With 2015 now in the books, it’s time to look back on the year that was.
It was another year of surprises: after the gurus continued to predict higher interest rates, the Bank of Canada shocked almost everyone by lowering the overnight rate twice in 2015: first in January, and then again in July. That spelled another year for higher-than-expected bond returns. And while it was a disappointing year for equities in almost all regions, the plummeting Canadian dollar caused the value of foreign equities to soar.
All in all, a diversified portfolio did quite well in the “year when nothing worked.” Yet another reminder of why it is so important to hold all of the major asset classes all the time and ignore the noise. Let’s look at the details.
The building blocks
Here are the returns of the individual TD e-Series funds and Vanguard ETFs that are the building blocks for Options 2 and 3 of my model portfolios:
TD Canadian Bond Index – e (TDB909) | 3.07% |
TD Canadian Index – e (TDB900) | -8.51% |
TD US Index – e (TDB902) | 20.74% |
TD International Index – e (TDB911)
Source: TD Canada Trust |
18.90% |
Vanguard Canadian Aggregate Bond (VAB) | 3.48% |
Vanguard FTSE Canada All Cap (VCN) | -8.74% |
Vanguard FTSE Global All Cap ex Canada (VXC)
Source: Vanguard Canada |
17.04% |
Now let’s put these blocks together and see how the model portfolios performed. At the beginning of 2015, I expanded the TD e-Series and ETF models to include five different asset mixes, ranging from Conservative (30% stocks, 70% bonds) to Aggressive (90% stocks). Here are the returns for each version:
TD e-Series funds
Conservative | Cautious | Balanced | Assertive | Aggressive |
30% equities | 45% equities | 60% equities | 75% equities | 90% equities |
5.26% | 6.36% | 7.45% | 8.55% | 9.65% |
Vanguard ETFs
Conservative | Cautious | Balanced | Assertive | Aggressive |
30% equities | 45% equities | 60% equities | 75% equities | 90% equities |
4.97% | 5.72% | 6.46% | 7.21% | 7.95% |
Why the differences?
The first question that leaps out from these numbers is why the TD e-Series portfolios outperformed the ETFs across the board. After all, the e-Series funds carry management fees that are roughly 0.30% higher. There are two main reasons:
Different Canadian equity indexes. Vanguard’s VCN and its TD e-Series counterpart both track the broad Canadian market, hold roughly the same number of stocks, and use a traditional cap-weighted strategy. However, their index benchmarks are different: Vanguard’s ETF tracks the FTSE Canada All Cap Index, while the e-Series fund tracks the S&P/TSX Capped Composite.
The indexes have slightly different rules governing which companies are included and the weight assigned to each. As a result, from year to year their relative performance will vary slightly and randomly. This year the S&P index won out. Over the long term, these differences have tended to even out.
The ETF portfolios include emerging markets. The ETF portfolios get their foreign equity exposure from Vanguard’s VXC, which holds roughly 10% in emerging markets. This asset class was essentially flat in 2015: returns were a little above or below 0%, depending which index you tracked. The TD International Index Fund includes only developed markets, which performed much better on the year.
Again, this is simply a random result that worked in favour of the TD funds this year. Over the long term, adding emerging markets to a diversified portfolio should be expected to boost its expected return, though it may also increase volatility.
@Shaun
Yes I see your points, however I look at the fund as a whole and I have made more money (net of fees) holding this fund than I would have with the 60/40 CP model portfolio over the last decade. But I do think you are on to something….all of those now millionaires who invested in Warren Buffett’s partnership should have realized there was little room for skill.
