As we had suggested in the MoneySense Best ETFs for 2019, the One Ticket Asset Allocation ETFs are a game changer. An investor can enter 4 letters and purchase a well diversified and re-balanced portfolio at the risk level of choice.
There’s really no reason to hold high fee mutual funds. You can access a well rounded, globally diversified investment portfolio with annual fees in the range of .20-25%. For many there’s really no reason to pay an advisor on an ongoing basis. Of course you should make sure that you know ‘what goes where’ with respect to RRSP vs TFSA vs taxable accounts. You should have that all-important financial plan.
These Asset Allocation Portfolios are putting serious pressure on Canadian mutual fund providers and are contributing to the ongoing trend where we see Exchange Traded Funds (ETFs) outselling mutual funds. Larry Bates the author of Beat The Bank offered this on Twitter.
And here’s the article link that details how CI Financial stock sinks as mutual fund giant struggles with redemptions. From that article …
CI reported net redemptions of $2.47-billion in the second quarter, meaning investors are pulling more money from the company’s funds than they are putting in. The results extended CI’s streak of net redemptions to seven straight quarters, totalling $15.4-billion since the fourth quarter of 2017.
The article went on to state that CI’s share price has fallen by 50% after peaking in 2014. On investment companies not getting with the program I had offered.
Perhaps some of those monies from redemptions ended up in Vanguard’s Asset Allocation Portfolios. My friends at Vanguard tell me that they’ve seen an incredible $1 billion of net new monies added to the funds in 2019. If we do the quick math on assets to end of June, we see about $1.9 billion of assets AUM in those funds. The majority of those monies are in the Balanced and Balanced Growth models.
- Conservative Income Portfolio 55.9 million
- Conservative Portfolio 220.1 million
- Balanced Portfolio 675.3 million
- Growth Portfolio 845.1 million
- All-Equity Portfolio 99.7 million
Vanguard Is Not The Only One Ticket Portfolio Solution
BMO the bank that is all things ETF on the investment front also offers asset allocation portfolios and they’ve been very busy promoting those offerings with online advertising (they follow me around the web, ha).
It appears that those 3 funds have attracted about $73 million.
BlackRock’s iShares is also into the One Ticket game. Here’s a link to their XBAL Balanced Fund and their XGRO Balanced Growth Fund. They had been in the One Ticket arena for quite some time; those portfolios were cleaned up and offered with lower fees in December 2018. There is $336 million in those 2 funds.
And while I would not invest in a behind-the-times mutual fund provider I do like investing in a positive and undeniable trend. I hold BlackRock as a pick and it is doing well. Here’s BlackRock BLK vs the S&P 500, chart courtesy of portfoliovisualizer. com
Asset Allocation Portfolios – That’s the Ticket
Robb Engen of Boomer and Echo wonders that given the poor performance record of investors, perhaps many should just pack it in. When Investment Returns Are So Bad, They Make GICs Look Good. The stats are real and the trend is acknowledged but we also know that index investors are better at it compared to those ill-advised mutual fund investors. The new trend is better low fee investments to go along with that better investor behaviour.
Mark Seed of myownadvisor offered that he prefers Financial Independence Work On Own Terms FIWOOT. That’s in response to the FIRE Financial Independence Retire Early movement that is usually lead by bloggers who claim to be ‘Retired’ but work tirelessly on their blogs and are supported by their blog income. Not so retired perhaps, but selling the dream.
On Findependence Hub, Ian Moyer offers a guest post detailing Cascade’s retirement planning tool. I have taken that for a spin, and it is more than interesting. This might be a great resource for self directed investors and planners. The most common investment mistakes might take place in the harvesting of retirement assets.
milliondollarjourney asks Can You Have Too Much RRSP?
Rob at Passive Canadian Income offers his July dividend update.
GenYmoney offered a net worth update.
And from The Financial Post another investor is hit with some severe TFSA over contribution penalties. Be careful out there with your TFSA accounts. Contact the CRA when in doubt but keep in mind that they do not have records for your current year.
Thanks for reading. Please share this post to help more Canadians find those wonderful one ticket asset allocation ETFs and other sensible low fee investment solutions.
And certainly it should be acknowledged that while most of CI’s eggs are in the mutual fund basket they are now a majority owner of Canadian Robo Advisor WealthBar and have some exposure to the ETF space by way of First Asset Investment Management.
Have a great weekend, your comments and questions are more than welcome.