In my wife’s personal RRSP account she held the Vanguard VDY-T ETF. It had outperformed the TSX Composite by about 1% annual. We can thank the financials overweight for that. The Canadian financials XFN-T and the Canadian banks ZEB-T have a long history of outperformance. In June of 2023 we moved to a Canadian blue chip stock portfolio that I thought would be more retirement-ready. She will likely retire within the next 2-3 years. But it’s possible she will work for another 6-7. All said, it’s best to prepare for the shorter term horizon to manage the risks. She is already in the retirement risk zone. On the Sunday Reads will take a look at that Canadian blue chip portfolio.
Here’s the post that announced the move away from Vanguard’s VDY.
Selling VDY to build a Canadian stock portfolio.
As I have reminded readers for several years, that Canadian blue chips have historically greatly outperformed the TSX Composite. I’m a big fan of core index investing …
What is index investing?
but as we saw in the Canadian essentials portfolio post, the outperformance is considerable.
The stock portfolio advantage in retirement
If history repeats, there is a great advantage to building your own Canadian blue chip stock portfolio. In retirement, it could help boost your spend rate by 1% or more depending on your asset allocation and geographic weighting.
You might get a little bit creative and take advantage of the qualified Canadian dividend tax credit for taxable accounts. The dividends can be quite tax efficient for those with modest income plans. We should not let the lure of tax efficiency drive the bus; risk and greater diversification should be the number one priority. That said, we might shade in more Canadian stocks in the taxable space and in the same vein hold more U.S. stocks in the U.S. Dollar RRSP accounts (where they are more tax efficient). Once again, that Canadian tax efficiency might help you nudge up the retirement spend rate, a bit more.
At Retirement Club for Canadians, we are about to run some models and deliver a presentation on the sweet spot for over-weighting Canadian dividend stocks in taxable accounts. Use the Contact Dale form if you want ‘in on that’.
In 2024, meaningful positions were added to iShares Consumer Staples XST-T and Hamilton’s Enhanced Utility HUTS-T. This shores up the defensive equities allocation. But sure, HUTS’s leverage will increase volatility, modestly.
Joan’s Canadian blue chip portfolio
Here’s the performance of Joan’s Canadian stock portfolio vs the TSX Composite, from January of 2024. It was in early 2024 that we added iShares Consumer Staples XST-T and Hamiltons’ enhanced utilities HUTS-T.
It’s essentially a tie ball game, but with Joan’s portfolio offering less volatility, by design. Of course, we haven’t really been tested from 2023. In 2025, Trump delivered the worst Presidential first quarter since the Nixon era. Canadian stocks offered positive returns, with Joan’s blue chip portfolio outperforming the TSX by 4% vs 0.8%.
Maybe the portfolio is more Trump and tariff war-ready? 😉
Here’s the performance of the individual assets from January of 2024. We can see that Couche-Tard is the only holding that offered a loss.
Here’s the portfolio with HUTS removed, from June of 2023. We now see some slight out performance for the TSX Composite. That suggests that HUTS is a slight drag on portfolio returns. All said, we’re essentially in draw territory on Joan vs TSX. But we’ll take the lower volatility as a sign of potential victory should we hit a true rough patch for markets – or a recession.
The blue chip stock portfolio also holds oil and gas stocks. I evaluate them separately as they are part of the inflation-protection bucket. I put Canadian oil and gas stocks on the table in late 2020. Or about 400% ago as I like to write …
I added Canadian oil and gas stocks, using the big four of CNQ-T, SU-T, IMO-T and TOU.-T The big 4 has a history of beating the energy index with much less volatility. Notice a theme here? All of our accounts hold the big 4 plus other dedicated inflation protection. Oil and gas is up nicely from mid 2023, though has stalled in the last 17 months.
The Canadian Big 4 has bested the oil and gas index XEG-T by about 15% from June of 2023. I continue to chip away at those energy stocks in most accounts.
More defensive equities less bonds
Readers will know that I’m a big fan of defensive equities for retirement. They work in concert with cash / bonds/ gold / bitcoin.
