Your Complete Guide to Index Investing with Dan Bortolotti

Vanguard’s One-Fund Solution

2018-05-29T22:14:22+00:00 February 5th, 2018|Categories: ETFs, New products|Tags: |216 Comments

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%.

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, the biggest knock against many of the competitors to these new ETFs, including the iShares CorePortfolios (CBD and CBN), which hold REITs, high-yield bonds, preferred shares, and track fundamental indexes. The same criticism can be levelled at 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. Traditional bond funds, for example, are a poor choice in taxable accounts, and all of the new Vanguard ETFs include a significant amount of fixed income. If you have a large non-registered account you’ll 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.



  1. Canadian Couch Potato February 8, 2018 at 3:00 pm

    @Ben: The 3-ETF portfolio would have a slightly lower MER overall: about 0.15% compared with 0.24% or so for the single ETF. That’s about $9 a year on every $10,000 invested. I think the one-fund solution is worth that tiny additional fee, even if you’re not paying commissions at Questrade. The automatic rebalancing makes this a really hand-off solution.

  2. Michael February 8, 2018 at 5:52 pm

    Hey Dan,
    Can you estimate the cost of having the Vanguard VGRO ETF in a registered account in terms of what they would lose to tax inefficiency? Maybe using example dollar amounts? Currently I can shelter VGRO in TFSA and RRSP but would love to know the approximate impact on then opening a non registered account and purchasing VGRO in it. Would the simplicity of having VGRO in every account be totally silly when it comes to having to introduce a non registered account?

  3. Oldie February 8, 2018 at 7:46 pm

    My first reaction to seeing the new Vanguard one fund solution was “That’s nice, but now that I’m an experienced investor with a larger portfolio, I can do better with my multiple ETFs than the single fund with a 0.22% fee.”

    However, crunching the numbers makes my smugness a little less so. For a 3 fund portfolio with a mean MER of 0.15%, to capitalize on your 0.07+% advantage you’d need to have a really large portfolio to make it worth while. I just made my annual TFSA contribution top-up and rebalancing so the inconvenience factor is fresh in my mind. One consequence of becoming a true-blue Couch Potato is that, barring any life-situation changes, you should be trading very rarely. So you actually get a little rusty and you have to re-familiarize yourself every year or so. And you forget the little nuances and conveniences of optimally handling the trades in a multi-fund portfolio. So the annoyance and inconvenience factor is probably more than I gave it credit for.

    Furthermore, the dollar costs of trades are more than the mere $9.95 the trading platform charges (or maybe not charging, e.g. Questrade for purchases). You have to consider approximately the value bid-ask spread on each trade averaging out in the long haul. This adds up.

    The fact that there is no rebalancing required is a huge convenience bonus. A certain caution is required at the very start that you are truly comfortable with the asset allocation mix that hopefully you have agonized over and are totally confident in. I think from a practical viewpoint, investors who have to rebalance yearly when they make new contributions, in effect have to a mental review of their asset allocation mix to re-check that they are still OK with it. This mental reminder would be less strong, I would think, with a single fund solution. But assuming you are still good with the mix (or risk exposure class of the chosen fund, I guess) and hopefully you should be, it’s as simple as buying as many units as your extra injected cash plus what was left over from the last contribution and purchase. That is really, really simple.

  4. Canadian Couch Potato February 9, 2018 at 7:31 am

    @Michael: Holding these ETFs in a TFSA or RRSP is ideal. Justin has estimated the foreign withholding tax drag at 0.17% for VGRO when held in a registered account. But remember that this is the same as it would be if you held the individual underlying ETFs, and it is unavoidable in a TFSA. The only way to reduce that in an RRSP would be to use US-listed ETFs, which introduces a number of other costs.

    The bond component makes these ETFs less than ideal in a taxable account, but with VGRO only 20% is bonds. So if the holding is not large and you’re not in the highest tax bracket, we’re talking about a pretty small amount of tax compared with the other options. Assuming the bonds have an average coupon of 3%, we’re talking about $60 of interest paid on every $10,000. Once again, it’s about accepting that good solutions don’t need to be optimal.

