Tag: Foreign Exchange

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What’s in my retirement portfolio (June 2026)?

RobH1 Comment

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.

  1. Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
grayscale photography of threads and needles on table

Custom Indexing, Direct Indexing; What’s the Deal?

RobH1 Comment

As readers know, I’m strictly1 an index investor. Boring, yet very effective over time. Buy a basket of stocks that are based on public indices (e.g. S&P 500, TSX 60, MSCI World) and forget about it. Since it’s not possible to buy an index directly, ETFs exist to do that for you — you buy the ETF, the ETF managers buy the underlying stocks, and life is good.

This means a few things:

  • You don’t actually own the stocks of the index yourself; the ETF manager does
  • You rely on the ETF manager to do the work of adding/removing stocks from the index when the index does (and this happens all the time2)
  • You rely on the ETF manager to pay out the dividends the underlying stocks hold; this isn’t on the same schedule as the underlying companies themselves — the ETF manager will pay out dividends annually, semi-annually, quarterly or even monthly.
  • You are implicitly investing in everything the chosen index invests in. Some folks may have reservations about investing in sectors like defence industries, oil and gas, tobacco and alcohol, gambling or anything involving Elon Musk, etc.
  • You pay a (hopefully small) premium to have someone else do this work3

Now. the super cheapskates out there will rightly point out that with commission-free trades on many DIY platforms4, why bother with an index fund? Why not just own all the stocks of an index yourself and cut out the intermediary step (and the associated fees)?

Two of Canada’s DIY providers (Wealthsimple and Questrade) are now offering products that may meet that need. Although I am a client of both providers, I don’t use either of these services.

Wealthsimple Direct Indexing

Wealthsimple was the first to introduce a product that allows investors to own the underlying stocks of an index. The full story is here, but it’s not exactly what you might expect:

  • Good: You can buy either the S&P 5005 or the TSX Composite6 (about 200 companies)
  • Good: You can exclude stocks from the list if you wish
  • Bad: You can only use direct indexing in a non-registered account.
  • Good (?): You don’t actually hold all the stocks in the underlying index; sampling is used to approximate the overall index (this is done in order to facilitate tax loss harvesting)
  • Good: Trades are done automatically on your behalf to take advantage of tax loss harvesting. The idea being that (for example) an underperforming bank stock is sold and replaced with a different bank stock
  • Terrible: Although you can hold the S&P 500, you can’t hold it natively in USD. This means lots of FX fees for Wealthsimple 🙁
  • Neutral: Direct indexing costs 0.15% of holdings
  • Bad: The service sounds like it will generate a lot of trades, which means a lot of tracking of gains and losses. Wealthsimple helpfully(?) suggests using CRA’s “Autofill my return” feature.

The main value proposition of direct indexing offered by Wealthsimple is the idea of automating tax loss harvesting. For people with large non-registered portfolios, this can be an attractive proposition. Of course, you have to be able to FUND a large non-registered portfolio in the first place. In my case, this would mean liquidating my existing non-registered portfolio and incurring all the capital gains at once. No thanks.

And, I can’t stress this enough: using this service in its current incarnation to buy the S&P 500 is a terrible idea. The FX fees will eat into your returns as sure as the sun will rise tomorrow!

Questrade’s Custom Indexing

This is a brand new product from Questrade. All the details are here.

  • Good: You can define your own index, either starting totally from scratch or using one of the existing templates7.
  • Bad: It only works for USD stocks8 at the moment. It goes without saying that you should invest using USD and not CAD if you were to choose this route910.
  • Good: It can be an RRSP, TFSA, FHSA or non-registered account.
  • Bad: It doesn’t include RRIF accounts.
  • Neutral: It has to be a new account dedicated to this strategy
  • Good/Bad: Rebalancing (with “one click”) is in your hands. Good because you maintain total control, Bad because you can be inclined to try to time the market, which is almost never a good idea.
  • Neutral: Your custom index is limited to 600 holdings.
  • Good: There’s no charge!

