Just about everyone was happy to wave goodbye to 2020. By the spring it was shaping up to be the worst year for markets since 2008: when the market touched bottom on March 23, Canadian, U.S. and international equities were all showing huge losses. From peak to trough, Canadian equities had declined more than 37%, and foreign markets saw losses between 26% and 29%.
Even the safety net had gaping holes: Canadian bond ETFs saw peak-to-trough price drops of about 14%, which no one had ever seen before.
Then, almost as quickly as the markets fell, they roared back more swiftly than anyone expected. For example, the Vanguard Growth ETF Portfolio (VGRO) declined more than 25% in 40 ugly days during February and March, then had fully recovered just 196 days later. The whiplash was enough to make you want a neck brace to go with your face mask.
Last year was also the first in which my model portfolios consisted of asset allocation ETFs from Vanguard and iShares. Below I’ve presented a summary of the 2020 results for the individual equity and fixed income components in these products. Then we look at the overall return of the all-in-one asset allocation ETFs, as well as the returns of the two-ETF portfolios in my models.
For a deep-dive into the performance of the asset allocation ETFs in 2020, watch Justin’s video recap of one of the weirdest years investors have experienced in recent memory:
Equities
Canadian equity ETFs, which fell hardest in the spring of 2020, managed to finish the year on solid ground:
Vanguard FTSE Canada All Cap Index ETF (VCN) | 4.8% |
iShares Core S&P/TSX Capped Composite Index ETF (XIC) | 5.6% |
The 0.80% difference in returns between these two ETFs was a surprise: it arose because VCN started the year tracking the FTSE Canada All Cap Index, which had a quirky methodology that adjusted the weighting of some companies, rather than simply using their market cap. In June, the Vanguard ETF switched its benchmark to the FTSE Canada All Cap Domestic Index, which better represents the broad Canadian equity market. The returns of VCN and XIC should be more similar going forward.
U.S. equity ETFs continued their dominance in 2020. The ETFs tracking this market performed almost in lockstep:
Vanguard U.S. Total Market Index ETF (VUN) | 18.2% |
iShares Core S&P Total U.S. Stock Market ETF (ITOT) | 18.1% (in CAD) |
International equities—in both developed and emerging markets—also delivered tidy returns in 2020. As we’ve talked about in previous blogs and videos, comparing the individual components of the Vanguard and iShares ETFs in these asset classes is confusing, because the two index providers disagree about South Korea: the Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) tracks an index of developed countries that includes Korea, while the iShares Core MSCI EAFE IMI Index ETF (XEF) excludes Korea, as MSCI classifies it as an emerging market.
As it happens, this was a big deal in 2020, as Korean stocks returned over 43% in Canadian dollar terms. This provided a boost to VIU relative to XEF. Of course, opposite was true for their counterparts in emerging markets, with the iShares index getting the edge:
So, how did all of these equity categories perform when combined in the Vanguard and iShares asset allocation ETFs? Here’s how the two all-equity funds performed in 2020:
Vanguard All-Equity ETF Portfolio (VEQT) | 11.3% |
iShares Core Equity ETF Portfolio (XEQT) | 11.7% |
Fixed income
It was the best of times, it was the worst of times for bonds in 2020. Concerns about liquidity in fixed income markets led to bond ETFs seeing huge price declines during the COVID crisis in March. But this problem cleared up quickly and bonds went on to post their best calendar year since 2014.
The yield to maturity of broad-market Canadian bond ETFs started the year at 2.3% and then plummeted to around 1.2% by year-end. Remember, a decline in yield increases bond prices, so the result was a surprising total return for the Vanguard and iShares flagship ETFs:
Vanguard Canadian Aggregate Bond Index ETF (VAB) | 8.6% |
iShares Core Canadian Universe Bond Index ETF (XBB)Â | 8.6% |
If you’re using my two-fund model portfolios with bond allocations of 70%, 50% or 30%, then one of the above two ETFs makes up all of your fixed income holdings. However, if you’re using one of the all-in-one ETF portfolios, then you’ll also have some other bond asset classes in the mix.
The iShares Core Canadian Short Term Corporate Bond Index ETF (XSH), which make up 15% of the fixed income in the iShares portfolios, delivered 6.2% in 2020.
The Vanguard U.S. Aggregate Bond Index ETF (VBU) returned 7.2%, while the U.S. bond ETFs held by the iShares portfolios (GOVT and USIG) combined to returned between 8% and 9% in Canadian dollars.