  5. Gabe February 9, 2018 at 11:39 am

    Thanks for the well thought out post Dan.

    I’m quite tempted to change to the VGRO fund; however, how do you feel about the 20% bond allocation vs. your agressive ETF portfolio?

    I know it’s not a huge difference, but I feel comfortable with 10% bonds, and don’t want the additional 10% dragging down my returns in the long run. Is this enough of a difference to worry about?

  6. Canadian Couch Potato February 9, 2018 at 12:47 pm

    @Gabe: Personally I think there are very few investors who should hold more than 80% equities. That’s still a very aggressive portfolio. For the last several years it has been easy to be comfortable holding almost no bonds, because it’s been a relentless bull market. I suspect it will be less comfortable once investors feel what it’s like to lose 30% or more. So I think VGRO is aggressive enough for all but the most risk-tolerant.

  7. J February 9, 2018 at 4:04 pm

    Thank you very much for this website. I am new to investing and I was looking for the one fund solution from your website ( tangerine, or questrade).my wife and I should be able to max up our TFSA (cash) and had some extra savings for our house down payment in the near future (we are in our late twenties). we are also looking to invest for our future retirement based on your advice and a lot of reading. The point I don’t get with the one fund solution is how you can be having more bonds and less equity as you age and get closer to retirement.By having different funds you can adjust this every time you by more, right? Would you have to sell and buy a different ETF? Also, would this fund be applicable for RESP, it’s a good strategy. Thank you very much for the website and the great articles.

  8. Canadian Couch Potato February 9, 2018 at 4:38 pm

    @J: If you need to change your asset allocation at some point, then you would indeed need to sell the ETF and readjust. (Or you could just add a separate fixed income component to make the overall allocation more conservative.) There’s no such thing as “set it and forget it for the rest of your life.” But these ETFs could be something you hold for a decade or two.

  9. Oldie February 9, 2018 at 5:54 pm

    Dan: In trying to puzzle out the further pros and cons, regarding the more efficient automatic balancing of the new Vanguard ETFs — am I correct in my recollection that fastidious manual balancing of a multi-fund portfolio to your allocation specification (ignoring the costs, if any, of re-balancing) on the whole adds no particular likelihood of mean long term gain or loss? Therefore the automatic behind-the scenes rebalancing of the One-Fund ETFs similarly should be evaluated as a non-advantage financially, and only as an added convenience to no-brainer balancing to your previously decided comfort zone asset allocation?

  10. Canadian Couch Potato February 10, 2018 at 10:14 am

    @Oldie: There is no reason to expect rebalancing to boost returns in a portfolio of equities and bonds, so the benefit of the one-ETF portfolio is simply that imposes discipline that many investors lack. Remember that anyone who did not rebalance during the last five or six years would have outperformed some one who did so regularly, because every year rebalancing meant selling stocks and buying bonds. But the non-rebalance would have been taking on much more risk than they had intended.

  11. Greg February 10, 2018 at 2:33 pm

    A new article in the Globe and Mail today with contributions from our own Dan B:

    I think most Canadian investors are wondering the same thing: when will Canada start producing some decent returns? When the rest of the world gains, Canada languishes. When the rest of the world corrects, Canada corrects right along with it. All Canada has been for the last 7 years is a drag on returns. I pity anyone who has been overweight Canada for a long time.

    What does it say when our best performing stocks are dividend stocks? Is it better to return profits to your shareholders because they have nothing better to do with the money? Is this the way to grow your economy?

    The question on my mind is whether Canada has a place in the new economy? Is the resource sector still relevant when the FANG stocks that approach $1 trillion dollar market caps don’t even use natural resources? How much longer should I wait for the Canadian market to start performing, and is a 3% weighting sufficient based on global market capitalization? Looking at the composition of the TSX, it seems that the new economy is practically absent in Canada.

    Holding a large Canadian allocation might serve to dampen volatility, but you hold stocks for superior long-term returns, not lower volatility. The Couch Potato philosophy might be to keep re-balancing and hold on, but at some point, you have to question the home-bias. How long do you wait? 10 years? 15 years?