This is a great looking service on paper. I thought that perhaps it would work for my TFSA accounts since I only hold XIC and XEQT in them but I see some limitations in doing that:

  • Custom indexing doesn’t (yet) support CAD-listed stocks
  • XEQT holds international stocks; custom indexing can’t. I suppose I could use ETFs to get around that.
  • XEQT holds ~8500 individual companies, whereas custom indexing is limited to 600 stocks

I suppose I could decompose my all-in-ones (XGRO/XEQT) into their ETF components and build a custom index based on that. This would replace the all-in-one MER with the MER of the individual components, which as I’ve shown previously, would save you money.

I could do this immediately with AOA (my USD all-in-one), but I only hold that in my RRIF account, and direct indexing doesn’t seem to allow RRIF accounts.

Anyway, it’s an interesting offering, and one that I’ll keep an eye on!

My Take

Wealthsimple’s direct indexing might be attractive to someone in the accumulation phase of their investment journey. For me, all the things I have in my non-registered accounts will eventually be sold off to fund my retirement — I’m not adding to that part of my retirement holdings.

Questrade’s custom indexing might be interesting to me once they add support for Canadian equities. Until then, another button to ignore.

  1. Well, for 80% of my portfolio anyway. The equity part. ↩︎
  2. For example, on June 2, 2026, FedEx Freight joined the S&P 500 at the expense of EPAM Systems per https://www.spglobal.com/spdji/en/documents/indexnews/announcements/20260527-1483532/1483532_fdx-amwd-56.pdf ↩︎
  3. Expressed as MER (Management Expense Ratio). This is the percentage of your holdings that goes to pay the expenses of the fund manager. For passive index funds, it should be low — 0.25% or lower. If it’s higher, it should lead you to question what, exactly, the fund is doing. ↩︎
  4. Wealthsimple, Questrade, QTrade, National Bank Direct and Moomoo all offer commission-free trading for stocks and ETFs without restrictions. ↩︎
  5. I’m simplifying here. Wealthsimple’s US offering is actually based on the Morningstar US Target Market Exposure Index which is slightly broader in scope than the S&P 500. But for all intents and purposes, close enough. ↩︎
  6. Actually, the Morningstar Canada Domestic Index ↩︎
  7. There’s not a lot of templates but they include S&P 500/200/100 and a few sectors. There’s also user-submitted templates, not sure how these are curated by Questrade (they appear to be rather polished, so I’m thinking these are seed ideas, TBD how many of these become visible over time) ↩︎
  8. This is because Questrade only support fractional shares of USD stocks and ETFs. CAD is “coming soon” but has been for about a year now. ↩︎
  9. Or you will incur a lot of FX fees… ↩︎
  10. Questrade accounts all natively support both CAD and USD holdings. ↩︎
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What’s in my retirement portfolio (May 2026)?

RobH1 Comment

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 May 29 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). The charts look almost identical to the previous month; AOA is up a bit mostly because the USD has been on a bit of run this month, increasing almost 1% month over month :

Plan for the next month

The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.

Here I have some work to do, since I’ve recently revisited the 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

At the same time, I’m looking to get rid of my USD allocations since they are adding needless complexity and I no longer have a way to easily spend USD anyway. This is going to be a multi-month process1, but I want to be USD free by the end of the year.

So, next month, I will begin. I’ll first tackle ICSH in my non-registered account, which I’ll do once it pays out its monthly dividend in the first week of June. And I’ll begin replacing AOA with XGRO2.

Overall

Part of using VPW3 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.

  1. Multi-month because I want to make sure I don’t get burned by a sudden change in USD/CAD FX rates. By converting some every month, I can smooth out any weird spikes. ↩︎
  2. The biggest difference between AOA and XGRO (besides the native currency) is the amount of Canadian Equity content. AOA has a very small amount (about 3%) whereas XGRO has 20% ↩︎
  3. Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
assorted sushi and sashimi platter top view

What’s in my retirement portfolio (April 2026)?

RobHLeave a comment

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 retirement1, so that’s a good trigger to update this post. On April 24 at mid-day, 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). The charts look almost identical to the previous month, in spite of some conversion of AOA to XGRO. (I use Norbert’s Gambit to move USD denominated funds into CAD on a quarterly basis since my spending is all in CAD).

Plan for the next month

The asset-class split looks like this; you can read about my asset-allocation approach to investing over here.

