I have just updated the returns for the Canadian asset allocation ETFs. The returns over the last year and three years can be described as abnormal returns. So much so that I had to double check the performance for the equity markets that fuelled this incredible run. How did they do it? Over the last 3 years equity markets have delivered average annual returns that are 60% to 100% greater than historical averages. The U.S. has delivered outsized returns over the last 5 years and beyond. In fact, coming out of the financial crisis U.S. equity returns are nothing short of spectacular. We’re looking at abnormal returns on th Sunday Reads.
Here’s the Canadian asset allocation ETF page that shows the returns for the major Canadian asset allocation ETF providers. You’ll also see a ranking by risk level.
And here’s an overview of the assets that drove the returns for the (wonderful) managed all-in-one global ETF portfolios. Also, bonds stopped being a portfolio anchor over the last 3 years as inflation is under control (for now).
U.S. stocks XUS-T
International stocks XEF-T
Canadian stocks XIC-T
Canadian bonds XBB-T
U.S. bonds (in U.S. Dollars) AGG
A look at iShares asset allocation ETFs
Here’s an example of the returns for iShares asset allocation ETFs.
The returns are incredible, especially over the last year and three years. Five year returns are abnormally generous as well.
Here’s an example of the asset allocation and holdings of iShares XGRO, with a target of 80% equities to 20% bonds.
How do your returns stack up?
Everyone should benchmark their personal returns. Of course, if you have an advisor and are invested in high-fee mutual funds your returns are likely waaaaay behind. Remember – Canadians should avoid most mutual funds.
The shift to ETFs and asset allocation ETFs can be a life-changing move. Consider it. High fees are a wealth destroyer. Use the Contact Dale form on this page if you want to know how to make that happen. And if you want low-fee global ETF portfolios, advice and financial planning …
Check out Justwealth, Canada’s top Robo Advisor
If you’re a self-directed investor you should also benchmark (compare) your accounts to the asset allocation ETFs of the same risk level. That is, you will match the equity to bond ratios. If you’re underperforming you can discover why.
Is it your global weightings? Is it your asset selection – for example your Canadian stocks are underperforming the passive Canadian market. Or perhaps you are being too active – buying and selling as you react to market noise and conditions.
You can adjust your portfolio (or behaviour) to fix things up. You might simply move to an asset allocation ETF, or perhaps you’ll build your own ETF portfolio.
ETFs for retirees
The good new is that simple global balanced ETF portfolios work for retirement as well. Check out this 8-minute video on the retirement stage …
And yes, the asset allocation ETFs will work for retirement. You’ll simply match the ETF risk level to the task at hand for each account. And you’ll follow the script put forth after using a retirement cash flow calculator.
That’s the kind of “stuff” we cover at Retirement Club.
Last week on this blog we looked at monthly income ETFs for retirement. Those ETFs use asset allocation ETFs to deliver income at a 4% spend rate and a 6% spend rate.
And given the recent windfall, retirees have the option of de-risking an amount to cash, or to a lower risk portfolio. They can protect some or more of these wonderful gains.
There are so many strategies to consider. But make no mistake the markets and global portfolios have delivered a gift in recent years.
The Sunday Reads
Congrats to Banker on Wheels on their fifth anniversary. Most blogs don’t get past a year. It’s a lot of work, and often for little or no money. It has to start with the mission and passion to help others. I share that, with BOW.
This week Banker posts offer some protection from stagflation and can you get Buffett-like returns without investing in Berkshire Hathaway? I think we’ll stick to investing in Berkshire – our largest holding by a wide margin.
At Findependence Hub, we’re rethinking retirement income.
The Retirement Manifesto suggests that technology will make aging easier. I’d have to agree. This is an interesting idea and one we’ll keep an eye on. And we’ll put forth the benefits of technology for retirees. I’ll open up a space for that topic on Retirement Club.
Dan at Stocktrades looks at Manulife – one of the holdings in my wife’s Canadian stock portfolio. The insurers have been on quite a run, with the financial index XFN-T outperforming Canadian banks ZEB-T in recent years. I hold XFN in my RRSP.
Bob at Tawcan offers the five worst investments that he’s made.
GenYMoney offers up her June portfolio update.
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For June we received $55.13 in cash from everyday spending. You can select 3 categories for 2% cash back. The rest pays at 0.50%.
That cash went into my TFSA account to help buy some CBIL-T
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