It was one of the great mysteries in the Canadian fund market: why had no one created an ETF version of the balanced index mutual fund?
These days you can find ETFs focusing on just about every sub-sector of the market, and a pile of others with active strategies that make particle physics look easy by comparison. Yet until last week, no one offered an index ETF that included a simple mix of global equities and bonds. That’s shocking when you consider the balanced mutual fund is a staple in the industry, with over $766 billion in assets as of December. That’s more than five times the assets held by all Canadian ETFs combined.
That yawning gap has now been filled with the launch of three new ETFs from Vanguard. The new family of asset allocation ETFs are built using seven other ETFs. The Vanguard Conservative ETF Portfolio (VCNS) holds 40% stocks and 60% bonds, while the Vanguard Balanced ETF Portfolio (VBAL) uses the opposite proportion. The most aggressive version, the Vanguard Growth ETF Portfolio (VGRO), is 80% equities. All three ETFs carry a very competitive management fee of just 0.22% (expect the MER, which includes taxes, to come in at about 0.24%).
The reaction to the launch of these new funds was swift and overwhelmingly positive. Indeed, they’re probably the most important new ETFs to be launched in Canada in the last couple of years. So let’s spend some time considering whether they’re right for your portfolio.
What’s under the hood
Each of the new funds is built from four equity and three bond ETFs: the only difference is the proportion allocated to each. You can find the specific breakdown in the ETFs’ marketing brochure.
Let’s look at the equity component first. The underlying holdings include the Vanguard FTSE Canada All Cap (VCN) and Vanguard U.S. Total Market (VUN) for North America. For overseas stocks, the funds hold the Vanguard FTSE Developed All Cap ex North America (VIU) for western Europe, Japan and Australia, and the Vanguard FTSE Emerging Markets All Cap (VEE) for China, Taiwan, India, Brazil and other developing economies. All of these underlying ETFs use plain-vanilla, cap weighted indexes of large, mid and small-cap stocks.
While my model portfolios assign one-third each to Canadian, US, and international equities, the Vanguard ETFs allocate things a bit differently. In all three ETFs, Canadian stocks make up 30% of the equity allocation, while the US gets about 38% and overseas stocks get the other 32%. The international allocation is then subdivided with 77% in developed markets and 23% in emerging.
On the fixed income side, the new ETFs use a mix of Canadian and foreign bonds. About 59% of the fixed income in each fund is allocated to the Vanguard Canadian Aggregate Bond Index ETF (VAB), with another 18% to the Vanguard U.S. Aggregate Bond (VBU), and about 23% to the Vanguard Global ex-U.S. Aggregate Bond (VBG). These latter two funds use currency hedging, which is essential for foreign bonds.
What to make of Vanguard’s decision to include US and global bonds? As I’ve written before, I’m agnostic on this question: since interest rates in foreign countries do not move in lockstep with those in Canada, a global bond allocation might reduce volatility, but the benefit is modest, and if you’re managing your own portfolio it’s not worth juggling three funds. However, if there’s no additional work or cost involved, then it’s probably just fine to include US and global fixed income.
Kudos to Vanguard for sticking to the core asset classes in these funds, for using traditional cap-weighted indexes, and for setting a long-term asset mix that won’t change based on economic forecasts. They could have tossed in their new factor-based ETFs, or dividend-focused funds, or given the manager a wide berth to tweak the allocations, but they didn’t. That was a wise choice, because trying to improve on this simple model is, in my opinion, one of the knocks against many robo-advisors, who can’t resist adding unnecessary asset classes that sound sophisticated but do little more than pile on cost and complexity.
The appeal of one-fund portfolios
A couple of years ago, my model ETF portfolio evolved to includes just three funds instead of five, as the launch of new “ex-Canada” equity ETFs allowed investors to get US, international and emerging markets in a single fund. These new Vanguard asset allocation ETFs makes life even simpler by rolling the whole portfolio into a single fund. That should reduce the number of trades you need to make, and remove the need to rebalance. (The fund literature is not specific about how often this will occur.)
There are other advantages to a one-fund solution as well. When your portfolio includes a different fund for each asset class, it’s easy to dwell on the individual parts rather than the whole. (“My portfolio returned 8% last year, but Canadian stocks didn’t do as well as international. Maybe this year I should put less in Canada.”) With a one-fund portfolio, you’re less likely to fall prey to these distractions and stay focused on the long term.