@Shaun
I know all about Miller. Hey, it is what it is. I am simply happy with my Mawer Balanced. If at some point in the future it starts to underperform significantly over a period of a year or two, then I may consider making some changes. In the meantime, I am comfortable with its performance over the last number of years so at this stage, it is a good fit for me. Also, it has actually done very well since it’s inception in 1988, so it has a 30 year track record of very strong returns and conservative management. 30 years. Hard to beat that. Thus I will take my chances. And please also remember, I own Index funds as well. There is nothing wrong with owning both. It does not always have to be just Index funds or just mutual funds. In the end, it is my hard earned money, and for me, owning Mawer Balanced and some Index funds works, and that is all that matters.
I think if you want to index it’s best to just buy the Tangerine product of your choice based on your asset allocation. In the long term the biggest cost is not the MER but sticking to your asset allocation and adjusting back to you set allocation Human nature is to always buy high and sell low. Only the strictest person will stick with it. The Tangerine product is a no brainer and worth the 1% or so MER.
As for the Mawer balanced fund. I own it, again for the same reasons as above. Human nature is against you.
I think some of the readers arguing for or against Mawer’s balanced fund should read this earlier post from Dan:
https://canadiancouchpotato.com/2011/06/27/cant-we-all-just-get-along/
If you want a low cost balanced 60/40 portfolio with minimal maintenance and you are wondering between Mawer’s balanced fund and and a balanced index fund like Tangerine’s, either one should allows you to reach your financial goals.
If you want to manage a portfolio with individual ETFs, than you good for you. But many novice investors would be well served with a low cost low maintenance balanced portfolio.
@ Glen
First off I truly do wish you all the best. I don’t mean to come across as an adversary. I am only providing my perspective as food for thought.
Having said that one of your last comments raised a flag for me. Even if they do manage to outperform over the next 15 years, it is almost a guarantee that there will be years of reasonably substantial underperformance along the way. Planning to sell when they do dip is a sure way to lose. Many studies have shown that this is what the masses do over and over with billions flowing from last year’s dogs to stars. The result is that on average actual investor returns are about 2% less than the reported returns of the funds they own.
If you truly believe in Mawer’s approach, which may very well be a good call, then I think a prudent way to incorporate it would be to treat it as an asset class with a target % and rebalance annually as per the regular CCP approach and stick with it forever. This way you still sell relatively high and buy relatively low.
You may also find this Morningstar article interesting. It is an interview with Martin Ferguson, the award winning manager of the Mawer New Canada fund.
http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?culture=en-CA&id=63265
As someone pointed out above, Mawer closed the New Canada fund so it is no longer available to the public. Ferguson explains “We continued to grow to a point where we said we can’t take on any more money because it just gets incrementally hard with each additional dollar brought into the mandate to do the best that we can for clients.” They closed the A series fund to the public in 2005 when the total assets were around $270M. But Mawer New Canada is still available through the balanced fund and the institutional O series is also still selling. So despite being closed it has grown to $1.2B under management today.
The New Canada fund is not alone and most of the Mawer funds including the Balanced fund have increased their assets under management by more than 5 times. How well Mawer handles this rapidly increasing burden is yet to be seen.
Best of luck to you.
@shaun
It is funny. When I wrote that I may adjust course if Mawer under-performs for a few years, I said in my mind that I left the door open for you to jump on that. And you did. Good for you! Haha. To be more clear, as Mawer Balanced, in the end, is a very conservative instrument, if it does under-perform, I do not expect it to under-perform by a huge margin. That is the nature of its management. By contrast, you can look at some Dynamic funds, for example. They can be number 1 for a year or two and then with a market shift, they can suddenly drop to 99% percentile. Such is the nature of some of their focused, high growth, “shoot for the stars” funds. Mawer Balanced, while not perfect, does have a very conservative nature. Its performance does not swing dramatically within short time periods (one reason for this is its very low turnover). So, as I mentioned before, if it does start to under-perform I do not expect it to suddenly under-perform by a substantial amount that will “spook” me into making any changes anyway. I could see it under-performing the Index for a year or two by a few %. Again, that is fine with me and I will stay the course. I think that Mawer Balanced, in conjunction with a proper Index fund portfolio mix as described by Dan, is the perfect portfolio for some. The Index funds get you the market and Mawer Balanced gives you a shot of beating that market by a hair once in a while or quite often. Cheers.
