Investment Q&A

Q: I would appreciate your general comments regarding these two ETFs, in particular with regard to these as a long term hold for my nephew at age 30. That person also intends to have other funds invested in more speculative, higher risk equities (play money!)
1) Are these a safe hold that should increase in value with general market appreciation over the years?
2) Would you believe the current dividend is sustainable?
3) Are there other options in the ETF world that you might recommend for a long term hold?
4) Again for a long term hold would you prefer something along the lines of buying equities directly, with something like holding one of your portfolios, knowing that he will not be paying much attention to these investments.
Thanks! Paul

Q: Further to my prior question, in looking at ETFs, I often thought why not just buy their top holdings, and that is quite often what I do. However, in trying to find out that info for these two I noticed something I thought was unusual.

For example, the XEQT ETF lists holdings as follows ...
iShares Core S&P Total US Stock Market ... 44.8%
iShares Core MSCI EAFE IMI ETF ... 24.96%
iShares Core S&P/TSX Capped Compost ETF ... 24.86%
iShares Core MSCI Emer Mkts IMI ETF ... 4.97%

This seems to be the total of their holdings (99.59%). I assume these also generate management fees, which seems like an approach to increase fees paid by "layering" their offerings!
Would a person not be generally better off just buying the 4 separately in the percentages to match the XEQT ETF?
... or possibly digging deepr in the layer and finding out what equities they really are holding?
Thanks! Paul

Q: Morning
Which etf would you recommend for US exposure and why. Please rate them from 1-4
ZSP
VFV
VGG
XUS
Also thoughts on XEQT for all round exposure
Thank you

Q: Good morning,

In one response to a question on the choice of a International exposure ETF, the 5i preference was VEQT, XEQT and XWD in that order.

Q1. Has you opinion of the order of these Global ETFs changed in any way and given XWD's 5 and 10 year performance?

Q2. Would you kindly explain your rational for ranking XWD ahead of VEQT and XEQT and even HEQT.

Thank you in advance and I look forward to hearing your response.

Q: Hi there,

Can I please get your opinion on HEQT. The asset allocation looks to be different from VEQT and XEQT with its NASDAQ exposure. Do you suspect that over a long period (ie: multiple decades), this will help this etf outperform? How would you rate it relative to VEQT and XEQT?

Thanks!

Q: Hi there, there are many "all in one" etfs to pick from these days. If a person wanted to have a super simple portfolio, what would be your favourite (or the best) ETF to hold to gain 100% equity exposure that would require the least amount of maintenance? I know there is XEQT, VEQT, XAW, VXC, XWD, HGRO and many more. What would be your favourite? (Does not have to appear on the ones I have listed)

Thanks!

Q: Hi there,

The majority of my portfolio is held in XEQT. If I wanted to increase US exposure from 45% to 60%, in your opinion would to be best to layer in a hedged or unhedged US etf, considering XEQT already holds unhedged US exposure?

Thanks!

Q: My daughter is planning to start a new TFSA (full $88K) and contemplating the following:
Option#1, Autopilot All in one global index fund, such as XEQT or VEQT.
Option#2, All in Canadian equity index fund, such as XIU or XIC added to XEQT or VEQT.
Option#3, 5i favourite picks, such as BN, GSY, DSG, TFII, TOI and WSP .
Please advise which option is best for a buy and hold long term TFSA investment or suggest a better alternate. Thank you. Bill.

Q: Hi there, I hold a large amount of my portfolio in these broad based ETFs. I have about 30% in cash. At these levels, would you be adding to these indexes for a long term hold? How likely do you think it is that we would see SPY at 3300 to 3400 range? What would your strategy be to deploy my cash position into equities? Thank you!

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: There seem to be a number of CAD Hedged NASDAQ 100 ETF options. Which one(s) would you recommend for a couple of young investors, both of whom will be making regular, small contributions - one to an unregistered account and one to an RRSP? Was thinking of pairing with XEQT as both are looking for 100% equity exposure (in CAD). Your thoughts on this or other suggestions to pair with the NASDAQ 100 that may be more suitable would be appreciated. Thanks.

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: 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 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: Is black rock XEQT all in one, all stock, ETF a good option for an RESP that would start with a $1000,00 and add $100 a month. Or do you have a better suggestion.

Q: Peter and team
Could you please explain why XEQT was only up 3 percent on Friday's rally, while XGRO was up 6 percent and the TSX DJIA and S and P 500 were up close to 10 percent. Would that be attributable to the XEF holding
Thanks as always