Category: Audience

TD versus iShares: XEQT/XGRO/XBAL versus TEQT/TGRO/TBAL

RobH4 Comments

My post talking about BMO’s fee reduction for their asset allocation family enticed me to revisit competitive asset allocation funds. TD’s low-low fees (0.17% versus the 0.20% of iShares) are tempting.

So, quick sanity check — what’s the historical performance of XGRO versus TGRO?12

Per https://www.canadastockchannel.com/compound-returns-calculator/ (featured in Tools I Use) I see:

What? The TD fund has returned a full 2 percentage points better? This is a bit hard to believe. They must be rather different somehow?

Ah, yes. Revisiting their respective fund pages reveals that TGRO has a lower allocation for bonds — it’s only 10% versus the 20% for XGRO. More bonds will definitely lower return as a reward for lower volatility (I showed that effect here), so that probably explains the difference.

XGRO versus TGRO: Asset Allocation

So comparing the returns of XGRO versus TGRO wasn’t an apples to apples comparison. I could instead measure the relative returns of XBAL versus TBAL since the equity/bond ratios of these two are equivalent (both at 60% equity, 40% bonds)3. There are, however, some minor differences in the equity side of the equation:

XBAL versus TBAL: Asset Allocation

TBAL has a higher weighting in Canadian equity at the expense of some International equity, let’s see how that translates in the overall return:

That’s a lot closer, but the advantage still tilts TBAL’s way, which is another positive argument for considering it.

I am curious about how different these two are under the hood.

The first obvious difference is that they use different market indexes to build their portfolios, summarized below:

TGRO/TBALXGRO/XBAL
CAD EquitySolactive Canada Broad Market IndexS&P®/TSX® Capped Composite Index
US EquitySolactive US Large Cap CAD IndexS&P Total Market Index
Int’l EquitySolactive GBS Developed Markets ex North America Large & Mid Cap CAD IndexMSCI EAFE® Investable Market Index, MSCI Emerging Markets Investable Market Index
Bonds FTSE Canada Universe Bond IndexFTSE Canada Universe Bond Index and others
Underlying indices tracked by TGRO and XGRO

So sure, the indices are different, but is it really a big deal? Doing a bit of digging I can confidently say that:

  • On the Canadian Equity front, TGRO’s holdings are more broad and include smaller stocks.
  • On the US Equity front, the opposite is true — XGRO holds more smaller US stocks
  • On the International Equity front, XGRO has exposure to Emerging markets that TGRO lacks
  • On the bond front, XGRO includes non-Canadian holdings, so a bit more diversified

Are any of these differences of great significance? No idea. Doubtful. TGRO has a recent small (0.5%) advantage, which is still worth digging in to. I took a look at the underlying assets…It’s easiest to do that by looking at the ETFs that underpin TGRO, one by one (TPU, TTP and TTE). XGRO’s product page shows the underlying assets so you don’t have to do the same (tedious) exercise for it.

Top CAD EquityTop US EquityTop Int’l Equity
TEQT/TGRO/TBALRBC, Shopify, TD, Enbridge, BrookfieldMicrosoft, NVIDIA, Apple, Amazon, MetaSAP, ASML, Nestle, Novo Nordisk, Roche
XEQT/XGRO/XBALRBC, Shopify, TD, Enbridge, BrookfieldMicrosoft, NVIDIA, Apple, Amazon, MetaTaiwan Semi, SAP, ASML, Nestle, Novo Nordisk
Top stock holdings, by asset category, for TGRO and XGRO

Hmph. Almost the same. I guess the difference is really coming down to an advantageous geographic mix for TBAL over XBAL, which may or may not be repeated. As compared to TBAL, XBAL’s greater focus on equities outside North America hurt its performance in the last 5 years.

All this to say that TGRO/TBAL look like fine products, with no real reason not to recommend them. For me, one small complexity with TGRO is its bond allocation, which is lower than XGRO’s, meaning that to keep my usual 20% bond allocation, I would have to either buy a standalone bond fund or buy a TEQT/TBAL combo (a 50/50 ratio works, I did the math).