Finally, the Vanguard Global ex-U.S. Aggregate Bond Index ETF (VBG), which invests in foreign bonds outside of the U.S., managed just 3.9% during 2020.
Overall, then, the addition of these bond asset classes lowered the fixed income returns for the Vanguard and iShares all-in-one ETFs, compared with simply using VAB or XBB. If we take the weighted average of each ETF’s return, we can estimate a return of 7.2% for the Vanguard fixed income portfolios and approximately 8.2% for the iShares versions.
All together now
All right, it’s time to end the suspense and reveal the 2020 returns for each of the Vanguard and iShares asset allocation ETFs, as well as the two-ETF portfolios that combine a bond ETF and an all-equity fund. For a fairer comparison, the two-ETF portfolios are assumed to have been rebalanced monthly.
Asset allocation | Vanguard ETFs | Return | iShares ETFs | Return |
---|---|---|---|---|
80% bonds / 20% equities | VCIP | 8.35% | XINC | 9.35% |
70% bonds / 30% equities | VAB + VEQT | 9.73% | XBB + XEQT | 9.84% |
60% bonds / 40% equities | VCNS | 9.37% | XCNS | 10.33% |
50% bonds / 50% equities | VAB + VEQT | 10.35% | XBB + XEQT | 10.53% |
40% bonds / 60% equities | VBAL | 10.20% | XBAL | 10.58% |
30% bonds / 70% equities | VAB + VEQT | 10.82% | XBB + XEQT | 11.10% |
20% bonds / 80% equities | VGRO | 10.81% | XGRO | 11.42% |
Source: Vanguard, BlackRock, DFA Returns 2.0
As always, we need to be careful about drawing conclusions from short-term results.
First, the two-ETF portfolios saw relatively better performance than the one-fund options last year, simply because all-Canadian bond indexes outpaced more globally diversified fixed income portfolios last year. That won’t always be the case.
Moreover, the main reason iShares portfolios outperformed is their significantly larger allocation to US equities, the top performer in 2020. In any year when US markets lag Canada and international markets, the Vanguard portfolios are likely to have the edge. Over the long term, the differences are likely to be very small.
There’s another factor to consider as you ponder the events of last year. Many investors opt to build their own diversified portfolios using multiple ETFs rather than embracing the simplicity of the asset allocation funds. While this decision saved few a few basis points in MER last year, it would also have required you to do some major rebalancing—twice.
The first opportunity was in March, when you would have been selling bonds and buying stocks when it looked like the world might end. If you had the stomach to do that, you may have had to rebalance in the other direction, selling stocks to buy more bonds late in the year, following the amazing recovery.
Neither of those decisions was easy. However, if you were using an all-in-one ETF, this was all done for you, and you would have endured a tumultuous year with a return between 8.4% and 11.4%, with zero work, no matter what your asset allocation. It’s another reminder that successful investing isn’t about scratching and clawing for every basis point in fees and taxes. It’s about getting the big decisions right and avoiding crippling mistakes.
Thank you so much for this summary. Will you be posting the returns for the TD e-series Index fund portfolios at a later date?
@Lori: Yes, I’ll be posting the e-Series returns (and updating the PDFs with historical returns) as soon as I have a chance to compile them.
Major rebalancing indeed. I was on the older three fund approach to couch potato investing. I realized that pulling the trigger to rebalance was more difficult than I thought when you’ve lost over 20%. I decided it wasn’t worth the slight savings and switched to VGRO. I may be paying slightly more, but the behavioural correction for rebalancing has been freeing and I don’t have to worry about when to rebalance.
Thanks for all of your work Dan (and Justin). Best wishes to you and your family in 2021.
Great post! Curious how the returns of the one-fund portfolios compare to an equivalent portfolio of individual funds where the investor didn’t re-balance in March or after the rebound – I’m guessing that not rebalancing mid-year this year would have been a costly mistake.
Hi, thanks for this. Your blogs are so useful and I regularly use them for my own investment decisions. Question for you – when looking at the 2020 returns for Vanguard and iShares ETFs across those different allocations, is there a reason WHY the iShares ETFs consistently outperform those of Vanguard? Why is this so? Thanks again. Neil P
@Erik – You’re very welcome – thanks for reading/watching! :)
Great post! You know what, everyday YTD I search for “returns for 2020” on your website and now I see it! Thanks for all of your hard work providing such amazing info.
Thanks, Dan and Justin.
I look forward to this recap every year!