The new Vanguard ETFs are also much cheaper than other one-stop solutions, such as the Tangerine Investment Funds and robo-advisors. The obvious disadvantage of ETFs is that you usually pay a commission to buy and sell them, whereas index mutual funds and most robo-advisors don’t have trading costs. But if you’re now able to use only one ETF per account, you may still come out ahead even if you’re paying $10 per trade.
Consider the Tangerine funds, which are simple, convenient and well diversified, but carry a relatively high fee of 1.07%. A $50,000 holding in one of the Tangerine funds would carry an annual fee of $535. If we tack on a couple of basis points for taxes, the new Vanguard ETFs should have an MER of about 0.24%, giving that $50,000 holding an annual fee of just $120. Even if you spend another $10 per month on commissions your all-in cost would still be less than half as much as the Tangerine option.
The new balanced ETFs offer a similar cost advantage over robo-advisors, most of whom add an additional 0.50% fee to the cost of the underlying ETFs. One of the primary advantages of robo-advisors over do-it-yourself options is the automatic rebalancing, but now that this feature is built in to the Vanguard ETFs, the value offered by a robo-advisor is somewhat less than it used to be.
Not so fast
Since the ETFs were announced on February 1, my inbox has been bursting with emails from readers who want to know whether these funds have revolutionizing index investing in Canada. Many seem to think virtually every other option—Tangerine, the TD e-Series funds, robo-advisors, and even portfolios of individual ETFs—have become obsolete overnight.
Now there’s no doubt the Vanguard asset allocation ETFs will have broad appeal for investors who want to keep things simple without paying more for convenience. But before you liquidate your portfolio and go all-in with a brand new ETF, make sure you consider the big picture.
One of the key benefits of mutual fund options such as Tangerine and TD’s e-Series is that they allow you to set up pre-authorized contributions, and these get invested automatically. (This is also true for robo-advisors, though they use ETFs rather than mutual funds.) Don’t underestimate the importance of disciplined savings and systematic investing. If you use an asset allocation ETF instead, you’ll need to make a trade every time you add money to your accounts. Even with a one-fund portfolio, you can easily fall into the trap of wondering whether this is the “right time” to buy.
The point here is that if you are successfully using one of these other options and you’re not enthusiastic about buying ETFs, don’t feel pressured to switch.
And while a one-ETF solution is a great choice for investors who hold all of their investments in TFSAs and RRSPs, those with larger portfolios may want more flexibility. If you have a large non-registered account as well, you may want to consider using individual ETFs for each asset class for more tax-efficiency.
These new Vanguard asset allocation ETFs are a welcome addition to the marketplace, and if you’re looking for an easy way to get started with ETFs, you just found it. But always remember that investing is about process, not products. Cheap and easy solutions certainly help, but in the end it’s up to you to stay focused on saving, investing with discipline, and tuning out the noise.
@Jon: If your investing through TD Direct (and can therefore hold e-Series funds and ETFs in the same accounts) then I think this hybrid approach can work with a larger portfolio. But it is not worth it for $15K. Assuming the ETF is about 0.25% cheaper than your e-Series portfolio, your MER savings would amount to $37.50 annually, and at least $10 of that would be lost with one annual trading commission. I’m not sure I would do that for such a small amount of savings.
I have a response that probably betrays how little I know about executing trades efficiently.
I have my daughter’s RESP in iShares’ CBN, through Questrade,with no “buy” fees, so I don’t have to pay $10 every time I make a $300 monthly RESP contribution. I have also been seeking to replicate a globally-balanced portfolio in my own significantly larger RSP and LIRA accounts but have too many ETFs, making rebalancing a pain – and VGRO looks like the least complicated answer in both cases. What’s wrong with CBN? Not much that I can see but its fees are higher than VGRO and its holdings more complicated.
So I would like to sell up other holdings and move in to VGRO. But when I look to sell the CBN, the bid-ask spread is a whopping 4% or thereabouts, so the cost would eclipse several years’ worth of savings on management fees. My question is whether there is a way to minimize the selling and acquisition cost incurred by the spread when moving between relatively lightly-held ETFs like CBN and VGRO?
I’m a newer investor and looking to start getting serious about investing. I have about $6000 in TFSA and RRSPs between my wife and I in London Life Quadrus Mutual Funds. I was thinking about switching to Questrade and just using the VGRO and maybe purchasing a little bit of stocks. Would it be much of a hassle to do regular deposits and continue to buy the ETF as I go? Questrade has pre-authorized deposits, but would I be dinged anything by manually buying the ETF?