Perhaps you’ll start to see some of these funds in my monthly update — stay tuned!

  1. I wouldn’t normally do this, especially since the funds don’t have a long history, but in this case I see that the TD funds use obscure (to me) indices so I want to quickly see if there’s a major difference in return. ↩︎
  2. XGRO is the mainstay of the CAD portion of my retirement portfolio and TGRO looks to be the same thing. ↩︎
  3. You may wonder if this is really a valid comparison since what I actually care about is TGRO versus XGRO. I think it is a valid comparison since TBAL and XBAL are still relying on the same underlying indices to build their respective funds, it’s just that the percentages vary. That’s pretty much how most all-in-ones approach the problem of building multiple risk levels: take a set of ingredients (the indicies) and mix them in different ratios to get to the final all-in-one product. It’s really a test to see if TBAL’s indices are somehow “better” than XBAL’s. ↩︎

A “two-fund” method for retirement investing

RobHLeave a comment

I read a lot of different financial blogs from a bunch of different sources. Last week, this article from “boomer&echo” caught my eye.

In it, they propose a “two fund” solution for how to invest in retirement:

They suggest funding your day to day spending needs from the HISA ETFs. Replenishing the HISA ETF comes courtesy dividends from the all-in-one equity ETF, and selling units “during up markets…or on a regular annual schedule”.

There are some things to like about this method, and some things not to like. I’ll break them down for you.

Like: It’s really simple

Two funds, and two percentages to remember. That’s simplicity. In a perfect world, my holdings would look similar, but would instead look something like

  • 75% in XGRO (an 80/20 ETF)
  • 20% in XEQT
  • 5% in ZMMK

This breakdown would give me the 80% equity, 15% bonds, 5% cash that I strive for in my asset allocation targets.

Like: It’s broadly diversified (mostly)

Holding an all-in-one equity fund seems like you’re putting all your eggs in one basket, but as I discussed over here concerning XEQT, it’s actually a great way to make sure you have your investment spread out across many companies in many geographies. My one mild objection to this approach is that there are no bonds5 in the boomer&echo portfolio, but it’s a minor point.

Like: It recommends keeping cash in the retirement holdings

Having cash on hand is a good way to smooth out the gyrations of the market. It’s a fundamental part of my own withdrawal strategy.

Dislike: The approach is likely to get emotional

The approach to refilling the cash portion of the boomer&echo portfolio is left a bit vague in the linked article. “During up markets” is almost guaranteed to encourage daily agonizing over whether it’s really the “right” time to sell. “On a regular annual schedule” is better advice, but that’s a big trade to execute on a single day, and the temptation to delay this trade would be rather large, I expect.

Dislike: It may not be practical

In theory, it’s really nice to have a super-simple portfolio. In practice, it’s much harder to pull off when you have substantial non-registered investments. Making trades in your non-registered accounts to simplify your holdings may attract unwanted capital gains, which of course may attract unwanted taxes. Add to this my dubious practice of holding substantial USD assets, and you quickly go from an ideal to what a real retiree’s portfolio actually looks like. In any case, it’s always good to try to simplify wherever you can, like I did.

My approach: similar, but different

My approach to portfolio maintenance in retirement is similar to the boomer&echo approach, with a few key differences:

  • Withdrawals are done monthly, without fail, and selling parts of my equity portfolio happen every month. No emotion, and I sell in up or down markets, on the same day every month.
  • The 80/15/5 mix between equity, bonds, and cash is maintained at all times, plus or minus a percentage point. My multi-asset tracker spreadsheet helps with that. Extra trades might be needed in a given month to keep the mix correct.
  • The cash portion of my portfolio is divided between a 6 month non-registered cash cushion that is part of the VPW methodology, and everything else. “Everything else” is largely in registered accounts so as to not generate unnecessary (and taxable) interest income.

What do you think about the boomer&echo two-fund approach? Anyone out there using it? Let me know at comments@moneyengineer.ca.

