Model Portfolios
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If you’re thinking about putting the Couch Potato strategy into practice, here are some sample portfolios you might consider. Once you become more familiar with the Couch Potato strategy and the products available, you can modify them to suit your needs.
You can adjust the proportions in any of these portfolios to suit your risk tolerance. Most of them use a conventional split of 60% equities and 40% fixed income, which is suitable for long-term investors with a moderate risk tolerance. Conservative investors can allocate more to bonds and less to equities, while aggressive investors can do the opposite.
You can build these portfolios yourself with a discount brokerage account. If you need professional help in assembling and maintaining a portfolio, visit the the Find An Advisor page.
NEW! Download up-to-date returns of the Model Portfolios and their underlying ETFs.
1. The Global Couch Potato
This simple portfolio—popularized by MoneySense magazine—gives you exposure to stock markets in all developed countries, as well as a firm foundation of Canadian bonds.
Option 1: Investors with at least $50,000 or so should consider ETFs rather than index mutual funds, especially if they add new money annually rather than monthly. The total annual cost of this portfolio is 0.36%:
| Canadian equity | 20% | iShares S&P/TSX Capped Composite (XIC) | |
| US and international equity | 40% | iShares MSCI World (XWD) | |
| Canadian bonds | 40% | iShares DEX Universe Bond (XBB) | |
Option 2: The cheapest index funds in Canada are TD’s e-Series funds, but these are only available to investors who open an online account with TD Canada Trust, or through a TD Waterhouse discount brokerage account. The total annual cost of this portfolio is 0.43%:
| Canadian equity | 20% | TD Canadian Index – e (TDB900) | |
| US equity | 20% | TD US Index – e (TDB902) | |
| International equity | 20% | TD International Index – e (TDB911) | |
| Canadian bonds | 40% | TD Canadian Bond Index – e (TDB909) | |
Option 3: Those who use other discount brokers can consider this option. The total annual cost of this portfolio is 0.73%:
| Canadian equity | 20% | RBC Canadian Index (RBF556) | |
| US equity | 20% | RBC US Index (RBF557) | |
| International equity | 20% | RBC International Index (RBF559) | |
| Canadian bonds | 40% | TD Canadian Bond Index – I (TDB966) | |
2. The Complete Couch Potato
This portfolio goes beyond the basics to add three additional asset classes (emerging markets, real estate and real-return bonds) while remaining extremely easy to manage. It uses Vanguard ETFs (traded in US dollars on the New York Stock Exchange) for the US and international components.
This portfolio is really all the average investor will ever need. The weighted MER of this portfolio is 0.29%.
| Canadian equity | 20% | iShares S&P/TSX Capped Composite (XIC) | |
| US equity | 15% | Vanguard Total Stock Market (VTI) | |
| International equity | 15% | Vanguard Total International Stock (VXUS) | |
| Real estate investment trusts | 10% | BMO Equal Weight REITs (ZRE) | |
| Real-return bonds | 10% | iShares DEX Real-Return Bond (XRB) | |
| Canadian bonds | 30% | iShares DEX Universe Bond (XBB) | |
3. The Yield-Hungry Couch Potato
This portfolio is designed specifically for investors who are seeking current income rather than long-term growth from their investments. It may be suitable for investors in retirement, although it should be complemented with cash holdings such as GICs.
The individual ETFs in this portfolio were selected for maximum tax-efficiency, but a considerable amount of the income will be fully taxable. For complete information, see the article Building an Income Portfolio With ETFs, originally published in Canadian MoneySaver.
The overall MER of this portfolio is 0.50%:
| Canadian dividend equity |
15% | Claymore S&P/TSX Canadian Dividend (CDZ) | |
| Canadian dividend equity | 15% | iShares DJ Canada Select Dividend (XDV) | |
| Global dividend equity |
10% | Claymore Global Monthly Adv Dividend (CYH) | |
| Real estate investment trusts | 10% | BMO Equal Weight REITs (ZRE) | |
| Preferred shares |
10% | iShares S&P/TSX Preferred Stock (XPF) | |
| Canadian high-yield bonds | 5% | iShares DEX HYBrid Bond (XHB) | |
| US high-yield bonds | 5% | Claymore Advantaged High-Yield Bond (CHB) | |
| Canadian bonds |
30% | Claymore Advantaged Canadian Bond (CAB) | |
4. The Cheapskate’s Couch Potato
Keeping costs low is a primary goal for any Couch Potato, but this portfolio goes a step further and chooses the lowest-cost ETF in each asset class in an effort to keep the annual fees at an absolute minimum.
The weighted MER of this portfolio is just 0.15%:
| Canadian equity | 25% | Horizons S&P/TSX 60 Index ETF (HXT) | |
| US equity | 15% | Vanguard Total Market Stock (VTI) | |
| Europe/Pacific equity | 15% | Vanguard MSCI EAFE (VEA) | |
| Emerging markets equity | 5% | Vanguard MSCI Emerging Markets (VWO) | |
| Corporate bonds | 20% | Claymore 1-5 Yr Laddered Corp Bond (CBO) | |
| Government bonds | 20% | Claymore 1-5 Yr Laddered Gov’t Bond (CLF) | |
5. The Über–Tuber
For something ultra sophisticated, consider this portfolio based on the academic work of Eugene Fama and Kenneth French. The Fama-French research demonstrated that value stocks and small-cap stocks have historically delivered higher returns than the overall market and is the foundation of the funds created by Dimensional Fund Advisors.
This ETF portfolio is based on similar principles. Because it includes so many funds, it may be difficult to manage and is not recommended for inexperienced investors. It is not likely to be efficient for account of less than $200,000.
This portfolio’s overall cost is 0.45%.
| Canadian equity | 15% | Claymore Canadian Fundamental (CRQ) | |
| Canadian small and mid-caps | 5% | iShares S&P/TSX Completion (XMD) | |
| US equity | 10% | PowerShares FTSE RAFI US 1000 (PRF) | |
| US small and mid-caps | 5% | Vanguard Extended Market (VXF) | |
| International equity | 10% | PowerShares FTSE RAFI Developed Markets | |
| ex-US Portfolio (PXF) | |||
| Int’l small and mid-caps | 5% | PowerShares FTSE RAFI Developed Markets | |
| ex-US Small-Mid Portfolio (PDN) | |||
| Emerging markets equity | 5% | Vanguard Emerging Markets (VWO) | |
| Global real estate | 5% | Claymore Global Real Estate (CGR) | |
| Canadian short-term bonds | 30% | iShares DEX Short-Term Bond (XSB) | |
| U.S. corporate bonds | 10% | iShares US IG Corporate Bond (XIG) |
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