  12. I.D. February 10, 2018 at 3:28 pm

    My only concern with these funds is as follows – – 1. Do they have a fixed rebalancing policy and 2. Will they be able to change their asset allocation any time they wish ?

  13. Jake February 10, 2018 at 4:45 pm


    I stopped investing in Canada when Trudeau came in power, he and his gov’t is an economy killer. Canada is a laugh to rest of the world. With gov’t policy killing what we can offer the rest of the world by pipelines not being approved for example things won’t get any more pretty anytime soon. Now we have a BC gov’t wanting to stir the pot even more. Just put yourself outside of Canada watching what is going on, would you invest in Canada? Pushing up the minimum wage across the country is hurting and will hurt the economy even more down the road.
    To cap off the week our PM said relations with the USA are great. Who he is trying to fool !!!
    The bottom line is gov’t policy, both federally and provincially is not letting the economy more forward.
    will be interesting if Amazon picks Toronto for its 2nd new headquarters. This will be a huge indication what the world thinks of doing business with canada.
    The debt a lot of canadians have isn’t helping the rest of the worlds view either, having most of ones money tied up to housing doesn’t leave much of disposible income to push the economy forward. It’s got to end sometime and the rest of the world is just waiting.

  14. Greg February 10, 2018 at 5:12 pm

    @ Jake: I tried hard not to politicize Dan’s blog, but I basically agree with your thinking. If you are looking for a reason to skip investing in Canada, you don’t have to look very hard!

  15. Jason M February 10, 2018 at 5:31 pm

    Hi Dan, thanks for another great post. One question I have is about using such a fund compared to the 3-fund solution, when one has a taxable account. How would one handle asset location in terms of sheltered versus non-sheltered with the one-fund?

  16. NM February 11, 2018 at 12:48 pm

    Hi Dan,

    Thanks a lot for this post. I was waiting for you to write this up :) I have one quick question around capital gains(or any gains comes from these etfs). If there are any capital gains on these ETF’s how does it get re-invested into ETFs automatically OR does it stay as cash until I go and buy more ETF’s with it ?

  17. Chris Holmes February 11, 2018 at 6:35 pm

    Hello Dan,

    Any thoughts on the seemingly wide bid-ask spread (below details from last Friday)?
    Bid: $23.50,
    Ask: $23.98,
    Spread: 2.02%.

    For somebody moving a portfolio over into VGRO (moving out of Tangerine mutual funds), the cost seems considerable (NAV: $23.68 = cost of $0.30/unit?).

    Is this ‘to be anticipated’ due to the recent launch date?

    Morningstar pointed out VGRO was trading at a premium:

    Thank you.

  18. Greg WW February 11, 2018 at 7:04 pm

    Hi Dan,

    I appreciate you responding to these new funds so quickly.

    How do you feel about using these new funds, like VGRO, in a LIRA where there will only be a one time tax deferred contribution and a single purchase?

  19. Greg February 11, 2018 at 7:12 pm

    Hi Dan,

    I appreciate you letting us know the ins and outs of these new funds so quickly.

    How do you feel about VGRO in a LIRA?

    Since there will only be a one time tax deferred contribution and a single purchase, over the course of many years will it save comparative to the 3-fund model due to not needing to rebalance?

  20. Dan S February 12, 2018 at 2:49 am

    Hey Dan,
    I’ve been using the CCP “balanced” portfolio for a year and I have had to try and make allocations evenly to a TFSA, RRSP and a “margin” non-registered account on Questrade.

    I really appreciate your model portfolios and information, but I find it hard to enforce balancing practice because I have these 3 account types, each with a different function, size limitations and rules. It is difficult for me to decide which etfs should be being put in which accounts, keeping in mind tax efficiency, balancing

    The breakdown is $47,000 TFSA,$33,000 RRSP and $14,000 in the non-registered margin. I utilize the 3 etfs in your model portfolio such that each account type only holds one etf. The TFSA only holding ZAG, (so I have a stable “rainy day” account I can draw from in an emergency) the RRSP only holding XAW and the Margin account only holding VCN. I am considering changing both registered accounts to just contain VBAL because I don’t enjoy re-balancing.