I sympathize with all do-it-yourself investors that must be going crazy over the last two weeks with all that’s happening. Hope they can all ride it out.
Thanks for the numbers, Dan! Always surprised by the number of comments here from folks who don’t actually apply the Couch Potato plan as their investment strategy and those who say they do yet always want to tinker with it. (When it’s been proven the more tinkering you do in your portfolio, the more you’ll fail.) Resisting the urge to “do nothing” still seems to be the biggest challenge for DIY investors. Everyone (even those who should know better) always want to change their asset allocation towards things that are doing well recently–many people I’ve spoken with online who were adamant about 90-100% equities last year are already changing their so-called “investment plan” to include more bonds this year. Exactly the backwards way to go about things.
Anyway, I’ve staunchly been doing the “Balanced” CCP for almost 4 years now and I’ve very happy with it and the simplicity. Funny thing is, when I began in 2012, TD told me my 60/40 was “too aggressive”, last year they told me it was “way too conservative”. I wonder if we’ll be back to “too aggressive” if equities don’t do well this year? I just ignore them and rebalance in January and July.
Hi all, I’m trying to match the total return performance percentage numbers published on Vanguard’s site for the ETF VCN to what is in my brokerage statement. I have no purchases in the period in question other than automatic reinvestment of the fund dividend so it seems like my returns to should match very closely to what Vanguard publishes (like to within 10 basis points). Does anyone know exactly how Vanguard calculates its posted return figures?
I have already made the adjustment to use NAV instead of market price unit values but there is still no match.
Does Vanguard calculate from Dec. 31, 2014 end of day to Dec. 31, 2015 end of day, or go from Jan. 1 2015 end of day to Dec. 31 2015 end of day? Also, do they consider the dividend included in their return figures as of the Record Date (which is in the Q4 2015 return period) or the payable date, which would make the Q4 2015 dividend actually show up in their to-be-posted Q1 2016 return figures?
I recognize this site is not Vanguard :) but maybe someone has already reverse-engineered their exact calculation for published return figures.
Regards,
Tim
Hi Dan,
For a long-term Canadian investor, is there any reason to hold aggregate bond funds instead of ZFL (BMO’s Long Federal Bond Index ETF)? My reasoning is that with a 3.5% yield, it’s one of the highest among “safe” funds. As for the duration risk (ZFL has a duration of 15 years), any significant uptick in long-term rates or inflation should correspond to a rise in oil prices and therefore energy stocks and the TSX in general. The corresponding stock gain should compensate for capital losses from ZFL. Furthermore, the corporate bonds present in aggregate indexes are often positively correlated to equities. Why not just hold ZFL and stock ETFs?
Hi Dan – thanks as always, for the work you put into such an informative site!
While I know you can’t give individual advice, I am skewing to making everything in my life as simple as possible.
I currently hold a “former” portfolio through BMO Investorline composed of weightings of:
ZRE; XRB; XIC; VAB; VT:US
It’s time for my annual review, and I’d like to change to the 3 Vanguard ETFs in your model portfolio: VAB (have), VCN, VXC to make my portfolio even simpler to manage.
Does this make sense? Is the trading cost worth the ongoing simplicity?
Thanks again for your site/insights – they have certainly helped me!
@Tim: Vanguard calculates total returns from December 31, 2014 to December 31, 2015. Unfortunately, your brokerage account will show a January 2015 distribution that is not included in Vanguards returns, and won’t show a December 2015 distribution that will appear on your January 2016 statement. This can cause a small difference. Vanguard assumes that the distributions are reinvested at no cost, probably at the closing price (NAV, market) of the distribution record date.