Given that, my wife’s portfolio is quite aggressive by traditional metrics at 90% equities and 10% bonds XBB-T. It was at 15% bonds, but the aggressive move of the equities has moved the portfolio away from its original stock to bond ratio. I will likely keep adding to the staples and pipelines and HUTS-T vs XBB-T. The portfolio is demonstrating better returns and risk return characteristics compared to a balanced global asset allocation ETF – iShares XBAL.
Our retirement accounts run from a range of 10% to 35% bonds and cash. We’re in the area of 60% U.S. to 40% Canadians. There is a sprinkling of International (non U.S.).
More Sunday Reads
And on MoneySense Tony Dong explored the use of private assets in the search of a 30/30/40 balanced portfolio. It’s an alternative 60 / 40 balanced portfolio that would have held up better in 2022, when bonds failed. When bonds fail it’s usually due to high and unexpected inflation. In that environment, inflation-fighting assets are then off to the moon.
Funny enough in the New Balanced Portfolio published in 2019 on this blog, I suggested the Purpose Real Asset ETF PRA-T. While Tony’s expensive and complicated U.S. real asset ETF was up 7% in 2022, the Canadian Dollar PRA-T was up almost 16%. It was up 23.8% in 2021 as the inflation assets sniffed out the looming inflation risks. It was a wonderful inflation hedge.
You can keep it simple folks, even with an all-weather balanced portfolio.
Annuities for retirement
Remember, annuities are your super bonds in retirement.
Pensionize your nest egg with annuities, your super bonds.
This past week at Retirement Club we had a presentation from annuities expert Phil Barker. It was so well received from Retirement Clubbers who attended the Zoom.
Here’s a taste of the comments members typed into the Zoom chat feature at the end of the call.
While not advice, retirees might consider annuities for a modest portion of their fixed income bucket. The Zoom call went over the ‘whys’ and the how to potentially put them to work.
You can contact Phil directly if you have questions or want more details on annuities. You can also ask questions in the comment section of this post. I’ll get you the answer.
And yes, if you’re a self-directed investor who is retired or is preparing to retire, you should join Retirement Club. 🙂
Home ownership costs
At Findependence Hub – the hidden costs of home ownership. And Mark of MyOwnAdvisor is selling his U.S. stocks in favour of XAW and QQQ.
Related Read: Looking for U.S. ETFs
It’s a very good strategy to build a Canadian stock portfolio and cover the rest with XAW-T IMHO. That ETF is global equities, excluding Canada.
At Stocktrades Dan looks at the Canadian telco sector and his favourite stocks. In Joan’s blue chip portfolio we continue to hold Telus and Quebecor – a duo that has provided some nice returns for a (now) challenged low to no-growth sector.
At Tawcan, Bob offers his July dividend and portfolio udpate. Bob has closed out two positions that I hold 😉 Qualcomm QCOM and Pepsi PEP.
Last week in this space, I suggested you may might need to take advantage of the spousal RRSP account. In that post I had offered that I would look into how to make the most of taxable accounts. I need to do more research on that. Stay tuned for that important post.
Tweeting …
Here’s why U.S. stocks keep pushing higher …
And a reminder to stay the course …
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Here’s Canada’s top-performing Robo Advisor, Justwealth. You can get advice, planning and low-fee ETF portfolios all at one shop. You can have it all.
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OUR SAVINGS ACCOUNTS
Make your cash work a lot harder at EQ Bank. RRSP and TFSA account rates are at 1.75%, other savings rates up to 3.0%. You’ll find some higher rates on GICs up to 3.60%. They also offer U.S. dollar accounts at 3.0%. 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 …
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For July we received $43.56 in cash from everyday spending. You can select 3 categories for 2.0% cash back. The rest pays at 0.50%.
That cash went into my TFSA account to help buy some CBIL-T, CHPS-T and VDY-T.
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Make sure you’re doing retirement right. It’s also suitable for those who are approaching retirement. Use Contact Dale if you’d like more info, or to sign up for the next group.
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