Investment Q&A

Q: I'm looking for a fund of fund for an RRSP that will provide geographical and sector diversification but I don't want the fund to hold bonds.

Q: What do you think of this for an RESP for two kids aged 3 and 5:

30% XSB
10% XIT
60% VEQT

Anything I should consider with this mix? Is it to late to get into XIT where its is already up so much?

Q: I opened an RESP account for my newborn son this year, my goal is to have ~10% annual return and not have to actively manage and rebalance the portfolio. So I plan to just buy and hold VEQT with available funds for the next 10-15 years, then slowly transition to a more balanced VBAL as it gets closer to withdrawal. What are your thoughts on this strategy, and would you recommend another ETF/stocks as a better alternative for the purpose? Thanks!

Q: I'm looking at XAW and VEQT as global index funds that (other than Canada in VEQT) have similar exposure. What puzzles me is that XAW has an average P/E ratio of 24, and VEQT has a ratio of 14. I don't see how the Canada exposure at 25% in VEQT can make this much difference. Can you help me understand this apparent anomaly?

Q: I would like to exit my brokerage RRSP to a self directed RRSP and I am looking for 4 to 5 Canadian EFT's to provide balanced diversification across sectors, nations, Portfolio Analytics suggests 70 equities/30 fixed income. Other ideas you have to create a balanced diversified ETF RRSP would be appreciated.
Are there any strategies( eg time of year) to make the switch or just do it.
Thank you for your service.

Q: My 28yr old son is looking to build a diversified ETF portfolio with 100% equity exposure with a bent towards growth given his long investment horizon.  These will be spread across his TFSA, RRSP and Non-Registered accounts.  Since he will be contributing smaller amounts on a regular basis a zero commission platform such as Wealthsimple is appealing.  However, they charge 1.5% fee for all currency conversions making it only practical to hold Canadian traded ETF's.  As a result he is considering the following:

ZSP 40%
XIC 25%
TEC 20%
VIU 10%
VEE 5%

ZSP + XIC + VIU + VEE together create a mix of ETFs that are globally diversified and very similar to the structure of XEQT/VEQT.  Versus XEQT/VEQT This portfolio has a slightly lower weighted-average MER at 0.16% and also has 20% in TEC (in place of something like QQQ) which is more growth oriented. Here are how the sectors would be weighted with this portfolio:

Info 31%
Financial 15%
Cons Disc 11%
Industrial 9%
Healthcare 8%
Communica 7%
Cons Staples 5%
Energy 5%
Materials 4%
Utilities 2%
Real Estate 2%

These would be the top 10 holdings with this portfolio and these top 10 would account for 24% of holdings in this portfolio:

AAPL5.1% MSFT4.9% AMZN3.2% GOOGL1.8% FB1.7% GOOG1.7% TSLA1.5% SHOP1.4% RY1.2% NVDA1.2%

If this was you at 28, can you please comment on
- are the 5 ETFs he has chosen ones you would go with given his objectives, if not, what changes/substitutes would you make along with recommended % allocations?
- is his % allocation across the 5 appropriate or would you make changes? For example I thought there might be too much overlap between ZSP and TEC as they are both highly invested in AAPL, MSFT, AMZ and FB and he is looking at 60% going into these 2 ETF's. That may well be what you want at his age but  I wonder if he is better served by reducing ZSP to 25% -30% and TEC to 15% and add  the remaining 15-20% to CDZ or VGG (or something else?)
- given he will be making contributions to his TFSA, RRSP and Non-registered, which ETF would be best in which account and why? 

Thanks for all your help, 
Scott

Q: I have the time and interest to invest in individual stocks and have benefited greatly from your advice, My 28 year old son is looking to me for investment advice and I was hoping that you could help me. He is young with a long investment horizon so he is not interested in any bond or fixed income components and is comfortable with a portfolio holding a diversified mix of 100% stocks in various geographies. He wants to control his own portfolio but does not have the time to research and stay on top of individual stocks and is leaning towards an ETF portfolio. I am not well versed in this area and was hoping you could provide some guidance.