A simple calculation of end-of-year price (or NAV) plus distributions minus capital gains divided by starting price usually comes pretty close. Here’s the NAV calculation for 2015:
approximate_return = (26.1297 + 0.16415 + 0.19867 + 0.17824 + 0.15458 – 0.05437) / 29.3441 = -8.77%
The official 2015 NAV return is -8.74%.
So when you see most performance returns, they include all dividends re-invested ?
@John r: Yes, all published fund returns assume reinvested dividends and interest.
@Kris: If you are planning to rebalance your portfolio anyway it probably is a good time to simplify my moving to a smaller number of funds. It should only be a couple of trading commissions (assuming these are registered accounts and you won’t trigger capital gains taxes) and going forward you’ll be making fewer trades, so there’s a long-term benefit.
@AR: Long-term bonds are much more volatile than the broad market, and their risk-reward trade-off is not favorable: the yield to maturity on ZLF is just 2%, only a touch higher than a broad-based fund with a much higher duration. (The yield to maturity matters far more than the distribution yield.)
Here’s a question. I have recieved a pension buy out and a lump sum of cash to invest (over 100k). I plan to retire in about 5 years so my question is; in this market when should I buy in? Is now a good time or should I wait some more? I know its impossible to identify a market bottom but I’m worried about buying in and having my equities drop 10-15%.
Hi Dan, If it was you and you were sitting on some cash, would you invest in the Vanguard etf portfolio now or wait and watch for some further downturn in the markets? Thanks
@James: It’s impossible to answer that question without doing a full analysis of your situation. But a few general thoughts: equities can always drop 30% or much more, let alone 10% to 15%. So you must always be prepared for that possibility. The research suggest that investing a lump sum usually results in a better income than dollar-cost averaging, but it’s nowhere close to being a slam dunk. So even if DCA is not optimal, it can certainly be less stressful to ease in gradually. Unfortunately, investing in several tranches can bring its own set of problems: it turns one difficult decision into several.
If this is a significant sum and it forms a good part of your retirement savings, a financial planner can almost certainly help you make a decision based on the numbers and not on emotion. Good luck!
https://canadiancouchpotato.com/2013/05/28/ask-the-spud-should-i-buy-in-now/
https://canadiancouchpotato.com/2013/05/31/does-dollar-cost-averaging-work/
https://canadiancouchpotato.com/2015/08/24/is-a-pullback-really-a-buying-opportunity/
Dan, I’m wondering something similar to Kris, but am not in a position where I need to sell to rebalance. I am only adding new money, but I would need to buy ZRE and XRB (with Questrade — free ETF purchases). Do you think it would be a better idea to just sell off my existing positions (I have these only in a couple of registered accounts), or would you suggest continuing to maintain the complete couch potato portfolio?
Thanks, and happy new year!
@CCP: This article triggered a vexing question for me which may have a simple answer, but it is by no means clear to me — because of a confusion in my mind as to what constitutes “real” value.
The Canadian losses opened an opportunity to exploit some tax loss harvesting, and while I was doing it, I also did some minor rebalancing, although the imbalance did not reach the 25% relative threshold that has been suggested as being a reasonable trigger. One of the candidates for selling was my US equities which were over-proportioned compared to my prescribed allocation. However, as has been pointed out by commenter #5 KJF, this overvaluation was totally due to the falling loonie; in the US, in USD, the value would actually have been seen to have fallen.
I puzzled over this, and finally decided that while “real value” may be only relative to what currency you view it from, for the Canadian Couch Potato, the only relevant metric is the value in $Can. Contemplation on whether the US:Can Exchange rate is inappropriate/appropriate/about to change etc is as relevant or helpful as to whether gold is overvalued or whether it will rain in Calgary on my next birthday. Did I get this right?
