The core ETF portfolios have delivered over the last several years.

It’s easy to build a core ETF portfolio. And Cut The Crap Investing offers portfolio 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 create the most appropriate portfolio that will match your time horizon and risk tolerance level to the appropriate model. The asset allocation portfolios offer a one-ETF solution for global, well-diversified managed ETF portfolios.

sign up with Questrade (a top-ranked discount brokerage) through this partnership link. You can buy ETFs for free!

And of course, ensure that you have done the necessary research or have taken advantage of an advice-only planner.

The core ETF Portfolios

Here are the 4 core ETF models. Keep in mind that these are Canadian Dollar ETFs. You can hold a U.S. Dollar ETF in a U.S. Dollar RRSP or RRIF account to avoid withholding taxes on dividends. You may also be able to file to retrieve U.S. withholding taxes in a non-registered account (taxable). Here is a good withholding tax guide from iShares.

To increase exposure to the U.S. Dollar (a good idea), you might consider a U.S. bond ETF or two. For example, you can own the U.S. bond market with iShares XAGG. That is a Canadian dollar ETF. There are no withholding taxes on the bond income. In the balanced portfolios with bonds, you might split the total bond allocation between XBB and XAGG. As per the ETF Portfolio page you might consider other assets for greater diversification.

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 March of 2015 to the end of March 2024. That is based on the inception date of the ETFs available. The portfolios are rebalanced annually. 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; the world changed in 2020. We moved through a bear market and a period of higher inflation.

The returns of ETF portfolio assets from 2015

Bonds stopped working in 2021 and in 2022 as rates were increased in the attempt to battle inflation. International stocks have been a laggard. My “call” to limit that international exposure has been a good one. For retirees and near-retirees I am a fan of adding some dedicated inflation-fighting assets.

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 and reasons for shaping the portfolio to fit your goals.

The core ETF portfolio returns

Here’s the returns history. The period is from March of 2015 to the end of March 2024. The charts and tables are courtesy of portfoliovisualizer.com. CAGR represents the Compound Annual Growth Rate. Stdev is a measure of volatility. I can only run 3 portfolios on Portfolio Visualizer, so the Balanced Portfolio with more bonds is not shown in the first chart.

Here’s a chart with the more conservative Balanced Portfolio With More Bonds in the mix.

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 has worked.

You will also notice that investors were rewarded for taking on more stocks and more risk.

Also, it is likely not wise to chose a conservative portfolio such as Balanced Portfolio With More Bonds over high interest savings or GICs for a 3-5 year time horizon. But it would be key to use some GICs to lock in the ‘longer dated’ returns.

Check out the GIC rates at EQ Bank. There are terms with rates at 5.0% or higher.

If your time horizon for a pot of money is under 3 years, you should definitely be in cash and GICs or ultra-short bonds.

Looking longer term thanks to Tangerine Portfolios

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.

By looking at the Tangerine Portfolios we can evaluate performance of index-based portfolios through a major stock market correction – the financial crisis that began in 2008.

Keep in mind that the following table is to the end of December 2023. I will update this section when returns are available to the end of March 2024.

This gives us a longer look (from 2008 for the Balanced Models). The Tangerine Equity Growth Portfolio was launched in November 2011, meaning the Equity Growth Portfolio did not start before the recession of 2008. The Tangerine Dividend Portfolio was introduced in November 2016.

From the 2008 time period we moved through the financial crisis when stock markets fell by some 50% or more. The inception period for the Balanced Portfolios (Income, Balanced and Balanced Growth) will include that long bear market. It was a terrible start date for portfolios.

Given the difference in fees compared to the Tangerine Portfolios and the Core ETF Portfolios on Cut The Crap Investing, you can add nearly 1% (annual) to the returns for the Core ETF portfolios vs Tangerine Core ETF portfolios.

USE THIS LINK TO SET UP AN ACCOUNT AT EQ BANK.

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 stocks as they went on sale.

They also launched the Tangerine Global ETF Portfolios in 2021. The fees are the 0.75% range.

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. You will have your dedicated advisor that can also offer financial planning.

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 …

The new balanced ETF portfolio.

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 …

The 7-ETF Portfolio for retirement.

Thanks for reading. Be sure to follow this blog. It might lead to much more favourable wealth creation. Canadians can and should leave their high-fee mutual funds behind.

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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.

I have partnerships with several of the leading Canadian Robo Advisors such as Justwealth, BMO Smartfolio ,Wealthsimple and Questwealth from Questrade.

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 2.5% and 3.0%. You’ll find some higher rates on GICs up to 5.2%. They also offer U.S. dollar accounts. We use EQ Bank, they have been awesome.

OUR CASHBACK CREDIT CARD

We make between $40 to $70 every month! And that’s on everyday spending. There are no fees with …

The Tangerine Cash Back Credit Card

Last month, March 2024, we received $70 in cashback cash.

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.