It’s been a wild ride for the stock and bond markets. But if we step back and look at the performance over the last year, the traditional Balanced Portfolio is in positive territory. If you’d been living under a rock and did not check your portfolio statement for a couple of months, you might think not much had ‘gone on’ in the investment world. You’re up about 3% over the last year. You’re only down about 2.5% year to date. The Balanced Portfolio barely felt a thing in this pandemic crisis.
From the iShares site, here’s the one year chart for their XBAL Balanced asset allocation portfolio.
The chart shows that the portfolio is up 3.3% over the last year.
The Balanced Portfolio Update – October 2020
Here’s the performance of iShares XBAL. Once again we’ll look at a 1 year performance chart, to October 1.
Over the last year the fund is up 7.5%. Now that is certainly ‘not feeling a thing’ through the pandemic.
Here’s my review of the iShares one ticket asset allocation portfolios …
While the total returns are quite similar for the asset allocation portfolios, the iShares options have been eking out a minor victory over the last year and more. Here’s the asset mix.
The performance has been aided by that small but useful allocation to US Treasuries and the use of US investment grade bonds, both with no currency hedge. Vanguard is using a currency-hedged version of US and International bonds. Of course the Canadian dollar has been weak and Canadian investors get that added boost of US dollar exposure. The Canadian dollar has weakened by almost 6% vs the US dollar over the last three months.
Yes, it was a wild ride.
Markets offered the fastest 30% decline in stock market history. And of course markets bounced back quite quickly. But they have not gained back the full market correction. The TSX 60 is still down some 9.9% over the last 6 months and 5.6% over the last year.
Here’s the total return chart for the S&P 500 (IVV) for a 6 month period to May 21. Still fighting back but perhaps stalled over the last month or more. US stocks dropped by some 37% and have charged back over 23% from the recent bottom.
International stocks have had a rougher ride, not enjoying the same rate of recovery.
The velocity of the drop was startling. And then, it was largely over in a hurry. It did not offer much opportunity for investing at lower prices. But certainly reinvesting dividends and adding more monies at those lower prices will quicken your recovery period. It can set the table for greater long term performance. You may get more opportunities on that front.
The XBAL Balanced Portfolio ‘only’ fell by some 21.8%. It had less of a hill to climb.
Chalk up another one for simplicity and consistency.
The MoneySense Best ETFs for 2020.
I am pleased to be back as a panelist for the MoneySense Best ETFs. Our team discussion took place during during the peak of the pandemic crisis and fear. There is certainly the urge to react and rethink the portfolio and to rethink risk. There were some new additions this year. I was happy to see low volatility ETFs get the call.
Previously I had a look at BMO’s Low Volatity ETF for Canada.
While I had no success in getting gold ETFs and US Treasuries as official ‘picks’, I was glad to see those options get some digital ink. Those assets can help get us close to that Permanent Portfolio that holds stocks, gold, US long term treasuries and cash.
I had offered up gold and long term treasuries in my Feb 1 post on how to prepare your portfolio for the coronavirus outbreak.
Have a read of the MoneySense Best ETFs for 2020. And thanks so much to Jonathan Chevreau for all of the hard work to put that together and to make that happen.
And don’t get too comfortable.
Yes the Balanced Portfolio has performed well. But we are certainly not out of the woods yet. We are likely in store for much more volatility. Many think that we will retest those lows, or more. After all, we are only in the first or second inning of this pandemic. Be prepared. Have a plan that you know you can embrace.
I think the economic recovery will take a while. And it’s possible that there could be major disruptions along the way. On Seeking Alpha this week I penned …
There’s simply been too much economic damage. We already have a wave of bankruptcies beginning in businesses, big and small. That article has been well received. It’s nice to get this kind of feedback from readers in the comment section …
Thank you. Enjoyed your observations and thoughts on this world problem. Best article I have read that makes common sense.
This may be one of the most thoughtful balanced posts in the c-19 era. Thanks.
Please have a read and share. Too many early morning hours went into the making of that post, ha.
More Weekend Reads.
Mark Seed offers his financial independence update on myownadvisor.
savvynewcanadians offers the best savings accounts for your RRSP and RRIF.
On Balanced Portfolios, Fritz at The Retirement Manifesto offers his 5% rebalancing strategy.
On findependencehub – Vanguard reduces fees on 3 bond ETFs.
10 Sunday reads at The Big Picture offers up much on COVID-19 and the race for a vaccine.
And as always a must-read resource these days is Tomas Pueyo. This post looks at how the virus spreads and what businesses we might be able to open first and last.
And Mathieu Latalien went to update his dividend cut list for TSX stocks and found there were no cuts this week. Many could use the break.
And Matthew at All About The Dividends goes for some generous yield with 3 new stock purchases.
On the Canadian Robo Advisor front our friends at WealthBar have been rebranded as CI Direct Investing. Clients will also have access to CI’s discount brokerage offering.
Thanks for reading. Don’t forget to follow Cut The Crap Investing. Shares of this post are greatly appreciated.
Canada’s top-ranked discount brokerage.
Cut The Crap Investing readers can sign up with Questrade (Canada’s top-ranked discount brokerage) through this partnership link. You can buy ETFs for free, including the wonderful one ticket ETFs.
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And as always, check out those Canadian Robo Advisors for advice and low fee ETF Portfolios.
And you might make your cash work a lot harder at EQ Bank.