@LI Thank you so much for the worked out example! I did not know about the capital gains adjustment. That was the cause of my calculations not matching. Much appreciated! -Tim
Hi Dan,
The topic of currency-neutral vs not seems relevant given how much the Canadian dollar has been dropping, and how well non-currency neutral US investments have done lately. I understand from your past posts that your analysis shows paying the extra fees for currency neutral funds is a drag on returns. But it seems risky to buy US index funds that are not currency neutral, because of (i) the dramatic changes in either direction in the value of the Canadian dollar vs the US dollar, and (ii) not knowing if a change/trend in one direction may last a long time so that the changes don’t ‘even out’, possibly to the investor’s detriment. Buying the non-currency neutral version of the MSCI EAFE index seems generally less risky in this regard, since it involves a basket of foreign currencies, and seems more likely to ‘even out’ in the long term. Investing a large amount now in a non-currency neutral US index fund seems risky since there could be much more room in the future for the Canadian dollar to move higher – and stay higher for a long time – rather than move down from where it is currently. I’m wondering if I’m missing something. Your thoughts? Much appreciated.
Hi Dan,
Further to my last post, just looked at TD e-series fund returns charts comparing funds to their equivalent currency neutral versions. When the Canadian dollar value moves, the returns of the non-currency neutral funds can be dominated by that fact, rather than market returns. Just looked at a Canadian dollar – US dollar comparison chart. Since 1972, the Canadian dollar has been lower than its current value for only a roughly 5 year period from 1998-2003. Therefore it would seem better for now to put money into currency neutral US investments. Generally it seems like a good idea to determine what the ‘normal’ or ‘average’ $CDN value is from historical values, and invest in currency-neutral if the $CDN value is currently lower than average, or non-currency-neutral if the $CDN value is currently higher than average, when adding new money to US investments. This would seem to maximize returns. Otherwise it seems you’d be exposed to a lot of currency risk, particularly when making large lump sum contributions. What do you think?
@oldie: I’ll turn the question around and ask you: if you hold a US equity index fund whose market value is $100,000 USD and $140,000 CAD what is it’s “real value” and how would you determine this?
https://canadiancouchpotato.com/2015/02/09/rebalancing-with-foreign-currencies/
@Pat: The issue with currency hedging has nothing to do with fees: currency neutral funds are not more expensive. The problems are that hedging does not reduce risk, it frequently does not work as advertised, and strategies like the one you suggest are no different from trying to switch from long to short bonds in anticipating of interest rates, or switching from Canadian to US equities based on P/E ratios or some other valuation metric. It sounds easy: it never is.
https://canadiancouchpotato.com/2015/02/04/stepping-back-from-the-hedge/
@Tyler: I think simpler is likely to be better going forward.
Dan, I looked at pwl vanguard model portfolio 1 year return as of dec. 31/15.
Vanguard Canadian aggregate bond-weighting 50% return 3.48%
Vanguard ftse Canda all cap -weighting 17% return -8.32%
Vanguard us total market index -weighting 17% return -20.25%
ishares core msci eafe -weighting 13% return 19.11%
ishares core msci emergin markets -weighting 3% return 1.5%
PWL claims the 1 year return is 6.23%; my calculation is 4.4%; significant difference.
Can you pls. advise where I’ve made a mistake. thanks,Dave
@dave
2015 Returns
vab 3.48
vcn -8.74
vun 19.06
xef 20.41
xec 2.35
You should get the correct individual returns before trying to calculate the overall return !!!! They are clearly posted on vanguard and ishares websites !!!
@Dave: Even using the individual fund returns you’ve listed here (as opposed to those given by Jake), your math must be wrong, because the portfolio return is much closer to 6.23% than 4.4%:
(0.50 x 3.48) + (0.17 x -8.32) + (0.17 x 20.25) + (0.13 x 19.11) + (0.03 x 1.50) = 6.297%
Thanks Dan. For investors who have used currency hedging to date but now want to permanently drop this practice, would it be a bad time now (with a 68 cent Canadian dollar) to switch their investments over to non-hedged?
