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- Should you own Canadian-listed ETFs or U.S.-listed ETFs?
- Then and Now – XAW
- Then and Now – QQQ
- The Best All-in-One Exchange Traded Funds
Graham February 9, 2024 at 10:12 am · Edit
Mark,
You have mentioned that you like HEQT because of it’s additional Nasdaq 100 holdings. I think you also mentioned holding some QQQ for an additional Tech kicker. However, I believe the S&P500 already has about 30% in Tech sector. Is that not enough?Regarding international investments, my thought is to keep those separate from those in US and Canada using say VIU or XEF (in taxable account) This would allow some control over geographic allocation. It seems XAW presently has over 60% US exposure and that is function of the MSCI® ACWI ex Canada IMI Index XAW is based on. Probably not a bad way to get ex-Canada coverage, particularly in smaller accounts, but geographic allocation is just whatever XAW has.
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Mark February 9, 2024 at 11:24 am · Edit
Thanks, Graham.
I guess what I was trying to say is if I had to pick one ETF, to rule them all, and not own anything else at all it would be HEQT.
Who knows, I might invest this way eventually but not now…including capital gains inside my taxable account to deal with.
VIU and XEF are great funds. No concerns there vs. XAW or VXC. There are likely another 20+ ETFs I could have included in this post that could be of great value to investors…very personal decisions.
I appreciate your comment.
MarkReply
Pay February 13, 2022 at 11:32 pm · Edit
Hi Mark
I saw Aki’s question about the TD e-series funds. Would you distribute the funds the same way as ETFs, Canadian e-series in any account type, US and International in the RSP and bond in TFSA or RSP.What about those target retirement funds. If one were to look at the components of the fund that pertains to their retirement date, could you use this as a guide for your ETF or e-series distribution? Mine would be for year 2030 and the distribution is
39% US stock index (I could make this CDN)
26.6% Internstional(I could make this US/foreign)
35.5% Bond(23.8% short term CDN, 10.6 international bonds)—I know you don’t own any bonds but it seems for my age the Vanguard fund has about 35% fixed income.
I also invest only in stocks but I plan to include ETFs and possibly e-series to reduce my dividend stocks to about 50% and the rest index funds and so my bond exposure will be less than the 35%.Reply
Mark February 14, 2022 at 10:46 am · Edit
Hey Pat,
I think a great, boring set of investments could be this model. Not advice, just some ideas and yes, could have TD e-series just as easily.
1. Non-reg. = XIU, ZCN, VCN, VDY, etc = CDN-listed ETFs that pay dividends or focused on growth.
2. TFSAs = CDN-listed ETFs or CDN stocks or own an “all-world” ETF like XAW, VXC or even any all-in-one ETF like VEQT, etc.
3. RRSPs = as long as you have a long timeline, 10-20+ years, consider U.S. ETFs. Otherwise, could own CDN ETFs that own U.S. and international assets and avoid any currency conversion headaches. Just keep buying more over time 🙂I’m not a huge fan of retirement target date funds since I think you can build your own for less.
If your retirement year was 2030 then yes, something like that with a bias to equities is likely smart:
39% US stock index (yes, could own a XUU in CDN $$ for that one very easily).
26.6% Internstional (yes, could own a CDN ETF for that or merge the U.S. one with XAW).35.5% Bond (yes, could own a few CDN bond ETFs like XBB or XSB or VSB, etc.)
Choices abound 🙂
MarkReply
Betty February 11, 2022 at 7:07 pm · Edit
Would it be redundant to invest in both ETFs and TD e-series with the same account? I was thinking of having 4 ETFs and 4 e-series to cover the 4 allocation categories (bond, Canadian, international, US). And I will choose the percentage based on my risk and age. I also have 3 account types, TFSA, RRSP, and a non registered. Again, would it be redundant to use a different ETF company in each account, eg Vanguard in one, iShares in another, etc.