The biggest surprise for me was the outsized return for Canadian Bond ETFs. Now that yield is on the floor, do you think we can only go up in yield from here? What will happen to the bond market if rates return to historical averages (3-5%)? Should we start planning ahead….?
Finally posted!!!
have been expected for this for days. I read your high quality articles for years and this is my primary guide for my personal investing.
I have used Cough Potato portfolio for years, from eSeries to 5 ETFs, then 3 ETFs, currently on 2 ETFs – going easier and better.
Your valuable information is so much appreciated. thanks a lot!!!
Thanks a lot Dan. Can you please do a comparison of the asset allocation ETFs provided by Horizon as well along with Vanguard and iShares.
@Yousef – Here are the 2020 “non-rebalanced” hypothetical returns for the Vanguard Asset Allocation ETFs, assuming you just purchased the individual underlying ETFs in their target proportions on December 31, 2019 and didn’t rebalance your portfolio during 2020 (unfortunately, I can’t calculate the same for the iShares Core ETF portfolios, as there are no currency-hedged versions of GOVT and USIG):
VCIP = 8.1%
VCNS = 8.9%
VBAL = 9.8%
VGRO = 10.6%
VEQT = 11.5%
Great article! I’m wondering if you compare the ETF portfolio’s to their benchmarks? This is one of the biggest reasons why ETFs gained popularity since you are earning average market returns. Just curious really as this test would confirm if the ETF is meeting its investment objective.
Hi Justin,
It’s interesting that in your model portfolios, you assume that rebalancing is done monthly, when in this article, the most common strategy is to rebalance just once a year and notes this should be fine for most: https://canadiancouchpotato.com/2011/02/24/how-often-should-you-rebalance/
I understand that the monthly rebalancing choice is because it’s assumed that asset allocation ETFs will stay near their targets. However, in the prospectus of of VBAL for example, no clear rebalancing strategy is outlined except for a note that “the portfolio asset mix may be reconstituted and rebalanced from time to time at the discretion of the Sub-advisor.”
Another example is Tangerine’s Balanced mutual fund, where their rebalancing strategy is more clearly outlined, however it’s still possible they only rebalance every quarter though it’s worded such that they may review more often:
“The actual allocation among the four asset classes may deviate from the target allocations as a result of changes in value of the indexes (and the securities that make up the indexes) relative to each other. The Portfolio Sub-advisor will rebalance the asset classes back to the target allocations if, in the case of the Canadian bond index component, the actual allocation is higher or lower than the target by 2% or, in respect of any of the other components, the actual allocation is higher or lower than the target by 1.5%. Such a review will occur on at least a quarterly basis. ”
Given the variance or ambiguity of rebalancing strategies employed by ETFs/mutual funds, would you still recommend for most to rebalance only once a year regardless of major market fluctuations (such as the dip last March), especially for those who manage their own asset target mix? And if so, would it make more sense to have your model portfolios, adjusted to assume an annual rebalance as it would align with your general rebalancing recommendation?
I’m still on the three fund (XAW / ZAG / VCN) portfolio. I rebalanced this year, but not as early as I should have, and it looks like I lost out on about 0.8% worth of return (relative to the equivalent asset allocation single-fund option) because of this.
My questions would be:
1. I’m very tempted Can a case can still be made for a “true Couch Potato” approach with the three-fund option, when these single funds now exist?
2. Are there mutual funds that have the same profile as ETFs like VBAL and VGRO, that can be used as a place to stash regular (monthly or biweekly) contributions for a few months, building up funds until commission-charging ETF purchase is worthwhile? Many people (myself included) have the habit of using the e-Series funds as a temporary bucket for regular contributions, but this still requires buying and selling four funds.
Thanks Dan!
I noticed you don’t report the returns for a 100% Equity portfolio, nor do you go beyond 80% Equity in your model portfolios. I assume this is a conscious decision, nevertheless there are a lot of young investors out there who thing 100% VEQT is the way to go. I’d love to hear any thoughts or cautions you may have on the subject & the importance of bonds, perhaps in a follow-up blog post.
I think perhaps the biggest argument I have heard in favor for an all equities portfolio is that if an investor won’t stay the course during a huge 30% drop in VEQT then they probably wouldn’t stay the course during a 25% drop in VGRO or a 20% drop in VBAL either. (Not saying I buy into this argument, this is just what I have heard).
Thank Dan and Justin!
