The All-Stock Model ETF Portfolios – 2018 Review.

I recently looked at the returns of the Balanced Model ETF Portfolios on Cut The Crap Investing. Here’s the article and Why They Outperformed The Vanguard Portfolios in 2018. Those Balanced Portfolios were benchmarked against the wonderful Vanguard One Ticket Solutions. That is, you can purchase a complete globally diversified portfolio by entering one ticker symbol, VBAL for instance, the for the Vanguard Balanced Portfolio. It is simple and simply a great option.

vanguard balanced asset allocation

On Cut The Crap Investing I also offer 2 all-stock portfolios. One Portfolio option is a typical core large cap stock portfolio. The portfolio is quite ‘plain vanilla’. These are all Canadian listed ETFs.

The All-Stock Growth Portfolio. 

All Stock Growth Portfolio Assets Snip

Here’s my overview article on The All-Stock Growth Portfolio.

As per my previous update article, here are the core iShares returns for 2018. Of course the portfolios that were are looking at today are all-stock and do not include that bond component.

  1. Canadian Bonds XBB 1.26%
  2. US Stocks XUU 2.94%
  3. Canadian Stocks XIU -7.72%
  4. International Stocks XEF -6.62%

At the above weighting the portfolio was negative in 2018.

2018 Return (-4.56%)

Self directed investors can certainly adapt their own asset allocation. You may choose to create greater concentration in the US market, given the broad diversification and greater returns potential of that very dynamic market. Many will want even more of those US market leaders that dominate the index such as  Apple, Google (Alphabet), Microsoft, Berkshire Hathaway, Facebook, Amazon, JP Morgan, Johnson & Johnson, Exxon Mobil, Pfizer, Visa, Home Depot, Walmart, Costco and more.

That’s a personal decisions and tax consequences and currency may also come into play.

The All-Stock Greater Growth Portfolio 

This portfolio goes beyond the plain vanilla larger cap approach and seeks alpha; it seeks to outperform ‘the market’. It will employ the smart beta factors known to beat the market over time. For my friends who work in compliance I will add that ‘past performance does not guarantee future returns’.

Here’s my overview article Beat The Market With The Greater Growth Portfolio

Here’s the asset allocation.

Greater Growth Portfolio Assets Snip

The portfolio leans on the size premium (smaller companies outperform larger companies), value and the growth orientation of the tech-heavy Nasdaq 100. On the Canadian side of the coin, the portfolio uses the MSCI High Dividend Yield Indices that have beat the market in Canada, US, and International. As you may know those indices are available in portfolio form from Tangerine. You can have a read of Canadian Robo Advisors – The Tangerine Big Juicy Dividend Edition.

Here are he returns for the assets for 2018. RSP, IJH and QQQ are US listed funds. Canadians of course would receive a currency boost, due to the strong US dollar performance in 2018. And of course, as a self-directed investor you will need to know where and how to hold your US assets. You may need to use Norbert’s Gambit to avoid currency conversion charges.

I have included the estimated US currency boost.

  1. RSP 2.6%
  2. IJH -2.1%
  3. QQQ 9%
  4. XDIV -9.97&

Portfolio returns in 2018 were negative.

2018 Return (-2.8%)

You have to have patience no matter what road you take. 

Keep in mind that when we invest in an aggressive portfolio we might require a longer time horizon for the assets to ‘do their thing’. While many investment houses suggests that you at least have a time horizon of 6-9 years for an all-equity portfolio, I’d suggest that you have 10 years or more. And no matter what investment style you choose patience is key. That holds true whether you hold an ETF model portfolio, a portfolio by way of a Canadian Robo Advisor, a low fee mutual fund, a collection of individual stocks, or a blend of stocks and funds. You have to give the assets the time to do their thing. And the portfolio will move through markets cycles of booms and busts, of bull and bear markets. That’s when your portfolio is going to be put to the test.

At a recent Vanguard Investor Day, we discovered that Vanguard gives the managers of active funds 10-14 years to demonstrate the value of the chosen investment approach. Investment themes need time to play out, especially when the theme is greater growth, or the value of that divining rod known as a dividend growth history.

A portfolio is like a bar of soap. The more you handle it, the smaller it gets.

In the accumulation stage Buy. Hold. Add. 

Don’t chase; let the returns come to you. Investing should be simple. It should be rewarding and relatively stress free if you are investing within your risk tolerance level.

Thanks for reading.

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One thought

  1. Dale, another balanced diversified offering that was recently introduced by Horizons is HBAL. It’s a 70/30 total swap fund, no tax implications when held in non-reg accounts and very low cost (max 0.18). Seems like an even better choice than VBAL, XBAL, or a self-directed portfolio of the underlying index ETFs. Your thoughts?


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