He is looking at XEQT and VEQT as possible one stop solutions. There are some minor differences between the two, but overall they appear very similar. XEQT has a MER of 0.2% and VEQT has a MER of 0.25%, VEQT holds more stocks than XEQT and XEQT is weighted a bit more towards US stocks and a bit less towards CAD stocks compared to VEQT. Would you recommend one over the other, or hold both?

Instead of buying one of these he is also considering holding a two (or more) ETF portfolio using VCN and XAW ETFs. VCN tracks the Canadian market, XAW tracks the global market excluding Canada. A portfolio of 25% VCN and 75% XAW would replicate XEQT/VEQT very closely, but would have a weighted average MER of about .18%. The trade off is that this one would need to be rebalanced, whereas with XEQT/VEQT all rebalancing is done automatically. Would a 25%VCN/75% XAW be preferable to XEQT/VEQT?

If it was you at 28, would you do either of the above or would you prefer a portfolio of other ETFs and if so, what would those be?

Many thanks

Scott

Q: Is this an Etf with good returns.Capital gain?

Q: What are you thoughts on using broad based ETFs as "cash" in a portfolio? It seems like that's how the ARKK funds operate, except they are using stocks (I think GOOG and AMZN). To give you some context, my portfolio is mainly VGRO/VEQT, with some 5i stock suggestions for growth mixed in. I dollar cost average into the ETFs every two weeks but I'm wondering how I should approach adding to some of my stock positions and/or start a new position. Thanks as always.
Marc

Q: Long term investment of +20 years. Undecided between ETF vs mutual fund. Should Canadian allocation be 30% or 5%? Which would you suggest from the 3 listed above? Thank you

Q: Hi , Starting my 5 month old grand daughter's RESP. After reading all your other suggestions to other members, I am thinking of VEQT for the diversification of world markets and VUG for that extra torque and US dollar exposure. Would you add anything else here or suggest otherwise? I thank-you in advance. Sam

Q: Hello,
2 part question regarding the above companies for a 30 year old investor with a 10+ year hold horizon:

1. In a TFSA account I currently own BNS and BUS. Would you swap these 2 out for LSPD, KXS and DND today? If so, would you please rank the 5 companies in order of preference in a TFSA account?

2. I have some cash to deploy in my RRSP account. I was wondering if you could also rank the following companies to buy today once again for a 30 year old with a minimum holding period of 10 years: BAM, BIP.UN, BIPC (in case you think that one is better than the other in an RRSP), BNS, XIU and VEQT. I would be able to purchase 3 of the 6 mentioned so what would be your preferred mix in this case?

Thanks for your help!

Q: 3 grand children and 2 family RESP's. Ages 17 &12 in one RESP and 14 in the other. At present both RESP's invested in VBAL and I am concerned about the higher bond duration vs XSB. Therefore to keep this as simple as possible I am thinking of selling VBAL and putting the entire RESP's into XSB. I would then average into Veqt by reducing the XSB positions. I am still making annual contributions and am ok with the 2% XSB yield. Please give me your comments. Thanks guys.

Q: I have seen many articles in which advisors recommend all-in-one portfolios as core holdings. I understand the value of these portfolios given the rebalancing effect, when there is a mix of bonds and equities (e.g. VBAL, XBAL). However, I do not understand the benefit of the all-equity, all-in-one portfolio (e.g. VEQT, XEQT) compared to an all-world equity ETF (e.g. XAW, XWD). The all-equity, all-in-one portfolios are overweight Canada vis-a-vis global market capitalizations. It seems to me that the all-equity, all-in-one portfolios are "betting" that Canadian equities will outperform the rest of the world. Yet, most articles I read suggest the opposite, and recommend that Canadians invest increasingly internationally (in fact, I can not recall in the last few years any article suggesting Canadian outperformance).