Is there any advantage of where you place the fund? If I look at the 4 allocation categories, can you recommend which type of account would be best for each category?Reply
Mark February 12, 2022 at 1:52 pm · Edit
It’s probably a bit redundant Betty. I mean, you can invest in an all-in-one ETF these days and avoid other ETFs all together.
TD e-series funds are great overall.
Nothing preventing you from owning similar ETFs from different companies from different accounts but too much practical value in that.
I can’t offer advice – but I believe the following model can be good:
1. TFSAs = CDN stocks or CDN-listed ETFs.
2. RRSPs = CDN stocks, U.S. stocks, CDN-listed ETFs or U.S. ETFs (e.g., VTI, QQQ).
3. Taxable = CDN stocks or CDN-listed ETFs.Oldie but a goodie 🙂
https://www.myownadvisor.ca/my-asset-location-location-location/Just some ideas!
All the best,
MarkReply
Betty February 13, 2022 at 10:41 am · Edit
Do you keep XAW in your TFSA or RSP? What is the advantage in your choice?
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Mark February 14, 2022 at 10:26 am · Edit
I keep XAW in my TFSA Betty but the withholding tax hit is the same with XAW inside the TFSA and RRSP – so no advantage.
The reason I keep XAW inside my TFSA is for long-term growth, since I’m inclinded to keep XAW invested inside my TFSA longer and tap my RRSP sooner in the coming years for income.Reference on XAW:
https://www.cashflowsandportfolios.com/diversified-etf-model-portfolios-canada/You can read about my proposed, drawdown order here:
https://www.myownadvisor.ca/weekend-reading-portfolio-drawdown-options/https://www.myownadvisor.ca/overlooked-retirement-income-and-planning-considerations/
“As a planned (hopefully!) semi-retiree in a few years, I’m thinking my portfolio drawdown order will be primarily “NRT”: that stands for Non-registered (N), RRSPs (R), TFSAs (T) (NRT).”
Happy to answer more questions!
MarkReply
Betty February 13, 2022 at 11:21 am · Edit
Is there an advantage purchasing ETFs with an online brokerage like TD Direct or through a firm like WealthSimple/Nestwealth. I assume the MER is the same for the fund either way? I know the latter also offer advice with a low management fee
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Mark February 14, 2022 at 10:28 am · Edit
Yes, the MER will be the same either way with any brokerage, but the transaction costs (the money need to buy the ETF in the first place) could be a different commission (e.g., free, $9.99 per buy, etc.).
Questrade and Wealthsimple offer some commission-free ETF investing, as does my partnership with BMO for about 80 ETFs.
TD is now offering a new service as well.
https://www.td.com/ca/en/investing/direct-investing/services/easytrade/Cheers,
MarkReply
Betty February 13, 2022 at 11:28 am · Edit
All-in-one ETFs—which acvount type is best?
See AlsoITOT vs. IVV: Which iShares Fund Is Best? | White Coat Investor8 Small-Cap ETFs to Buy NowStrategically Building A $50,000 Dividend Portfolio With Only 3 ETFs And 3 StocksHow to Invest in Index Funds - NerdWalletReply
Mark February 14, 2022 at 10:36 am · Edit
I would say to avoid any tax headaches, all-in-one ETFs could be best in TFSA, RRSP, etc. registered accounts. Keep any CDN-listed ETFs that invest only in Canada, inside taxable.
XIU ETF, for an example only, is very tax efficient in a taxable account 🙂 Other CDN dividend ETFs are good too.
https://www.cashflowsandportfolios.com/the-best-canadian-dividend-etfs/Cheers!
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RBull August 31, 2021 at 12:15 pm · Edit
Great post Mark.
VTI & QQQ for US here
VXUS for international
Stocks & Reits for CDNHave started a position in XGRO and over time will likely move more assets here for a simpler/cheap equity and FI solution.
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Mark August 31, 2021 at 12:58 pm · Edit
Very smart on your part. Happy to own VTI and QQQ. Will try and add to either in 2022.