Jake, Dan-appreciate the comments. Dave
@Pat: It’s not an easy decision. If you believe the Canadian dollar is about as low as it’s going to get, then this would be an inopportune time. After all, being hedged hurt you as the loonie fell and being unhedged when goes back up means you can lose both ways. But, of course, if you want to implement a long-term strategy it usually makes sense to just do it immediately. I can’t make that decision for you, but perhaps the strategy of least regret is to go half-and-half for a while.
Thanks Dan, much appreciated!
Hi Dan,,
I have started my CCP in 2013 after reading through here :) I am happy with it. Today my TFSA is about 25k, RESP @ 6k.
Jan end is my buy date for year contribution. I guess i shall continue same strategy? My picks are exact as above with TD-e.
Also,, i have rdsp for son with BMO thats now over 35k,,, Is there any suggestion except BMO? BMO was picked at a time when they were only one of two providing rdsp. My Q basically is is there anything like TD-e for RDSP?
Thanks a lot!
Dan, I am ready to implement your vanguard couch potato methodology. Realizing that no one knows what is going to happen in the market tomorrow, so to speak, would I best to implement the portfolio now or wait until oil settles down? Pls. advise your thoughts.
Thanks for simplifying, and doing the math for, the rates of return for me, an average investor who follows your td e-series portfolio (somewhere in between assortative and aggressive).
@Eemjay: Unfortunately there is nothing comparable to the TD e-Series funds at other banks: they all have index funds, but they are much more expensive. Transferring and RDSP is possible, though something of an administrative headache, so make sure the cost savings make it worthwhile. Remember that the majority of the benefit from an RDSP is going to come from the government grants/bonds and the tax savings, so a slight decrease in MER many not make a meaningful impact.
@dave: I can’t offer any insight here: you need to make the move when you’re comfortable. Just remember a few things: if you are already invested in other funds (as opposed to sitting in cash) you may not be changing your market exposure significantly, so it may not be as big a move as it seems. Let’s also remember that “waiting until things settle down” almost always means “waiting until everything is much expensive, at which point I will be worried because I’m buying high.”
https://canadiancouchpotato.com/2015/08/24/is-a-pullback-really-a-buying-opportunity/
The Tangerine Equity Portfolio has been hit hard this year so far, especially with a maxed-out TFSA. But I guess just stay the course and don’t panic…right…RIGHT!??
Thanks Dan
Dan, great post – always enjoy your articles and responses. Once question i have is should we be treating all our TFSA, RRSP, and non-registered accounts as one large portfolio? Or should we be holding funds like TD eseries in one account?
Thanks for the insightful article Dan.
A question for you.
I am in my mid 20s and don’t forecast any imminent needs for cash. I am sitting on about $50k saved up in cash. When I was a new to investing (about 1 year back), to get started I initiated with setting up an automatic investment plan for investing a meager amount of $100/month across the 4 TD e-series index fund ($25 each into the 4 index funds) with TD Waterhouse.
I know this isn’t much given the cash I am sitting on but this has now helped me get a stronger appreciation and realistic hands on experience with investing (in index funds).
I now feel I am better informed after investing some time on learning more about investing (reading books and articles) (especially index investing) and am in the middle of working my way through “The Intelligent Investor” book.
I appreciate the idea of staying the course – dollar cost averaging, making automatic contributions regardless of what the market looks like, taking the emotions out of investing, taking the longer term view on investing & acknowledging the opportunity cost of staying vested in cash rather than investing it.
Going forward, wondering what’s your take/suggestion on deploying the cash I am sitting on into the market:
– increasing $ amount of contributions?
– frequency to investment contributions (monthly, quarterly, etc)?
– any other suggestions?
Thanks Dan, looking forward to hearing back.