Thanks!
@Karl: It’s hard to imagine a bid-ask spread that wide. Even a spread of 5 cents is only about 0.25% (which is still pretty large). Could your Questrade quotes be inaccurate? In any case, the spread is that high, you would be getting dinged every month when making new purchases: an even better reason to avoid CBN.
CBN was the best available balanced ETF in its day, but the Vanguard options are cheaper and cleaner (i.e. fewer exotic asset classes).
I have quickly scanned the other replies (wow – lots of replies!) – and I have not seen the following mentioned, but if it has been mentioned I apologize.
It seems to me there is a way to lower the fee even more – everyone should use VGRO and forget about the other two funds.
You can use laddered GIC’s (or individual bonds if you like) along with VGRO – to lower the overall fee.
For instance, If you want 40% stocks, put half of your money in VGRO and half in laddered GIC’s – you have just cut the MER in half to .11%
If you want 60% stocks, put 75% of your monty in VGRO and 25% in laddered GICs – you have cut the MER to .165%
If you want 20% stocks, put 25% of your money in VGRO and 75% in laddered GIC’s – you have cut the MER to .055%
I know it is NOT exactly a one fund solution, but it does bring the overall MER way down, depending on how much money you want in stocks.
@Jim: This is fine as far as it goes, but it does defeat the purpose of a one-fund solution. You also have very limited opportunity to rebalance, because you cannot sell the GICs to purchase equities if necessary.
If your money is non-registered, why invest in GICs when high-interest savings accounts exist? You won’t get more than the 2.3% that EQ Bank gives unless you go very long, and it is 100% liquid.
I agree with Jim that coupling VGRO with a H/I savings account or GICs(in registered accounts) is a great way to tailor your asset allocation. You could still rebalance manually since Vanguard doesn’t offer, for example, a 70/30 stock/bond allocation.
TD eseries funds does not have any fund covering emerging markets. How do add emerging markets in my TD eseries portfolio? Or any low cost emerging markets mutual fund.
@Aslam: The basic recommended Couch Potato of Equities portion subdivision at approximately 1/3 Canadian, 1/3 US and 1/3 Rest of World will get us so close to ideal basic mix with which to balance with your Bond portion that further splitting the Rest of World portion into 1/4 Emerging Markets and 3/4 Developed Markets will make only a trivial difference, if that, to most small to average sized portfolios, not to mention the additional hassle and cost, unless you are getting it in passing “for free”, as it were, and without any hassle overhead as in VGRO and the other Vanguard one-fund ETFs above.
Really, I’m amazed at how far we have come in only a few years with everything we could ask for now available in low cost, well diversified index mutual funds and now well thought out single fund ETFs as in this post.
It really throws the ball back in our court, for the individual investor to really put all the essential focus on deciding long and hard on what we can live with as far as long term risk, and our projected investment objectives, to design our own individualized optimum asset allocation mix. Which is ideally how it should be.
what about the taxes? does VGRO charge US witholding tax in an RRSP?
Hey Dan,
On February 12, 11:41 you made a comment that you can have the vanguard ETF in your registered accounts (let’s take VGRO for example). So in my case, I want to hold VGRO in my TFSA, LIRA and RRSP, (which I currently do). You stated that you could then turn to non-registered accounts and do all of the rebalancing there by adding Canadian Equity, ex-canada equity(such as XAW) and a tax-efficient bond ETF. Now, would I simply keep the VGRO ETF in all registered accounts, and simply purchase more bonds in the non registered account as I age, keeping up with the Age-20 rule for bonds? Would there ever be a point that I would want to sell my VGRO in my Registered accounts and switch them to VBAL or VCNS, and simply balance the non-registered allocation to match VBAL or VCNS when the time comes to switch from VGRO? or would I always keep VGRO and simply go heavier on tax efficient bonds and reduce XAW and canadian equities in the non-reg account?
Vanguard website says to setup DRIP with these ETFs “simply tell your financial advisor, broker, dealer or other financial institution before the ETF’s distribution record date”. I do my trading with TD Web broker, while I am ordering these ETFs, I didn’t see an option to set up DRIP, so I called them to setup DRIP in my RRSP account for VGRO they have no clue how set up this with vanguard. Any ideas how that can be achieved? appreciate your help on this.
@Ram: All brokerages have different policies regarding which ETFs are eligible for DRIPs. It’s not surprising that a brand-new ETF is not yet eligible, but it’s likely it will be in the future.
https://www.td.com/ca/products-services/investing/td-direct-investing/investment-types/investment-plans.jsp
Thanks for info Dan. I will check with them at a later time. appreciate your time and advise.
