It’s easy to build a core ETF portfolio. And Cut The Crap Investing offers portfolio construction examples, with models available at various risk levels. By building an ETF portfolio you can hold a superior portfolio compared to actively managed mutual funds. You’ll also cut your fees by some 90% or more. Fees are an incredible drag on returns. Cutting the fee cord might be one of the most advantageous financial events of your life. Heck, given that wealth can lead to personal and family security and happiness, it might be one of the best things you do in life, period. Let’s have a look at the returns for the core ETF portfolios for Canadian investors.
First, check out the ETF Model Portfolio page. You’ll find an outline and blog posts for the four core ETF portfolio models. On the all-in-one asset allocation ETF portfolio page, you’ll find a table that can help you select the most appropriate portfolio that will match your time horizon and risk tolerance level. The asset allocation portfolios offer a one-ETF solution if you want global, well-diversified managed ETF portfolios.
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!
If you have any questions on that very important call, please feel free to contact me via the Contact Form. And of course, ensure that you have done the necessary research or have taken advantge of an advice-only planner.
The core ETF Portfolios
Here are the 4 core ETF models. The greater the allocation to stocks, the greater the risk (mostly and typically). That said, the greater allocation to stocks typically leads to better returns over time. There is a greater risk / greater returns proposition.
Always ensure that you understand and invest within your risk tolerance level.
I will run total return (including dividends and dividend reinvestment) charts from January of 2016 to the end of October 2022. That is based on the inception date of the ETFs available. While it is only several years, it is a time period that offers a relevant evaluation as we had a period of growth and then many risks arrived, when the world changed in 2020.
The returns of ETF assets from 2016
Bonds stopped working in 2021 as rates are rising in the attempt to battle inflation. International stocks have been a laggard. My “call” to limit that international exposure has been a good one. Keep in mind that the models are not advice. You will have your own reasons for developing the portfolio that’s right for you, and it will likely include your own biases.
The core ETF portfolio returns
Here’s the returns history. The charts and tables are courtesy of portfoliovisualizer.com. CAGR represents the Compound Annual Growth Rate. Stdev is a measure of volatility.
And here’s the comparison of the All Equity ETF Portfolio vs the Balanced ETF Portfolios.
Our first observation might be that the returns for the portfolios have been quite good, especially for the Balanced Growth and All Equity portfolio models. An investor would have certainly built some generous wealth over the period. Also, even given all of the scary headlines and risks, not much has really happened. The core portfolios have delivered and there has been no apocalyptic collapse. Simple and consistent investing works.
Here’s a look at the returns by year. The All Equity Model (not shown) delivered even greater returns in the positive years.
Looking longer term thanks to Tangerine
Tangerine Investments offers managed index-based portfolios. They are similar to the above models, though they are mutual funds and have fees (all in) of 1.06%. I was an advisor and trainer with Tangerine Investments from 2013 through 2018.
This gives us a longer look (from 2008 for the Balanced Models). The Tangerine Equity Growth Portfolio was lauched in November 2022, while the Tangerine Dividend Portfolio was launched November 2016.
For this time period we moved through the financial crisis when stock markets fell by some 50% or more. The inception period for the Balanced Portfolios will include that long bear market. Given the difference in fees compared to the Tangerine Portfolios and the Core ETF Portfolios on Cut The Crap Investing, you can add 1% (annual) or so to the returns that would have been generated by the Core ETF portfolios.
Net, net, some solid returns have been available, even for those who invested a lump sum at the worst time over the last 30 years – 2008. Of course dollar cost averaging would have boosted your returns as you would have been adding monies during the market downturns. You would have been buying on sale.
You can also go Robo
If you want a managed ETF portfolio and advice, you might consider one of the Canadian Robo Advisors. Here’s a post that compares the returns of Canada’s leading Robo Advisors. Justwealth leads the way in returns, portfolio offerings and advice.
Other ETF portfolio posts worth a look
While core portfolios can be wonderful for the accumulation stage you might consider more ETF assets and greater diversification. Have a read of …
Historically a core Balanced ETF Portfolio would have done the trick for retirees, but you might be able to do better, and better manage the risks. Please have a read of …
Thanks for reading. Be sure to follow this blog. It might lead to much more favourable wealth creation. Canadians should leave their high-fee mutual funds behind.
Enter your email address in the Subscribe button. Please feel free to reach out with any questions or concerns- use the Contact Form.
What’s the deal when you cut the crap?
You will earn a break on fees by way of many of these partnership links.
CANADA’S TOP-RANKED DISCOUNT BROKERAGE
Cut the Crap Investing readers can earn a break on fees at Questrade by way of that partnership link. At Questrade, you can buy ETFs for free.
Here’s Canada’s top-performing Robo Advisor, Justwealth.
Consider Justwealth for RESP accounts. That is THE option in Canada with target date funds that adjust the risk level as the student approaches the College or University start date.
RETIREMENT FUNDING PLANNING
The self-directed investor might consider the service provided by Mark Seed from My Own Advisor. He runs Cashflows & Portfolios where they will provide options for that optimal retirement funding strategy. That service is provided for a very reasonable fee.
If you do head to Cashflow & Portfolios, be sure to tell them Cut The Crap Investing sent ya.
OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account savings rates are at 2.0%. You’ll find some higher rates on GICs, recently updated and increased to 3-4%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.
OUR CASHBACK CREDIT CARD
We make between $50 to $70 every month! And that’s on everyday spending. There are no fees with …
Last month we received $75 in cashback cash. We are spending too much, ha.
While I do not accept monies for feature blog posts please click here on the mission and ‘how I might get paid’ disclosures. Affiliate partnerships help me pay the bills for this site. That will allow me to keep this site free of ads and easy to read.