    The reson I find re balancing difficult is that I save $2000/mo total savings contribution to my accounts and I try and buy up etfs every month when the money is available, because of this I find myself running a balance calculation every month and it is a bit difficult with the 3 accounts. I simplified the process by just buying one etf per account type.

    the end goal: My idea is to hold VBAL in both registered accounts and VCN in the margin account for slightly more tax efficiency. What are your thoughts on this idea?

    I was hoping you could create (or discuss) which accounts should be holding which etfs? I remember you made a podcast debating the merit of holding bonds in a non-registered account and I saw some PWL capital (sample) portfolios had specific etfs and amounts per account type. It would be awesome to see your portfolios with this function! As always, I love your podcast, I’ve listened to every single one, I’ve come to appreciate that saving regularly is far more critical for my own situation than specific investment choices and I do appreciate how much this is driven home in your podcasts.

  21. Sleepydoc February 12, 2018 at 3:49 am

    Can I assume that the ability to harvest losses would be obliviated by holding one fund? Ie: if US was down and Canada up, the loss would be cancelled out by the gain overall? If one held the allocation separately you could harvest the loss by selling and buying a similar etf that followed different index…..

  22. GregJP February 12, 2018 at 11:09 am

    @ Sleepydoc: These all-in-one funds have both advantages and disadvantages.

    The biggest advantages are convenience and no commissions for rebalancing.

    The biggest disadvantages are:

    -inability to tax-loss harvest individual ETFs, You might be able to buy another Vanguard multi-asset fund and get away with it, but not practical unless everything drops significantly.

    -inability to change your target asset allocation if you don’t like Vanguard’s. Also, some questionable ETF choices. For example, it holds an int’l bond fund currently yielding 0.9%. What’s the point? Terrible yield and bond prices can only go down.

    -higher MER than holding individual ETFs, although in a small portfolio this is negated by no commissions for re-balancing.

  23. Canadian Couch Potato February 12, 2018 at 11:34 am

    A few readers have noted that you can’t do tax-loss harvesting with these one-fund ETFs. This is rather a moot point, as the funds are not well-suited to non-registered accounts anyway, because of their bond component.

  24. gmurad February 12, 2018 at 11:37 am

    As another used who posted above, I’m curious about the hit that I would take If I converted my 3 ETF CCP portofolio to VGRO.

    How much loss are we looking at on a 100K portfolio? Did anyone work out the numbers?

    Someone made a comment about it being traded at a premium right now because it’s a new product. Is this possible with ETFs?

  25. Canadian Couch Potato February 12, 2018 at 11:41 am

    @Dan S: If you hold VBAL in your registered accounts and VCN in your non-registered account then you always be overweight Canadian equities. Once the non-registered account becomes quite large, and if you’re making regular contributions there, then it might make sense to hold Canadian equities, ex-Canada equites (such as XAW), and a tax-efficient bond ETF there. That way you can do all of your rebalancing in the one account while the TFSA and RRSPs look after themselves.

    Based on a number of comments on this post, there seems to be conflicting objectives here: investors seem to want both hands-off convenience and optimization (lowest possible costs and taxes). But you can’t have both. One-fund solutions can never be optimal, but that doesn’t mean they can’t be “good enough.”

  26. Canadian Couch Potato February 12, 2018 at 11:43 am

    @Greg (re: the LIRA question): Sure, a fund like this can be useful in a LIRA, especially if you are able to set up a DRIP.

  27. Wayne February 13, 2018 at 10:10 am

    Thank you so much for this wonderful blog! In the past I’ve just used my broker and let him handle all my financial choices but am sick of paying these high MER fees especially with segerated funds and have decided to switch them all over the couch potato type of investing so very new to DIY investing.

    Just to clarify so you don’t suggest using these new one fund portfolios for non registered taxable accounts? I have about $120K in non registered funds I would like to invest. I’m definitely going to put my RRSP and TFSA into these one fund series but not sure about the non registered funds.