What all-in options are available for Canadian investors when it comes to USD funds? Something similar to VBAL or VAB+VEQT that can be purchased in USD? I think Vanguard has VT + BNDW that could accomplish the same, but maybe there are others.
@Luc – I’ve done the same thing. Sometime simplicity and convenience is worth the slight extra fee. I went with XGRO since it has slightly lower fees than VGRO.
Thanks Dan.
Great numbers. Question I have with VAB and XBB have a total return of 8.6% . I would consider that great compared to Simpli GIC and HISA at 1.0-2.5%. Why are people talking how poor the bond performance has been in the past year? what am I missing. I would assume if I bought XBB Jan 1 2019 and Sold it on Dec 31 my money would have made me 8.6 % with very low risk and no locked in term.
Thank you so much for this invaluable information. I learn more reading one of your blog posts than a month reading the Financial Post!
Hi Dan, I have been using use specific core funds for many years. I usually rebalance quarterly based on a pre establish range. In Feb/March both the equities and bonds went down, this is very unsual. But I resisted the temptation to increase the equity portion as all were within the range. I now regret! But “c’est la vie”.
I never thought much for the all in one ETFs but i maybe convinced. I currently hold a variety of US CAD INT and Bonds ETFs. I’m not good at rebalancing, never had been. my rebalancing happens when i add money one time each year. Should I move (sell) all i have and just go with an all in one ETF?
after this post, even i am thinking to move to all in one VGRO
My current portfolio of 5 funds is bit tiresome to maintain when it comes to rebalancing (VAB/VCN/VUN/XEC/XEF) though i am in accumulation phase. Wondering after retirement, the sell and buy part to rebalance might be tedious for little gains.
Can you please advise is it worth to move my 80Eq20Bonds (VAB/VCN/VUN/XEC/XEF) to VGRO in all registered and non registered account now..
Hello Dan,
Can you advise how the yearly return of 6.5% for XEF was calculated?
I have 6.00% for XEF for 2020 without DRIP: Dec 31, 2019 closing price was $31.53 and closing price on Dec 31, 2020 was $32.79. Dividends were $0.357 and $0.2757 so total gain was $1.89 for the year. Assuming 1000 shares on Dec 31, 2019 -> $31,530. Dec 31, 2020 would be $33.42 x 1000 = 33,420. So 33420/31530 = 6%
I don’t think DRIP would add 0.5% gain but maybe it has to do with withholding tax or something.
XBB is very close, off 0.1% probably because of DRIP.
Thanks, Ray King
@Mark H.: He listed the VEQT returns, only a little further up from the asset allocation ETF section.
And here’s a request for a future blog post: on “sustainable” couch potato ETFs in Canada.
I’m hoping to reduce my fossil fuel exposure a bit, and iShares in particular have recently made an effort to introduce “ESG”-focused broad-market index ETFs.
That’s promising on one hand, but what are the trade-offs in terms of market exposure, bid/ask spreads, screening methodology or other subtle issues? If I replace only a part of the Canada/US/EMEA/bonds mix, where do I get the best sustainability or the least additional risk for the buck? Does it make sense to hold out for more optimal VCN/VUN/etc. alternatives and what’s the outlook with Vanguard even?
I think this would be a really interesting topic to read about on this blog, nobody really covers it with the same care and insightful writing as you do :)
Would you mind clarifying if the all-in-one Vanguard ETFS would be appropriate to hold in TFSA? I vaguely recall an article you did, mentioning which funds are better in different types of accounts. I’m looking to simplify from 3-ETF model, to 1 ETF, in my TFSA. Many thanks for your valued insights and ‘wealth’ of information!
@Brandon: I think everyone was surprised by bond returns in 2020. However, if the last 15 years have taught us anything, it’s that we can’t assume “rates have nowhere to go but up.” Rates might rise to their long-term historical average eventually, but I don’t think anyone should be forecasting that. They may stay low for a long time, and they may fall further. Remember that the best predictor of bond returns over the medium term is current yield. So if you’re doing a financial plan it’s reasonable to expect bond returns of less than 2% (maybe significantly less) for the foreseeable future.
@Mayor: I used to do semi-regular posts about tracking error, which I agree is an important measure on an index fund. This information is now widely available on ETF providers’ websites, which almost all public fund performance compared to the benchmark. Most traditional indexes do a very good job of tracking their benchmarks, though form time to tome there are exceptions. The most recent outlier has been XUU, which made the poor decision to use several funds to the replicate the US total market instead of just holding ITOT.
https://canadiancouchpotato.com/2013/04/18/how-well-does-your-etf-track-its-index/
https://canadiancouchpotato.com/2013/04/22/what-causes-an-etfs-tracking-error/
Apologizes in advance as this maybe a silly simple question and I should know the answer but I don’t :-) is why are there different return figures for say VBAL between you, Vanguard site and Canada Stock Channel calculator when using the same time period?