  1. The article in question mentions VEQT, but its MER is 0.24%, and the others are 0.20% or less. I hold XEQT myself. ↩︎
  2. Elsewhere in the article they characterize the HISA bucket as “12 months of withdrawals”, which is not at all the same as “10%”. ↩︎
  3. These kinds of ETFs invest in a variety of HISAs, like the ones I talk about here. ↩︎
  4. I use ZMMK in this role which is a bit riskier but with a bit higher return. Writing this article makes me wonder if I should head back to HISA ETFs instead. ↩︎
  5. Some research indicates that holding no bonds is in fact the best strategy. ↩︎

News: Canadian and US interest rates stable; HISA Table for June unchanged

RobHLeave a comment

The Bank of Canada maintained their policy rate constant last week1, and as a result the HISA table remains stable, with no changes from the previous month. On the US side, no changes were announced at the mid-may Fed meeting; the next US Fed meeting happens June 18th, and as a result, there’s no changes on the US side either. The US Fed rate remains at 4.33%, the same level it’s been since December 19, 2024.

You can see last month’s table over here, with a newly updated “last update” date 🙂

Since my provider (Questrade) doesn’t provide a way to buy HISAs on the cheap, I use ZMMK for my Canadian cash holdings and ICSH for my USDs. These ETFs are part of my ETF all-stars. ZMMK’s last distribution was $0.12 per share, which works out to a yield of 2.89%2 and ICSH’s last distribution was $0.198284 per share, which works out to a yield of 4.71%.

As expected, I’m getting a slight premium on my interest rate for taking on a slightly more risky investment. I’ll keep on eye on that in future posts!

  1. At 2.75%, if you’re keeping track ↩︎
  2. 0.12/49.90*12 ↩︎

News: BMO reduces fees on all-in-one ETFs

RobH1 Comment

Summary: BMO has reduced fees on its family of asset-allocation ETFs (ZCON, ZBAL, ZGRO, ZEQT) to put its Management Expense Ratio (MER) in the same realm as competing families from GlobalX, iShares and TD.

If you’re a fan of all-in-one ETFs (as I am)1, then there is a new low-cost competitor2 to consider in BMO. BMO announced a reduction in their fees last week, and per Rob Carrick, it’s a win for everyone concerned. If you’re new to the idea of all-in-one ETFs (aka asset allocation ETFs), here’s a good place to start: https://moneyengineer.ca/2025/01/21/why-you-can-fire-your-advisor-asset-allocation-etfs/.

It’s probably worth taking a quick scan of the four lowest-cost families out there. Here’s the overview.

ProviderFund Symbols
TD3TEQT, TGRO,TBAL,TCON
BMO4ZEQT, ZGRO, ZBAL, ZCON
GlobalX5HEQT, HGRW, HBAL, HCON
iShares6XEQT, XGRO, XBAL, XCNS, XINC
Low-cost all-in-one ETF providers, and the symbols you can use to buy them

In my view, any of these families are worthy of your investment dollars. Which particular fund you pick within a family depends on your tolerance for volatility and/or your timeline for needing the money you’re investing. Each list of fund symbols in the table above is listed in order of amount of equity — so for TD, you can see that TEQT has the most equity (100%) whereas TCON has the least (40%). You might want to give https://moneyengineer.ca/2025/05/06/investment-basics-asset-allocation/ a read to get more familiar with the concepts.

  1. XGRO and XEQT are both members of the coveted “ETF All Stars” slot. ↩︎
  2. There are other all-in-one families (Vanguard, Fidelity, Mackenzie), the ones shown here are the least expensive of the lot at 0.20% MER or less. TD is the current winner of the lot with a rock-bottom 0.17% MER. ↩︎
  3. TEQT launched in April 2025. ↩︎
  4. There’s also an ESG asset allocation fund, ZESG. ↩︎
  5. There’s also a bunch of covered call variations that are of no interest to me. ↩︎
  6. iShares is the family I work within. I started with them over the others because they could be traded for free on my former provider (QTrade). My current provider (Questrade) allows free trading for any ETF. ↩︎

Mini-Review: PortfolioPilot

RobHLeave a comment

I discovered PortfolioPilot (https://portfoliopilot.com/), a product of Global Predictions, because it’s mentioned in passing on Passiv’s dashboard. (You can read a bit about Passiv over here — the premium version of Passiv used to be offered for free to all Questrade users, but it’s now part of their shiny new subscription service1.)