It’s looking pretty close to the targets I have, which are unchanged:

  • 5% cash or cash-like holdings like ICSH and ZMMK
  • 15% bonds/income (most are buried in XGRO and AOA, rest are in XCB)
  • 20% Canadian equity (mostly based on ETFs that mirror the S&P/TSX — HXT and XIC)
  • 36% US equity (dominated by ETFs that mirror the S&P 500)
  • 24% International equity (mostly, but not exclusively, developed markets)

The alignment with target is what drives my investment decisions; and here I see that the international equity portion of my portfolio has drifted 1% below target, which is usually the threshold whereby I start to pay attention. Do I need to take action to increase my International Equity portion, or is my target something to reconsider? I have some thinking to do.

Overall

Part of using VPW2 as a strategy is the need to calculate your retirement net worth on a monthly basis. Last month’s meltdown is yet another speed bump that we’ve managed to survive, and April 2026 brings me to another all time high of my retirement net worth, as compared to January 20253.

My VPW-calculated salary continues to increase, albeit at a more modest rate, as expected.

  1. Questrade, although my RRIF settings are for the last day of the month, seems to need a lot of time to process the payment; I’ve learned that unless I have cash in the account at least 3 business days prior to the last business day, the automatic payment won’t happen. ↩︎
  2. Variable Percentage Withdrawal, my chosen decumulation strategy. ↩︎
  3. In constant dollars. I should really adjust my net worth to show inflationary impacts but it’s more calculating than I feel like doing at the moment. ↩︎
dollar cut in half

Another quarter, another gambit

RobHLeave a comment

Every quarter, I convert some of my USD to CAD using Norbert’s Gambit. A good chunk of my retirement holdings are in USD, but since I spend in CAD, I need a cheap way to convert. I’ve been tracking my actual costs using Questrade’s platform for the past year. You can read about that over here.

Anyway, over the past year, the conversion has been effective. I have never paid the usual FX rates charged by Questrade (1.5% over the spot rate). My most recent conversion was the most expensive one to date, and that was a rate 0.7% over the going rate on the day I started the process. On three other occasions, I actually made out better than the spot rate, but that was because the foreign exchange rate moved in my favour in between the purchase and the sale.

My need for US cash has evaporated now that I have a no-FX fee credit card. (You can read about what cards I’m using over here.) So this makes me wonder if it’s time to get rid of the majority of my US holdings. Note this doesn’t mean that I will stop investing in US equities — that would be unwise — it just means I will stop holding assets denominated in US dollars.

The are downsides to holding USD-denominated assets, of course:

  • It adds complexity to the portfolio. AOA is the US equivalent of XGRO; both are 80/20 asset allocation ETFs. But because AOA is a US ETF, it holds a paltry amount of Canadian Equity, and I have to make up that difference elsewhere by holding pure Canadian Equity ETFs like HXT or XIC.
  • If you hold too much USD (or any foreign property) in non-registered accounts, you’ll be obliged to file a T1135 with CRA1.
  • It may limit the universe of online brokers you can deal with. Wealthsimple, for example, does not currently support USD RRIF accounts.
  • Foreign exchange can work for or against you. It’s another variable that can impact your returns. I’m not convinced this is a downside, but it does make tracking things like ACB in a non-registered account a little more tedious.

    One big hesitation I have about converting all my USD holdings would be the time I’d have to be out of the market while the Gambit runs its course. As you can see in from my tracking, each conversion means I’m not invested in AOA for 3-4 trading days. I just hate that idea. I also hate the idea of converting at a time when the CAD<->USD exchange rate is perhaps not optimal. (A low Canadian dollar would be a good thing for me in this case.)

    One place I sort of like having the USD assets is in my cash cushion, especially since US interest rates are quite a bit higher than Canadian rates. (I track current rates over at HISA and short-term bond table (Canada & US)).

    So perhaps I just need to craft a plan where I make more aggressive conversions over a fixed time frame. x% every month, with a deadline. This helps mitigate the “time out of market” and “exchange rate” issues. Crafting the plan with fixed milestones also takes emotion out of the equation; if I set a series of future transactions, then all I have to do is press the button mechanically.

    More to come on that.

    1. If your cost base exceeds $100,000 CAD ↩︎