    Time line is about 20 years.

    Again I’m a novice investor and would like to set it and forget it but don’t mine to rebalance once or twice a year.

    Thank you again for such a great blog!

  28. Landon February 13, 2018 at 11:38 am


    Use the Vanguard one fund solutions for your RSP and TFSA. For non-registered, use VCN, XAW, and ZDB in accordance with whatever your equities/bonds allocation you prefer..

  29. Wayne February 13, 2018 at 12:26 pm

    Thank you…I’ve always been more into real estate and have finally decided to have more control of my funds. Definitely love this blog!

  30. Jake February 13, 2018 at 12:49 pm


    First GIC purchase in a Non-Reg account in May 2017, it was a 1 YR GIC matures May 2018. Will I get a T5 for the accured interest up to Dec 31st, 2017? The amount of interest between May and Dec would be more than $50.00. If not how would I calculate it? I noticed my statements show $0.00 accured interest (up to Dec 31st) for it but the GIC’s in my TFSA and RRSP always show an increase in the accured interest on each months statements. All are BMO investorline accounts.

  31. Canadian Couch Potato February 13, 2018 at 2:05 pm

    @Jake: You won’t get a T5 for the accrued interest in 2017. The full 12 months of interest is taxable in 2018, so you will get a T5 next year.

  32. Farsh February 13, 2018 at 2:28 pm

    Where do i start if I want to use Vanguard One Solution, but have never done stocks before, and at a savings of 40 – 60K that I have at RBC in RRSP and TFSA? How do i get a broker / where, and how does one start using them? What are typical costs involved? Also, how often and what typical quantities can one start contributing to grow the amount?

    Thanks in advance, Farsh

  33. Gilmour February 13, 2018 at 4:54 pm

    Hi Dan, thanks for the great post!

    I’m wondering your thoughts on the rebalancing of these one fund solutions- I can’t find anywhere how often/when specifically they will be rebalancing? Any concerns about vanguard balancing potentially being done too “actively”?

  34. Canadian Couch Potato February 13, 2018 at 7:13 pm

    @Gilmour: The timing of the rebalancing isn’t mentioned in the fund’s literature (at least not that I can see), but I don’t think this is a problem. A large fund can rebalance with cash flows, dividends, etc. and keep a more or less consistent allocation. There would need to be very large market move to throw things off more than a few percentage points.

    There is no reason to believe that the asset allocation will be managed actively: if a fund is going to make that an option, it would say so in the prospectus. (This was my concern with the TD Managed ETF Portfolios, where the prospectus does give the manager that option. Although in practice it does not seem to be an issue.)

  35. Oldie February 13, 2018 at 10:18 pm

    @Farsh: If you don’t mind, I think I can answer your question. Since you have all your TFSA and RRSP set up at RBC with funds in place, it would seem to me most straight forward to set up the RBC version of online investing which is called RBC Direct Investing (DI). It’s dead easy to set up if you on-line banking already — I’m not particularly computer savvy and yet I was able to set it up next to my regular RBC on-line bank and credit card account. I never actually used it, because I already have all my investments set up somewhere else on line — so I do my investments there and transfer money on-line from the investment site to my RBC bank accounts. They also have a “practice” DI account for learners which you can set up to practice with.

    The costs are trivial – $9.95 per on-line trade as long as you don’t go through a telephone call to a broker to make the trade. As you are looking at a one fund solution, all you have to do is find out how many dollars cash you have in your RRSP or TFSA account, subtract $9,95 (the cost of your intended trade) and divide this number by the current cost of one ETF unit of the VGRO or whatever fund you have chosen. If you get a decimal amount, just truncate the decimal portion down to the integer because you cannot purchase fractions of an ETF, and if the decimal portion is very close to 0.1 or 0.0, you may chose to subtract 1 from the whole number for safety — i.e. to make sure you actually have enough dollars and cents to pay for all the units that you bid for, after subtracting the $9.95 cost of the trade (you’ll end up with some extra cash in your account but that’s a trivial annoyance).