So what is PortfolioPilot? Let’s hand it over to their AI assistant to weigh in on that question 🙂

PortfolioPilot AI Assistant v1.3 explaining what it is

On Passiv, the data provided by PortfolioPilot is limited to a portfolio score (out of 1000) and a “Forecasted Return” metric. The Global Predictions/PortfolioPilot assessments for my portfolio as presented on the Passiv dashboard are depicted below.

Global Predictions/ Portfolio Pilot’s scoring of my portfolio, as depicted on the Passiv dashboard23

When I headed over to the PortfolioPilot website, I decided to set up an account and take a closer look.

After an initial set of questions to help figure out my risk profile, I was able to enter my entire portfolio manually, since it’s down to just 12 holdings these days. Pro tip: this is a US tool, so if you enter Canadian stocks/ETF, you have to add “.TO” to the name of the holding in question, e.g. XGRO.TO not just “XGRO”.

So once I did that, it spat out all kinds of pretty data. I do like the visualization per ETF held…this one is showing 3 month returns per ETF. Whether or not it’s including dividend payouts is not known.

3 month return of ETFs held in my retirement portfolio

It also gave me a little more insight into my portfolio score4:

Portfolio Score of my retirement holdings, per PortfolioPilot

This view reminds me of how QTrade does their portfolio assessments, something I thought was a plus of that provider. The downside protection warning indicated that I have too much invested in too few holdings, but since I’m on the free version, no further insight was provided. Both AOA and XGRO are tilted towards large US stocks…I suppose my Magnificent Seven holdings are a non-trivial part of the overall portfolio as a result, but I wasn’t able to delve further into this warning. That’s what you get for paying nothing, I suppose.

So some nice stuff here, nice visualizations, customized news based on what’s in your portfolio, all good. But there are some problems I see with their data.

Example one:

PortfolioPilot Asset class view: 35% “unknown”? Blind spot for Canadian ETFs, maybe?

The asset breakdown is very detailed, which I like, but at 35% “unknown”, it’s kinda useless. No way I can see to figure out what ETFs are causing it trouble. Guess I’ll see what support has to say.

They have specific recommendations, which I also like, but again, I see issues:

PortfolioPilot suggested actions

So here, my issue is with action #2. It was recommending replacing XEQT (an ETF all-star) with VE.

Now, setting aside for a moment that VE and XEQT are pretty different in terms of what they hold, (to start, VE has no Canadian or Far East exposure), the REASON the suggestion was made was to save on management fees. PortfolioPilot claimed that VE attracted no fees, making me a sucker for paying 0.20% to hold XEQT. A quick look at the VE page dispelled that idea immediately — the MER is 0.22%. Following their advice would have led me to pay MORE in fees, not less. Shrug.

Anyway, I spent all of 30 minutes with this tool, and although it shows promise, some of the errors I spotted do not fill me with confidence in recommending it to others.

Anyone out there using it? Got other thoughts? Let me know at comments@moneyengineer.ca!

  1. But per some Reddit threads I have seen, users with more assets with Questrade may get it anyway. I await some sort of official communication before commenting further. As of right now, I still seem to have full access to the tool. ↩︎
  2. I dunno, 95th percentile seems “Excellent” to me.
    ↩︎
  3. Not really sure how to interpret that. Does that mean between 8% and 10% annual return, or does it mean -1% to 19% annual return? I would tend to believe the latter, since that’s more in line with an 80% equity portfolio, but no explanation is offered… ↩︎
  4. I suppose my score is a bit higher because it also includes my remaining QTrade holdings, which Passiv doesn’t support. Or maybe not. ↩︎