Tangerine is the leading online bank in Canada. With Tangerine you can get most everything you want or need out of a core banking experience, and you can do so by paying no fees. That’s right – zero fees. That is a a great option compared compared to forking over $20, $30 or more per month at your big Canadian bank. Tangerine also offers some wonderful and simple investment options by way of the Tangerine core portfolios and the Tangerine global ETF portfolios. Today we’ll have a look at the Tangerine portfolio performance for 2020 for the core portfolios.
As a backgrounder here’s my review of the Tangerine portfolios.
They also recently launched the Tangerine global ETF portfolios.
Have a read of those two options. All said the approach is very similar. By way of those two options you will own many or most of the publicly traded companies in the developed world, the stock market risk will be managed by way of Canadian bonds. The ETF portfolios also shade in some developing market exposure. That means you will have exposure to China and many other fast growing economies in Asia, Africa and South America.
They are both managed portfolio options, meaning there is nothing for you to do but add monies on a regular schedule. You could certainly use the balanced portfolios to fund retirement as well. The fees for the core portfolios (MER – management expense ratio) is 1.07%. The MER for the recently launched Tangerine global ETF portfolios is expected to be in the range of. 77%. The management fee is .65%.
The 2020 performance of the tangerine portfolios.
Without further delay here’s the updated performance table.
The performance table is to end of 2020. That means that the YTD (year to date) and the 1 year figures represent the total returns for the full calendar year 2020. The 5 year column would represent the average annual return from January of 2016 to end of 2020.
What is more than interesting is that the returns for 2020 are quite similar for the more conservative portfolios and the more aggressive portfolios. Here’s the stock to bond ratios.
For the core portfolios (excluding the dividend portfolio that applies a different strategy) the returns ranged from 8.38% to 8.84%. In fact the ‘worst’ performing portfolio was the all-stock equity growth. Investors were not rewarded in 2020 for taking on additional risk.
The reason for that event is the asset allocation and rebalancing schedule. Canadian bonds actually outperformed Canadian stocks in 2020. The Tangerine core portfolios hold the stock markets in equal-weight fashion. For example, the balanced growth model is 25% Canadian stocks, 25% US stocks and 25% International stocks. The remaining 25% is Canadian bonds of course. In the Equity Growth portfolio, the 33.3% weighting to Canadian stocks became a very slight drag, as the Canadian stocks were the worst performing of the stock gang and the Canadian bonds outperformed those Canadian stocks.
Rewarded over time.
But of course we would expect to see the more aggressive portfolios outperform the less aggressive portfolios over long periods – if the trends of the last 30 years holds up.
If you look at the 5 year and 10 year columns you see that investors were rewarded for taking on that addition risk and higher stock concentration. Even from inception in 2008 and moving through the massive stock market correction during the financial crisis, the more aggressive portfolios offered slightly better performance. Those massive corrections are the great equalizers when it comes to portfolios and performance.
The portfolio drawdowns.
More important than returns is your ability to stay the course moving through stock market corrections. The only good investment plan is the one that you can stick to like glue. We MUST invest within our risk tolerance level. That was the message I delivered one year ago in the post – how to prepare your portfolio for the pandemic. That is a common theme on this blog.
The drawdown represents the amount or percentage that the portfolio declined, in 2020. Remember those bonds work like shock absorbers.
The bonds ‘did their thing’ in 2020.
Comparing Tangerine Investments to other options.
First off, compare these returns to your portfolio performance in 2020 and over the last 5 years and 10 years. If you’re in high fee mutual funds, it’s likely no contest. Some of the credit will go to the lower fees. Additional credit will go to the simple and passive portfolio construction. The portfolios don’t try and beat the market, they are the market. We know that is a better investment approach. The underperformance of actively managed mutual funds is well documented.
If you don’t like what you see when you do that portfolio comparison grab that transfer form from Tangerine. If you’re already a Tangerine client you’ll find that transfer button online. And you can usually complete the transfer for registered investments online from start to finish. It’s a simple process. If you are transferring non registered funds pay attention to capital gains and any tax bill. Tangerine cannot accept any mutual funds in-kind. You would have to sell your other funds first.
If you have any questions, you can call one of the Tangerine investment advisors.
And tell them Dale sent ya 🙂 I was an advisor with Tangerine from 2013 and into 2018.
You might also consider one of the other Canadian robo advisors.
And of course if you’re comfortable pressing that button and purchasing an ETF you can buy an all-in-one ETF portfolio for about .20%-.25% in fees. Recently I looked at the one ticket asset allocation ETF performance for 2020.
Robo or one ticket? There is now no reason AT ALL!!! for a Canadian to pay high fees for managed portfolios. You can also get investment advice (at all of the Robo Advisors) and even financial planning at a few of the shops.
Thanks for reading. If you have an questions please use that contact form. I’m happy to help.
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Check out EQ Bank for those who want to make their cash work a lot harder. The current high interest savings account rate is 1.5%. EQ Bank recently introduced RRSP and TFSA accounts with a rate of 2.3%. You’ll also find GICs.
At Questrade, Canadians can buy ETFs for free.
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