    Then request a purchase for that number of units (i.e. an online bid with a limit of a couple of cents above the current ask price), and your bid should be filled within minutes if not seconds. As a general practice I like to make my trades in the middle of the trading day, and somewhere in the middle of the week so I don’t get caught in a freak situation where war has been declared overnight somewhere and I didn’t find out about it and the prices are jumping all over the place. But maybe I’m just overcautious that way.

    You could save the $9.95 on purchases if you do it on a Questrade account, but on a one-fund solution, and you’re making purchase once a year or something like that, the savings would be trivial, I would think, compared with sticking to the RBC organization.

    Oh, if you have to go through live persons to take your funds out of the RBC investments that I presume your TFSA and RRSP is invested in, be prepared of course for their “advisors” to strenuously dissuade you from doing so — remember they make a lot of money from the mythology that active management is way superior than “average amateur investing” which is what they’ll characterize your hard earned Couch Potato knowledge and research as.

    All this information is easily found scattered through this Couch Potato blog site — I’ve merely filtered it out for you, but it’s easy enough to search and read it through yourself.

  36. andre February 13, 2018 at 10:41 pm

    Will the percentage equity allocations to different geographic regions remain the same over time with re-balancing, or will the allocations change over time to reflect relative growth or decline in total market capitalization for each region?

    For example, if the Canadian market increases in value by 20% but the US market declines by 10%, will the percentage allocation to Canadian equities increase relative to US equities even after the re-balancing interval?

  37. Oldie February 13, 2018 at 11:47 pm

    @Canadian Couch Potato:

    Dan, the advice given in your post:

    and in the PWL post

    regarding the most stable time to purchase international ETFs such as VXUS on days when both the US and Canadian Stock Markets are open, somewhere between 10 and 11 am seems prudent when making large purchases for instance when using large amounts of cash setting up RRSP accounts. Would this also hold true for large orders of One-Fund Solution ETFs?

  38. Farsh February 14, 2018 at 8:53 am


    Thank you for taking the time and effort to assist me, much appreciate it. I have to now re-read it a few times and digest it. Cheers

  39. Farsh February 14, 2018 at 2:37 pm

    Two Questions i need help with, considering investing money for account on TFSA and RRSP in VBAL or VGRO one fund for the first time, and in the context of a couple where one is currently working and the other is not.

    1) Does it make a difference to start maxing out TFSA of one partner vs the other? As in who makes the investment (the one working or not)?

    2) with the one fund, does it make a difference to start maxing out TFSA vs RRSP? I mean, other than the RRSP gets you a tax discount vs TFSA doesnt tie up the money debate, is there any other consequences, such as maybe extra fees on TFSA account vs RRSP for when investing into Vanguards VGRO or VBAL that would be considerable to us? I am personally thing to max both partner’s TFSA first, then go into the RRSP, to keep it open for if wanting to buy a new house for example, or for emergency funds.

    Thanks in advance

  40. Barry February 16, 2018 at 10:11 am

    Dan…Thanks for sharing your knowledge through this great site. I’ve learned so much about index investing from it. I’m just at the point where I’d like to move my current TFSAs into either TD e-series funds or one of your recommended portfolios using Questrade. I’ve got about $35k between two accounts (Tangerine and Fidelity Investments) and having a bit of decision paralysis on which solution to choose. Currently I make regular contributions to both ($1200/month – bi weekly) and would like to continue to do so until I reach my account maximum. Seems like TD would be the easiest “set it and forget it” route to take. The new Vanguard one-fund would also be fairly easy through Questrade, even though I would have to manually purchase additional funds bi-weekly after arranging for a regular bi-weekly transfer of money from my bank account to Questrade. I figure that even utilizing one of your recommended ETF portfolios and adding funds to it on a bi-weekly basis wouldn’t be much more difficult than the Vanguard one-fund, except for the added layer of having to calculate the appropriate allocation to each fund to keep the portfolio relatively in balance over the year. As Questrade purchases are free I see having to maybe incur trading fees once a year after doing a proper re balancing. I’ve opened both a TD Direct Investing account and a Questrade account and have fiddled with both to the point (and by watching Justin’s excellent video tutorials) where I’m comfortable using both. Just to add, TD is offering a $100 bonus for transferring minimum $10k to them, so there is that too. Any suggestions or advice would be appreciated. Thanks!

