The momentum continues for the game-changing One Ticket Asset Allocation Portfolios. Yesterday we saw three new funds introduced by iShares and an actively managed fund from CI Investments.
iShares likes to refer to them as multi-asset ETF solutions. From Pat Chiefalo, the head of iShares Canada.
“We know investing can be complicated, but it doesn’t have to be. Since launching our iShares Core ETF Portfolios, Canadian investors and advisors have shown tremendous enthusiasm for our one-ticket multi-asset ETF solutions. Recognizing that each investor is unique, we’re excited to add three ETFs to the suite, to help meet the range of investors’ goals and risk profiles. ETFs were originally created to help simplify the investment process, these ETF portfolios build upon that idea, by providing a low-cost, diversified investment solution in one simple package.”
If you’re not familiar with these portfolio solutions, you can enter one ticker symbol, XBAL for instance, and you will be invested in a ‘complete’ globally diversified portfolio. That portfolio is managed and rebalanced for you; there’s nothing for you to do but stay the course and hopefully add monies on a regular schedule if you’re in the accumulation phase. And certainly many of these portfolios are wonderful options for retirees as well.
These game changing portfolios are more than ‘taking off’. On the success of the Vanguard offerings I recently wrote Vanguard Asset Allocation Portfolios Attract $1 Billion in 2019.
iShares already has that XBAL and XGRO on the shelf. They’ve now added.
They now have the risk spectrum covered from a range of 20% bonds to an all-equity offering with no bonds. The management fee for all is .18%.
- XINC is 80% fixed income.
- XCNS is 60% fixed income.
- XBAL is 40% fixed income.
- XGRO is 20% fixed income.
- XEQT is 0% fixed income.
They’ve largely followed the asset selection that was used in the XBAL and XGRO. As an example here’s the mix for the classic 60/40 Balanced Portfolio to August 12, 2019.
For equity holdings they will overweight to US Total Market, followed by developed and developing markets for international and then a Canadian component. Here’s another example using the all-equity model.
iShares will include a US bond component with a mix of Treasuries and Investment Grade Corporate Bonds. It’s a very sensible core portfolio approach. I’d prefer to see XUU in the mix for the greater and direct exposure to the US mid and small cap ETFs. My readers might also know that I prefer the TSX 60 XIU to the broader XIC. But these are minor quibbles.
If you are looking for a major difference or edge between the players in the Asset Allocation Portfolio space, you will likely not find one. From my review of the BMO One Ticket Offerings here is the allocation for their Balanced Portfolio.
Justin Bender has back tested the models from BMO, Vanguard and iShares and found almost identical returns.
Where you can create a discernible difference is in taxable accounts and by way of the one ticket total return portfolios from Horizons. Those portfolios use a total return swap structure to eliminate the taxation on any portfolio income. They are certainly tax efficient, but certain government agencies have their eye on them. Who knows how that ends? And I wrote on that. With all of the unfair and unethical behaviour that goes on out there in the investment world they choose to pick on these portfolios with modest assets under management?
I will do some research on those CI offerings, and I’ll be back soon with that post if I find anything interesting. At the very least we’ll keep score on the Active vs Passive battle in the One Ticket space.
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