It seems to me that the all world ETFs (XAW, XWD) are a better bet, but I am concerned that I am missing something given the popularity of the all-equity, all-in-one portfolios. What do you see as the advantage of the all equity, all-in-one portfolios over the all world all-equity ETFs? Why do major firms such as Vanguard and Blackrock have a Canadian overweight in their all-equity, all-in-one portfolios? For a long-term core equity-only holding, do you recommend the all-in-one portfolio (e.g. VEQT, XEQT) over the global equity ETFs (XAW, XWD)? Is there any other ETF you would recommend instead?

Many thanks for your excellent advice.

Q: Hi
A quick question.
I know BMO/ishares have equivalent ETFs to VBAL/VEQT/VGRO.
Are there any equivalents to these all in one ETFs offered US ETF companies?.
Vanguard's US site doesn't show any.
Any one else in the States offering all in one ETFs?
I am hoping if they do offer, their fees will be lower than the Vanguard's here in Canada.
Thanks.

Q: Hi,
My kids are all about 30 years old and have most of their retirement investments in equities with some bonds, e.g. VGRO.
Given the poor expectations for bonds, is it reasonable to move to all equities?
If so, which ETFs would you recommended? I was thinking VEQT or XAW?
Thanks

Q: Hi team,

I’m seeking to create a globally diversified all equity portfolio using low cost ETFs that accurately represent the market cap of each country for a 10-15 year hold. I also hold ZUT as an alternative to fixed income and am contributing to an inflation adjusted pension through my employer. For some real estate exposure we have two single family rental properties in slow and steady Manitoba. A small portion of my portfolio is in bitcoin as a hedge against inflation, not more than I’m comfortable loosing. BTC has been this year’s best performing asset but there are mixed opinions on its future and what I do own doesn’t cause me to loose sleep.

Currently my core holding is VEQT which is heavily overweight in Canadian equities. There are numerous ETFs for investors to sift through, many of which are very similar and it can be a bit overwhelming.

Firstly what are your thoughts on the strategy of holding a globally diversified portfolio that most accurately represents the market caps of each country? Or are there benefits of being overweight in certain countries, and if so can you recommend some ETFs?

If you believe being globally diversified with weightings equal to a country’s market cap is a sound strategy can you recommend some ETFs that would achieve this. I’ve been considering switching VEQT to VXC, XAW or XEQT.

Thanks for all the fantastic information and guidance. I really enjoy the investor education your service provides.

Q: Recently, a number of firms have brought out All-in-One ETFs, such as VEQT. If an investor wishes to be 100% invested, and diversified globally, then this ETF offers the advantage of rebalancing to the ETF's geographic weightings. These All-in-One ETFs are overweight Canada given global market capitalizations.

In contrast, there are ETFs offering similar low fees which represent the market capitalization of all global equities, such as XWD or VXC (w/o Canada). These ETFs are effectively rebalancing to reflect the global market capitalizations.

For a long-term hold, which investment do you feel will do better? Is an investor better off choosing say VEQT, or VXC? These two ETFs have similar ETFs. Is there a better alternative which you would recommend?

Your insights are much appreciated and valued. Thank-you.

Q: Hi,
what would be the main pros and cons of holding this ETF as a core holding for the equity portion of an RRSP account?
Thanks,
Dan

Q: I am looking for a lower risk ETF. My goal is to preserve capital, by beating inflation on an after-tax basis over a 5 to 10 year period, and not to lose any money. My view is that I can best achieve these objectives through an ETF which is diversified both sectorally and geographically. Do you agree?

I have been considering VIU, VXC, VEQT and XDG. What are your views? Do you agree with these possibilities, or do you feel there are better options available? What ETF do you think offers the best risk and reward? Do you feel the all-in-one ETFs will better achieve my investment objectives given the rebalancing feature?

Your thoughts and advice are greatly appreciated.