Does the MER on these funds stack? Do you pay an MER on the fund you hold, and then the underlying funds also charge an MER to holding fund?
I’m not sure if I articulated that very well, I hope you can grok what I’m asking there.
@Tom: There is no double-dipping on the MERs in funds like this.
Could anyone advise on my situation above? Thanks!
David
Would also love advice on my situation above :)
@Michael and David: It’s always hard to give advice to individuals because there are so many details to consider/
Michael, you’re looking so far into the future that it’s not useful to try to plot out how your portfolio will evolve. These are bridges you can cross when you come to them.
In general, David, it sounds like your portfolio is too small to make ETFs worthwhile, even if you are not paying commissions at Questrade.
Thanks for the response. My portfolio would be very small. I guess it would make more sense to just use a RoboAdvisor for now and then buy the odd stock? Just would rather have all my stuff at one place, but looks like Questrade charges a bit more for that. I still feel it makes sense to get out of paying a 3% MER from a mutual fund though.
Looking at beginning to use quest trade and buying into VGRO. I plan on doing long term investing (I am only 22 at the moment) would like to initially put in $1000. And then add 250 bi weekly or 500 monthly.
Am I going to be charged 10 dollars every time I make an order?
I think if that we’re the case the point of this would be gone. Just need a little explanation on the associated fees with buying this new all in one solution.
Thanks
Hello Dan,
You don’t recommend holding those ETFs in non-registered accounts because of the fixed income component.
But if I want to have a balanced portfolio in a non-registered account, would it be a good choice? My non-registered accounts hold 80% of my nest egg, currently using a single a Mawer Tax-Effective balanced fund.
I was thinking about building a new portfolio, so that I can later use those new funds and not trigger capital gains on my current holdings.
Hello Dan,
As always thank you for being the best source of investment information for me since I started investing a year ago :).
I am currently holding around 12k$ worth of e-series, but I have come across the Vanguard fund and the fact that QuestTrade do not charge comission to buy ETFs.
Is it worth it at this stage for me to buy that ETF through TD if I plan on adding 1,200$/month (and paying 120$ in comission each year)?
Or is is better to use QuestTrade to avoid the comission?
Or should I just stay with e-series and wait to grow my portfolio to 50k$ before switching?
Thanks a lot and thanks again for all your work that helps us all :)
Best,
Claire
@Lucas
Questrade CURRENTLY offers no-fee purchases of ETFs. Since the above funds are ETFs, you can purchase them for no fee in a Questrade account. (You’ll actually pay a few cents worth of exchange fees that Questrade passes thru…but it is literally pennies so not worth discussing)
I highlighted the word currently because you should be aware that this is a market offer like anything else….meaning Questrade could decide one day to no longer offer this. Just something to be aware of.
Btw good on you for starting at 22. You’ll be very happy about this later. It took me till about 29 to get organized and onto index investing….I wish I’d done it 7yrs earlier! Keep going!
@John Smith: The tax-inefficiency of the Vanguard asset allocation funds is what it is. If you are in a low tax bracket, then it may not be much of a concern for you, but if you are in a high tax bracket then you’re definitively paying a cost for the convenience of using them in a non-registered account.
@Claire: There’s no right or wrong answer here: it depends on what you’re willing to pay and whether you want to go through the exercise of switching to Questrade. Paying $10 on a $1,200 trade is not unreasonable if you don’t want to switch brokerages. But for now I suggest deferring this decision until your portfolio is larger. The e-Series funds have many advantages over ETFs in smaller portfolios, so don’t be in too a big a hurry to switch.
Claire, you could also do what I plan on doing. Invest in eSeries in accounts that you will deposit too regularly throughout the year, and then simply sell your eSeries funds and purchase the Vanguard ETF at the end of the year.
Dear Mr. Dan,
Thank you for making the world of index investing understandable & simple for the average Canadian.
Do you foresee the Vanguard One-Fund solutions becoming the recommended CCP portfolio?
Sincerely,
Junior
@CCP:
“The e-Series funds have many advantages over ETFs in smaller portfolios,…”
Apart from the convenience of inertia, i.e. not changing an established set-up, which would certainly be a simple alternative, could you elaborate please?
Dear all,
I’m new to self-directed investing… I have a broker account recently setup with TD Direct Investing, TFSA and this would be my point of trades with about $6K in my TFSA account. I wanted to ask this gracious community if there is a set defined amount that works better to start off with investing in ETFs?