  41. Canadian Couch Potato February 16, 2018 at 3:16 pm

    @Barry: This is the age-old question: whether to go for the absolute cheapest option and do a little more work, or pay a little more for convenience and imposed discipline. There’s no right or wrong answer: it’s a personal decision. But at $35K and a plan to make regular contributions, I would lean toward the TD e-Series funds, where you can automate your plan. I’m not sure you really want to be investing a few hundred dollars biweekly in ETFs.

  42. Barry February 16, 2018 at 5:21 pm

    Thanks for the quick reply and advise! I have been leaning towards the TD funds, so I think I’ll go that route.



  43. Jake February 16, 2018 at 6:17 pm


    Do you have any comment about the 7 Index fund portfolios offered by Simplii Financial ?

    Appears they are made up of CIBC’s basic index funds. The links of the funds takes you to a morningstar page which is the only place that shows an MER, which are between 1.00 and 1.10 percent. It appears the portfolios have been around awhile but have never seen anything on this blog about them and appear to me to be like the Tangerine offerings.

  44. Corey February 17, 2018 at 9:53 am

    I’ve had a relatively small Locked-In RSP in a Tangerine account for some time. Didn’t want to manually handle re-balancing on such a small amount. But VGRO fits the bill perfectly. Just filled out the paperwork to switch to Questrade and save ~0.80% without doing any additional work.

  45. Jay February 18, 2018 at 9:27 am

    What’s the best way to convert all my VCN, XAW and ZAG into VGRO from my TFSA AND RRSP accounts?
    What should I be aware of so I don’t lose too much money on the trades? (~200K portfolio)?

  46. Canadian Couch Potato February 18, 2018 at 9:46 am

    @Jake: I wrote about this many years ago, though I am sure many of the details have since changed:

    Even if they have since dropped all of the extra fees and conditions, I don’t see how this offering is preferable to any of the other index fund options available.

  47. Eric February 19, 2018 at 7:30 pm

    Time for my yearly portfolio re-balance and I was wondering if I should replace one or two of my ETF. I have a simple portfolio made of 40-20-40 of Vanguard funds (VAB-VCN-VXC). I did not read the 2017 recommendation to replace VAB by ZAG and VXC by XAW. I just read today that Vanguard decided to reduce the MER on VAB from 0.12 to 0.08. Base on this new info, is it still your recommendation to replace VAB by ZAG.

    Thanks in advance for you input and all the great information that you share.

  48. KGB February 20, 2018 at 1:06 pm

    I read an article saying JP Morgan is claiming that a diversified stock-bond portfolio will no longer provide protection in times of market volatility because, in a reflationary environment, the correlation between stocks and bonds is likely to go up. Thoughts?

  49. Colin February 21, 2018 at 9:50 am

    Great article.

    1. How will these be calculated? Do they essentially take the distribution of each of the 7 underlying ETF’s and combine them?

    2. Is there such a thing as paying a premium on a new ETF, or is the market price simply calculated by each of the 7 underlying ETF’s?

    I currently have a handful of Vanguard ETF’s that I would like to liquidate to purchase as they are held in the new funds. Would you guys suggest holding off for a while to let things get established before pulling the trigger on this?

  50. Jon February 21, 2018 at 11:06 am

    I current have TD-e series portfolio that I contribute to monthly. I have come into a lump sum of cash $15,000. I am wondering if it would make sense to use this cash to purchase a Vanguard One fund option as a one time purchase and then continue on with my monthly contribution to my e-series portfolio. I thought this would be a simple way to pick up a low maintenance ETF for a minimal cost of one trade. I do not really diversify because I am keeping the same asset allocation for both products (my TD e-series and the Vanguard one fund). I guess I diversify in my products with a slightly lower MER. Any downside to adding such an ETF to my portfolio that I am not seeing? Thanks. Love your site.

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