@Jordan: The decision to use an asset allocation ETF versus a multi-ETF portfolio is personal. There is no clear winner. But overall I think the single-fund option should be the default, especially for investors who don’t already have experience managing multiple funds.
There are many balanced mutual funds available, but I’m not aware of any that use only index strategies and have the a similar allocation to what you would find in the Vanguard and iShares asset allocation ETFs.
@Peter: I have no experience with Canada Stock Channel, so I can’t speak to that. However, there should be do discrepancy between the returns reported here and those on the fund providers’ websites. One potentially confusing point, though, is that ETFs report their returns in two ways: market price and NAV (net asset value). These can differ by several basis points. I always report in NAV, and I have rounded to one decimal place.
https://canadiancouchpotato.com/2013/03/13/two-ways-to-measure-an-etfs-performance/
@Paulina: Yes, the asset allocation ETFs are ideal for TFSAs, and they are appropriate holdings in all account types.
@Jakob: Thanks for the comment. Not sure if you saw this collaboration between Justin and me:
https://canadiancouchpotato.com/2020/11/23/inside-the-ishares-esg-asset-allocation-etfs/
And this podcast (now a bit out of date):
https://canadiancouchpotato.com/2017/05/18/podcast-8-couch-potato-with-a-conscience/
This site is also an excellent resource for ESG investing:
https://www.sustainableeconomist.com/model_portfolios
@Ray King: The total returns reported here all come from the fund providers’ sites and/or Morningstar Direct.
According to the iShares data for XEF (you can download a spreadsheet of historical prices and monthly returns), the closing price on December 31, 2019, was $31.48, not $31.53. And the closing price on December 31, 2020, was $32.84, not $32.79. Dividends are also assumed to be reinvested immediately. These changes should explain the differences you’re seeing.
@Mak and Nin: I can’t advise you to sell your portfolio and rebuild it with an asset allocation ETF. All I can do is ask you to consider what advantages you’ve enjoyed by holding multiple ETFs instead of one, and then ask yourself whether these advantages (if any) are important to you.
@Pat M: If people have complained to you about bond returns during the last couple of years, it’s they who are missing something, not you. :)
That said, comparing a bond ETF with a savings account or GIC is highly misleading. As described in the post, bond prices plummeted in March, and it is always possible for bond ETFs to lose value over longer periods. This cannot happen with a GIC or savings account, so the risks are not similar.
https://canadiancouchpotato.com/2015/05/07/should-you-replace-bonds-with-cash/
https://canadiancouchpotato.com/2015/05/18/how-changing-interest-rates-affect-fixed-income/
@Argon18: There are a number of asset allocation ETFs available from US providers, or as you say, you can build a diversified portfolio using one bond ETF and one global equity ETF such as VT.
But these are fundamentally different from the asset allocation ETFs from Vanguard and iShares, which are specifically designed for Canadians. These ETFs hedge all fixed income to Canadian dollars, and they all hold a significant overweight to Canadian stocks. Anything you build using US-listed ETFs will bear little resemblance, so it’s important to ask why a Canadian would want to hold an entire portfolio in USD before deciding on how to do it.
@Mark H: My model portfolios don’t cover the entire spectrum: if people want to invest in 100% equities they don’t need my blessing. But I tend to think a balanced portfolio is more appropriate for almost everyone. It’s important to understand that the maximum drawdown for an all-equity portfolio should be considered at least 50%, not 30%. You only have to go back to 2008-09 for that (it happened over six months). Once an investor can demonstrate they will stick to the course after losing half their life savings, then they’ve proven they can handle 100% equities.
https://www.moneysense.ca/columns/ask-moneysense/should-you-put-all-of-your-investments-in-equity-etfs/
Great article! Any thoughts on the new Tangerine Global ETF portfolios? Looks like they really have not yet made allocation details available .
Any plans to review the Questwealth portfolios? Over the past 6 years they seem to lag behind the iShares XBAL returns, but do offer a level of added convenience for those not comfortable in trading.
Thanks,
Jeff
@Canadian Couch Potato: Just two months ago and I totally missed your post anyway. How embarrassing. Well done getting ahead of people like me and thanks for the pointers!