Without stating the obvious, having more zero’s at the end will return larger sums, but will it be a pivotal factor if I start off with $6K versus $15K?
Also what are your recommendations in terms of ETFs, because I have the following list of ETFS, that I was hoping to buy now and continue to buy more of it using the dollar-cost averaging approach, on a biweekly or monthly basis.
VOO
VCN
ZAG
XAW
VGRO
VIU
VUN
VEU
KWEB
ARKW
Can I invest in TD eSeries funds (as per couch potato recommendations: https://canadiancouchpotato.com/wp-content/uploads/2018/01/CCP-Model-Portfolios-TD-e-Series-2017.pdf) through the same broker registered account I have setup with TD, or is it better to open up an entirely new TFSA account designated only for TD eSeries Funds? Wondering if using the same TFSA account has any advantages or disadvantages to it?
Thank you all in advance!
Do you recommend the VCNS for portion of the savings ($20k) for retired senior couple?
Thanks in advance,
@Karl
@Canadian Couch Potato
I was interested in investing in VGRO and noticed the comments regarding the bid-ask spread from Karl. You said a spread of 0.25% was large. I just checked Questrade VGRO today and bid 24.20 and ask 25.20. The seems large. Could you please comment to help me understand why spreads might be small or large, who profits from large spreads, and how that plays into eating your profits when investing over the long-term?
Much appreciated – Perry
Perry: The bid-ask spread on an ETF with a price of $24 or so should be about two cents, maybe three. Under no circumstances should it be $1, as you saw today. My guess, however, is that Questrade was just supplying inaccurate data: I doubt the spread was anything close to that. There was one day in early February where there were some bizarre pricing anomalies with the Vanguard asset allocation ETFs, but these were very short-lived.
As for who profits from large spreads, it’s generally the market makers, who are the institutional traders who operate behind the scenes and ensure that there are always several thousand shares available on the exchange for buyers and sellers. As long as the spreads are only a couple of cents and you’re not trading too much, the spreads are not a significant cost. But if they really were a $1 on a $24 share, they would be devastating. I generally assume your cost is about half of the spread (because the person on the other side also shares in the cost). So in this case you would be paying about 50 cents per share in transaction costs, or about $20 on a $1,000 trade (2%).
https://canadiancouchpotato.com/2013/11/20/the-hidden-cost-of-bid-ask-spreads/
It’s pretty good from what I read but I use the E series index funds due to automation and I contribute small weekly amounts. I was on vacation last month and didn’t have to worry about purchasing, depositing, everything just was done automatically. Just have to re balance once a year. But my portfolio is under 50,000 so I guess once it gets bigger the cost savings will out way the convenience…. Thanks for the Article Dan
Just to further clarify Perry’s bid-ask spread issue, a quick look at the VGRO right now shows a bid of $24.77 and ask of $24.80, i.e. a spread of 3 cents, just as CCP said. No idea why Questrade got it wrong, but it was wrong, big-time.
Hi, Dan. I have a question on bond funds. In this rising rate environment, yields are going up and the price decreases should eventually be offset by higher yields. For new purchases of bond funds, this is obvious, since you are buying at lower prices for the same coupon yields.
However, for existing holdings, you are not benefiting from higher rates unless the distributions increase, correct? If you look at XBB, the distributions have actually decreased over the last two months. Therefore, existing holders have not benefited from higher rates. They are losing principal as well as interest distributions. What am I missing here?
Hi Dan,
I have a couch potato portfolio consisting of Vanguard ETFs, and I am coming up to doing my annual re-balancing. I like the look of these new ‘balanced’ fund options they are offering and have decided to put new contributions for RRSP and TFSAs into these to start simplifying my many different holdings, but I am not ready to sell off the existing holdings lock stock and barrel just yet to switch everything over.
To do my annual re-balancing I have been using your and Justin’s multi account spreadsheet I obtained from this website years ago and it is getting unwieldy for sure. I do this when I have new cash contributions to add or transferring in assets from another institution (like maturing GICs) once a year.
How would you recommend I account for the equity/income split in the new deposits into one of these funds when calculating my holdings vs. targets. My first thought is if the fund is 80% equity 20% income, divide it that way, then subdivide the equity by Cdn, US and Global into the fund’s stated targets?
I hate math and this is getting to be quite the job each year. Any suggestions?