@oldie and @CCP. re: your comments on Jan 17/18th above: I too was interested in doing some tax-loss harvesting on some US-listed equities – in this case VXUS which was bought when there were no similar CDN-listed alternatives and the $ was at par. I also thought this would be the perfect time to exchange the money back to CDN (at significant profit!) and buy VIU or ZEA/ZEM. Thankfully I checked in with my accountant first: although my brokerage reported a significant loss in USD on the holding, because the ACB is tracked in CDN dollars, there is actually a huge capital gain! ie: there is a 10% loss on the book value, but because the currency appreciated 40% (and everything is tracked in CDN), it appears on the books that I actually have a 30% taxable gain!! I tried to ignore all your posts on ACB as it seemed too complicated for me, but this would have been a costly mistake and one I hope all your readers appreciate.
This question was asked in this thread before, and i didnt see any suggestions.
What happens when the components of your portfolio that are to be rebalanced are in different registered accounts? You want to sell the winners and buy the losers, how can you do that when money cannot be transferred from one to the other?
I only see two solutions:
Hold the same funds in each account to maintain proper allocation,
or
Contribute more to to the losers rather than the winners when you are topping the accounts off.
The former is clumsy and the latter doesnt actually crystallize any of the gains- you are only adding funds to reach your desired allocations.
This is driving me nuts, please advise.
@Art: You’ve discovered a problem that many DIY investors ignore: managing a portfolio across multiple accounts is difficult, and it takes experience to do it well. It is not necessary to hold all the funds in all the accounts (although this not necessarily a terrible idea if all of the accounts are tax-sheltered). As for the second solution you suggest, there is nothing wrong with rebalancing by topping up underweight asset classes with new money. Indeed, why would an investor specifically want to crystallize gains?
These may help:
https://canadiancouchpotato.com/2014/08/13/managing-multiple-family-accounts/
https://canadiancouchpotato.com/2013/10/30/making-smarter-asset-location-decisions/
@sleepydoc: An understanding of how to track ACB is essential for DIY investors using taxable accounts. Or at the very least, you need an accountant who is willing and able to do it for you.
I think you may have also made the common mistake of believing that switching from a US-listed ETF to a Canadian-listed ETF in the same asset class would allow you to capitalize on the rising US dollar. This is not the case:
https://canadiancouchpotato.com/2014/01/13/how-a-falling-loonie-affects-us-equity-etfs/
https://canadiancouchpotato.com/2014/01/16/currency-exposure-in-international-equity-etfs/
@AJ: If you have a long-term investment plan, I would suggest just implementing it immediately rather than trying to use dollar cost averaging or any other timing strategy unless you are truly too anxious to pull the trigger. As a young person with decades of savings and investing ahead of you, this $50K isn’t going to make much difference to your overall financial picture. That said, if you’re anxious, you could just increase your monthly contribution to the funds so the whole sum is invested in six to 12 months.
@Richard: This should help:
https://canadiancouchpotato.com/2012/03/12/ask-the-spud-investing-with-multiple-accounts/
Hi Dan, thanks for explaining the difference between tdb900 and VCN.
I was also curious about the differences in certain characteristics of XIC and VCN. I understand they use different indices (XIC is the same as tdb900). Although as they both track full Canadian market they should be reasonably similar. But why Vanguard has trailing PE of 19 while iShares gives trailing PE of 13. Why such a significant difference?
@Al: The difference in PE is almost certainly a result of different measurement methodology or different dates. The holdings in the two funds are almost identical, so there is no reason for their valuation metrics to be meaningfully different. You sometimes see the same issue with published yields, and it comes back to the different ways fund providers use to measure these characteristics.
Hi Dan,
If you have time, could you re-post or provide the link? , that colourful chart that I can’t seem to find right now that shows over the past several years, all the asset classes and their returns. I wish I printed it off when I noted it before on your site but I can’t seem to find it right now. Thanks Sue
@Sue: Is this the one?
https://canadiancouchpotato.com/2014/01/30/a-periodic-review-of-diversification/
What do you think about balancing your portfolio with the TLT long term bond?
Does it have more room to appreciate.