The 5-year returns for the core ETF portfolios.

Recently we checked in on the performance of the all-in-one Canadian asset allocation ETFs. Those globally-diversified portfolio ETFs allow Canadians to access managed portfolios with all-in fees in the range of .20%-0.28%. Given that Canadians pay some of the highest investment fees on the planet, those one ticket options are a game changer. Do-it-yourself investors can all build their own ETF Portfolio. Today, we’ll have a look at that performance of the core ETF Portfolios found on Cut The Crap Investing. We’ll also have a quick peek to see how build-your-own compares to the one ticket option.

The core ETF Portfolios

Here’s the allocations for the core ETF portfolios. For the Balanced With More Bonds model, I’ve deviated slightly from the allocation shown in the ETF Model Portfolio page. I’ve dialed up the bond exposure to 70% from 60% so that we can see the effect of a more bond-heavy portfolio for the period.

As a self-directed investor, you will decide upon your own stock-to-bond (risk) ratio and your preference for Canadian, U.S. and International equity allocation levels.

Here’s the Balanced ETF Models.

For asset allocation ETFs or build-your-own, you will need to open a discount brokerage account. At Questrade, you can purchase ETFs for free. They also recently introduced a very slick trading app. They are Canada’s top-ranked discount brokerage.

YOU CAN OPEN YOUR QUESTRADE ACCOUNT HERE

The returns comparison

And here’s the returns history to end of September 2021. The period begins in January of 2016. Of course it is a 5-year look, plus 2021.

We start with $10,000 for demonstration purposes.

Keep in mind that portfolio visualizer runs returns at each month’s end. The drawdown would be more pronounced. Equities were down in the area of 35% during the COVID correction in early 2020.

And the annual returns.

And here’s the returns for the period of study for the individual assets. The time period is January of 2016 to end of September 2021.

And here’s the monthly correlation of assets for the period. A low number suggests a low correlation.

All Stocks vs Balanced models

And for comparison sake we will run the All Equity model vs the Balanced and Balanced Growth ETF model.

Even given the COVID correction, and due to the quick recovery, the All Equity model is outperforming over the last 5-plus years.

One ticket vs build-your-own

Recently we looked at the performance of the Canadian asset allocation ETFs. Here’s Vanguard’s VBAL vs the build-your-own ETF Balanced Portfolio model, from VBAL inception.

iShares one ticket asset allocation balanced model had near identical returns to the build-your-own option. We are obviously not giving up much when we go that one ticket route. It might be a small price to pay (you might even end up ahead). An asset allocation ETF takes the rebalancing out of your hands.

In this post on MoneySense, you’ll get some additional help on how to select the appropriate one ticket option.

And here’s 5 ways to build a couch potato portfolio.

The New Balanced ETF Portfolio

And just for fun let’s have a look at a New Balanced ETF Portfolio approach as we add commodities, bitcoin and a REIT (real estate). We will keep the bond allocation at 40%. Readers will know that I am a fan of greater diversification.

And here’s the returns comparison. Er, make that no comparison.

While the REIT ETF and the commodities ETF can help the cause for better returns, and better risk adjusted returns, the chart largely shows the incredible effect of bitcoin on a portfolio (historically) even at a modest 5% weighting.

We see that the drawdown is more pronounced. And we can thank bitcoin for that. The coin fell by more than 50% in the COVID correction. While bitcoin historically has greatly increased the returns and risk adjusted returns, it does increase the volatility and drawdowns in certain periods.

Here’s the annual returns for the assets.

And we’ll remove bitcoin for individual assets to remove the visual distortion.

Of course, for all of the above (including bitcoin), past performance does not guarantee future returns. You’ll find some more metrics in this post, on investing in bitcoin.

Thanks for reading. If you’re still investing in high fee mutual funds, do yourself a favour and compare your returns to the ETF models. If the evidence is clear, you might consider moving to a superior form of investing.

For those who want advice and lower fee investing options, have a look at the Canadian Robo Advisors.

And don’t miss my weekly column for MoneySense. There was talk of Winter for U.S. stocks, but earnings season kicked off (with a bang) south of the border. The markets say party on.

Making Sense of the Markets.

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