Hi Dan/Canadian Couch Potato, I realize that my previous comment was directed at Justin, but I had actually meant that towards yourself Dan. Let me know your thoughts.
@Jeff: Thanks for the comment. I do plan on looking at the new Tangerine funds soon. I won’t be reviewing the Questwealth portfolios, which are actively managed. If you’re at Questrade and not interest in trading, the asset allocation ETFs are ideal!
@William Wong: Thanks for the comment. I actually don’t know many investors who schedule an annual rebalancing. My sense is that most take a more casual approach, i.e. rebalancing any time they make new contributions. All of the research I’ve seen on rebalancing suggests there is no optimal strategy: if you just get it mostly right, that’s enough. (Remember, much of the time rebalancing will lower returns, not boost them. It’s primarily a risk management strategy.)
https://www.moneysense.ca/columns/ask-moneysense/does-rebalancing-investment-portfolio-every-month-mean-bigger-investment-returns/
With our clients, we rebalance using thresholds, not the calendar, i.e. whenever stocks or bonds are more than five percentage points off target. But even then, there are considerations such as taxes and portfolio size to consider. (The bigger portfolio, the more it makes sense to rebalance with a lower threshold.)
The asset allocation ETFs do have a stated rebalancing strategy, but in practice, as long as they have large cash flows they will rarely drift far off their targets, so it’s reasonable to assume they’re effectively always in balance. In order to make the comparison more fair on the model portfolios, it makes sense to assume that a multiple ETF portfolio would also stay very close to its long-term target, and monthly rebalancing is a good proxy.
In the end, this really just theory and backtesting. I’m not there’s any lessons for investors to take away or any specific recommendation. If investors are using asset allocation ETFs, they don’t have to do anything. And if they’re using portfolios of multiple ETFs, they should just choose a reasonable rebalancing pattern and do their best.
@Dan,
Regaring your comment:
According to the iShares data for XEF (you can download a spreadsheet of historical prices and monthly returns), the closing price on December 31, 2019, was $31.48, not $31.53. And the closing price on December 31, 2020, was $32.84, not $32.79. Dividends are also assumed to be reinvested immediately. These changes should explain the differences you’re seeing.
I see Ishares is using the NAV values to caculated their yearly returns however I was using the actual closing prices. That difference accounts for 0.33%!
Friday, Jan 22/21 is a good example – NAV is $33.57 but closing price is $33.69. That difference is $0.12/$33.57 = 0.36%.
Thanks, Ray King
Thank you Dan and Justin. This is superb. I taught senior finance at a secondary school in Kitchener, ON (Resurrection CSS) for decades and also ran a personal finance club for the last five years of my career at the school. I would have my grade 12 financial accounting kids do a simulation in pairs where they created two portfolios (one couch potato and one actively managed). They researched and traded like crazy during the simulation in their active portfolios and yet they rarely beat their passive portfolios. What a teaching moment on the merits of the couch potato methodology! I now have a personal finance business and speak to hundreds of students (including putting on nine virtual presentations at Laurier this academic year) annually through my biz – http://www.mastersmoneymanagement.ca – and I encourage the attendees to embrace the couch potato method. In my opinion, the vast majority of Canadians who are terrified financially would be so well-served with their long-term investment dollars inside TFSA or RRSP or even inside RESP accounts to go with asset allocation index products. It’s the only logical conclusion to combat the human condition when it comes to making poor investment decisions. You have taught me a great deal over these many years – thank you for that – and be sure that it’s being paid forward! Thanks again!
why did tdb911 December dividend not pay out? Does this have to do with the changes with the fund earlier in the year?
@Fred: Many thanks for the kind words, and keep up the great work!
@George: It looks like TD decided simply elected not to pay the year-end distribution in cash. I can’t speak to the reason for that decision. Any dividends received in the fund during the year would have been reinvested and therefore reflected in the value of the fund. In a TFSA or RRSP this will make no difference. If you hold a fund in a taxable account, however, you will still receive a T5 slip and the dividends will be taxable.
@Ray King: Yes, it’s true there can be some big differences between NAV and market price from day to day, especially with international ETFs. My feeling is that the NAV return better reflects the experience of a buy-and-hold investor. The only person getting the market price return is one who actually bought on December 31 and sold the following December 31.
https://canadiancouchpotato.com/2013/03/13/two-ways-to-measure-an-etfs-performance/