Dear Dan,
For a 26K RRSP portfolio, with no monthly contributions, wouldn’t VGRO be far superior to Tangerine’s Balanced Growth Fund given its substantially lower MER? Thank you!
I want to help my dad out, they have a small amount that was transferred to an RRSP in cash and I was thinking of telling them to put the $35k into the VBAL fund. He’s 60, just retired with pension, and can likely let this grow for 10 years. Anyone see any reason this is not a good idea? They are looking for me to make a decision for them as they aren’t educated in the subject. Thanks for the input.
Hi Dan,
I’m trying to get a 70/30 asset split in my RRSP. Does it make sense to buy 50% VGRO and 50% VBA? Yes it’s not a one fund solution…but it does still perform the asset re-balancing and hide the ups/down of various classes from me. I have an account with Questrade so purchases are ETF purchases free and 30 years away from retirement. Thanks!
Hi Dan,
I wonder if any of these 3 one-fund-solution generates dividends? I do not see any dividend history of it since their releases.
If not, how does Vanguard use the underlining dividends? Would that be a better choice for investors who are competent to rebalance their portfolio to use your CCP model?
Thanks,
Ash
What are the dividend yields for these ETFs?
@Doc and Ash: There is no dividend info on these funds because they are only a few weeks old and have not yet paid any dividends. They will distribute the same amount of dividends and bond interest as their underlying holdings.
The most convenient way to manage these dividends within a TFSA or RRSP (as has been explained in the archives of this blogsite) is to request your account management to apply a DRIP (Dividend Re-Investment Plan) for the ETF shares. Just set it up once and it will go on forever (if you want, and why not), collecting the dribs and drabs of your dividends as they come in, and automatically purchasing new shares of the VGRO, VBAL or whatever, whenever the amount accumulates enough to to buy one or more units. It should be free, and no fuss.
Of course, in a non-registered account it would complicate the continuous calculation of Asset Cost Base, but then, this would be the case anyway, DRIP or no DRIP.
Hi Dan, I just listened to the new Podcast regarding these funds. I’m 44 and retired and own my own home. I have a sizable portfolio in my self managed CIBC Investor’s Edge RRSP, LIRA, TFSA and non-registered. I’m considering using only VBAL, but the tax inefficiency you mentioned has me concerned. My question is, would the tax inefficiency of VBAL be mitigated by the fact that I live on only about $11000 per year? My unregistered account has about $230k in it.
@Ray: Yes, I think it is fair to say that if you are in the lowest tax bracket then the tax-inefficiency of a non-resgietred account is not a concern. If your income is $11K, then you probably pay zero tax.
@Mike: If you’re going to use two funds anyway it would be cheaper to combine VGRO with a bond ETF to get to your target asset mix. Either way you would have to occasionally rebalance the two ETFs.
@Nick: This is the classic question of cost versus convenience. On a $26K portfolio, the MER savings would be about $200 annually. However, you would have to be comfortable with all of the steps necessary to open a brokerage account and buying ETFs.
@HeidiPG: This is another question of cost versus convenience. The complex portfolio you’re contemplating (a combination of individual components ad the new Vanguard ETFs) will be complicated to manage. You would have to create a custom spreadsheet to help. If you’re not comfortable with that, then using only one of the new Vanguard ETFs would solve the problem.
@GregJP: It sounds like you have the theory correct. Don’t be misled by two months’ worth of distribution from a single ETF. It takes time for rising interest rates to translate into higher coupons in large funds. Certainly we have seen the yield to maturity of bond ETFs ticking up over the last year or so, and these are the best indicator of the future return of a bond fund.
Also, be careful not to fall into the trap of making a distinction between existing and new holders of an investment. If Jill holds 1,000 shares of a bond ETF she bought five years ago and Jack buys 1,000 shares today, their returns going forward must be exactly the same. So there can never be a time (ignoring personal tax situations) when one could say “it’s good time to hold this fund, but not a good time to buy new shares,” or vice versa.
Hi Dan,
I’m pretty new to investing and these one-fund solutions seem to be just what I am looking for. I just put in 10K in my TFSA all in VGRO last week and plan to continue buying VGRO regularly. I will probably have another 20K or so to put into investments in the next few months but I am not sure how to split the investment between my TFSA and my son’s RESP (which i have yet to open). He is 2 right now. I definitely want to maximize the free money from the government, but beyond that is there any benefit in putting the money into the TFSA vs the RESP first? Also, at what point should i start to lower the equity percentage to reduce risk in the RESP? Thanks!