven2 break down:

AOA: An all-in-one USD ETF

AOA is an 80% Equity / 20% bond ETF. It’s roughly 50% of my retirement savings, and it’s exclusively held in my RRIF accounts. I’ve invested in USD ETFs for quite a long time now, and this one holding locks up most of my USD funds. The problem with AOA is that it tilts too far into US Equities (50%) and has very little exposure to the Canadian stock market (about 2.67%). So I have to compensate elsewhere.

XGRO: An all-in-one Canadian ETF3

XGRO is an 80% Equity/ 20% bond ETF, about 15% of my retirement savings. It’s the Canadian sibling of AOA in every way. It holds 20% Canadian equity and 36% US equity, so it helps take down the US bias of AOA a bit. It’s held exclusively in my RRIF accounts.

XEQT: An all-in-one Canadian ETF

XEQT4 is from the same family as XGRO but doesn’t hold any bonds. It helps take down the bond percentage of my overall portfolio from 20% to 15%. Since equities tend to grow faster than equity/bond combinations, and since my TFSA is the last account to be touched in my retirement income planning, XEQT is held only in my TFSA accounts.

XIC: A low-cost Canadian Equity ETF

XIC5 holds only Canadian Equities and helps fix the lack of Canadian content in AOA. As a 100% equity ETF, it lives mostly in my TFSA. Historically, I also hold this in my non-registered accounts but this will be reduced as I dip into my non-registered funds to pay my bills.

ICSH: A USD money-market fund

Technically, ICSH is an ultra-short-term bond fund, but I treat it the same way as I would treat a HISA. Cash is 5% of my portfolio in retirement, and it’s mostly in ICSH since US Interest rates are much higher than Canadian ones at present. I’d switch this holding to ZMMK if the opposite was true. ICSH lives both in my RRIF and my non-registered accounts. It’s only in my non-registered accounts because my decumulation strategy (VPW) requires a “cash cushion” to smooth out my monthly salary.

XCB: A Canadian Corporate bond fund

The way the math works at present, I’m a little short in bonds, and so I have a bit of XCB sitting in the RRIF to keep my asset targets in line. XCB is a nice low-cost corporate bond fund; I chose corporate because AOA and XGRO give me plenty of exposure to government bonds.

ZMMK: A CAD money market fund

ZMMK is a small portion of the cash cushion which is mostly invested in ICSH. If Canadian interest rates exceed US rates, then my holdings here would grow accordingly.

  1. My retirement portfolio is about 36% US equity, and the mag 7 make up about 10% of the US market, so say 4% of my retirement savings. ↩︎
  2. I thought I was going to need XAW as well, but worked out a plan to eliminate it ↩︎
  3. You could also consider ZGRO, TGRO, VGRO from BMO, TD, and Vanguard respectively. They are all pretty similar. ↩︎
  4. You could also consider ZEQT, TEQT, VEQT. Tomato, Tomahto. ↩︎
  5. VCN is another good choice; it’s pretty much the same thing. ↩︎

News: HISA Table updated, TD adds free-to-trade ETFs

RobHLeave a comment

High Interest Savings Page Updated

As reported last week, the USA cut their prime rates while Canada did not. The latest rates are now reflected in the HISA and short-term bond table (Canada & US). No changes for at least 6 weeks at this rate. Most cash I hold in my retirement savings is invested in an ultra-short-term bond fund, namely ICSH (one of my ETF all-stars) so I can squeeze out a few more basis points on my cash holdings.

TD Cuts Trading fees on 100 ETFs

TD seems to be upping its game. Not only are they throwing free money around, but an observant reader (thanks, big brother 🙂 ) alerted me to a recent change. You can read all about it here, but the skinny is that they cut trading fees on a list of 100 ETFs. Paying trading fees of any kind seems to be a dying business model, so it’s nice to see TDDI join the free club, at least a little bit. Some of these ETFs are even worth holding; I’ll save you the trouble and show you which ones:

NameSymbolWhat it holds
Vanguard S&P 500 IndexVFVLargest US Companies
SPDR S&P 500SPYLargest US Companies in USD
Vanguard 500 IndexVOOSame as SPY
iShares Russell 2000IWMSmall cap US Equity in USD
TD all-in-onesTEQT, TGRO, TBAL, TCON100% Equity, 90% Equity, 60% Equity, 30% Equity. Read more here and here.
TD Aggregate Bond IndexTDBCanadian gov’t and corp bonds.1
TD International EquityTPEDeveloped international market equity.2
TD US EquityTPU/TPU.USimilar to VFV/SPY3
TD Canadian EquityTTP300 Canadian stocks (aka “the Canadian market”)4
TD Cash Management TCSH/TUSD.UUltra short term debt in CAD/USD5
Vanguard all-in-onesVEQT, VGRO, VBAL, VCNS100% Equity, 80% Equity, 60% Equity, 40% Equity
Vanguard Canadian Agg BondVABCanadian gov’t and corp bonds6
Vanguard FTSE GlobalVXCAll equity ex-Canada (65% US Equity)
Vanguard FTSE DevelopedVIUAll developed equity ex-North America7
Vanguard US Total MarketVUN/VTI~3500 US Stocks in CAD/USD (aka “The US Market”)8
Vanguard FTSE Canada VCNTop 200 Canadian Stocks, so similar to TTP9
Newly free-to-trade ETFs at TDDI that are moneyengineer.ca approved

All the above funds would be worthy of consideration since they adhere to my rules about being passively managed, low cost, and aligned with my asset-allocation strategy. The simplest purchases here would be one of the TD or Vanguard all-in-ones (new to all-in-ones? read about them here) best aligned with your risk profile. There’s a bunch of other ones that aren’t of interest to me — bitcoin, leveraged, actively managed, segment-based…nah, I’m good.

  1. Used in TGRO, TBAL, TCON ↩︎
  2. No “emerging” market exposure. Used in TEQT, TGRO, TBAL, TCON ↩︎
  3. TPU is used in TEQT, TGRO, TBAL, TCON ↩︎
  4. Used in TEQT, TGRO, TBAL, TCON ↩︎
  5. Similar to my use of ZMMK/ICSH ↩︎
  6. Used in VGRO, VBAL, VCNS ↩︎
  7. Used in VEQT, VGRO, VBAL, VCNS ↩︎
  8. Used in VEQT, VGRO, VBAL, VCNS ↩︎
  9. Used in VEQT, VGRO, VBAL, VCNS ↩︎