I like XAW as you know for some international flavour but certainly VXUS more focused on that!!XGRO is a great fund and hard to go with that balanced/growth approach for years ahead.
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Deane Hennigar (RBull) August 31, 2021 at 1:14 pm · Edit
Thanks. I rebalanced and sold about 25% of my VTI over the last month with equities running up to stay within my allocation targets.
Party on.
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Mark August 31, 2021 at 1:29 pm · Edit
Nice problem to have, VTI has been on a tear over the last few years. Glad I didn’t sell any in my wife’s RRSP although I did adjust my RRSP at bit over the years by moving around VYM > VTI then to BLK and some others. Happy I bought BLK when I did in June 2020!!
That said, I hope to buy more VTI or QQQ in 2022. Out of RRSP room now. In savings mode. Boring I know!
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Deane Hennigar (RBull) August 31, 2021 at 2:55 pm · Edit
I suppose I could have let it run but I wrote a IPS for a reason and we were up around 76% so time to rebalance. Kept all CDN & VXUS same. Eventually I expect to get to 85% equities, as OAS/CPP draws nearer but who knows what markets will do.
Nice decision on BLK. As you know I switched VYM adding to VTI, and a touch of QQQ. Boring is good re savings/investments. Ditto here.
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Mark September 1, 2021 at 7:15 am · Edit
Yes, I got lucky on my BLK timing. Now fully out of VYM completely with purchase of BLK, BEPC.
Got small amounts of QQQ but that will do for now until I buy more in 2022. 🙂
YTD my CDN stocks are up almost 25%. Monster year.
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Deane Hennigar (RBull) September 1, 2021 at 7:49 am · Edit
Nice on timing and on CDN performance.
I only have about 1.5% in QQQ. Will buy more eventually and could see having another 5% there. I did buy some REET as a diversifier and inflation fighter. Also bought some VWO to pump up emerging but so far not working. LOL
Had to get calculator out to isolate CDN stuff. After accounting for TFSA contributions and unregistered divvy withdrawals we’re up ~23.6% on CDN. I’m overweight Canada now and underweight US; international and FI on track.
Ready to go with TFSA in 2022, and a little build up in unregistered. Have to decide on RRSP withdrawal. Did about 40% of normal in 2020 and about 30% so far in 2021. Need to get back on it to avoid bigger taxes later.
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Mark September 2, 2021 at 7:24 am · Edit
TFSA ready for 2022 already? Nice. 🙂
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RBull September 2, 2021 at 7:48 am · Edit
Easy when its funded from existing cash or in kind transfers from other accounts.
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Mark September 2, 2021 at 9:25 am · Edit
Gotcha. Saving mine now for 2022. That, and RRSP contributions for early next year.
I figure I’ll need $12K for TFSAs or $13K if they bump it? (inflation).
Then another $20K for RRSPs.So, need to save a bit to have $32K ready to roll.
Deane Hennigar (RBull) September 2, 2021 at 3:39 pm · Edit
It’s possible limit will be raised after 3 yrs and inflation bumping up. The ruling political party may be a factor.
I’d like to dump about 20k into unregistered and 12-13k into TFSA, but want to watch my asset allocations.Mark September 2, 2021 at 7:14 pm · Edit
Yes, smart to watch that and stick within your lanes!
Makeshifthappen2020 May 2, 2016 at 1:00 pm · Edit
Hey what do you think about VFV in your TFSA?
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Mark May 2, 2016 at 2:49 pm · Edit
VFV is a great product. I believe it trades in Canadian dollars and VFV is the Canadian version of U.S. VOO. So, using VFV in a non-registered account withholding taxes will apply (15%) but they are recoverable when investors file their tax returns. In an RRSP or TFSA withholding taxes will apply with VFV – which will increase the cost of owning this product. Thanks for the comment.
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Paul November 18, 2015 at 8:28 pm · Edit
Yes, I do own VGG as well as CUD which is similar but hedged against US dollar. A combination I really like is VGG and VEF (FTSE DEv ex NA – hedged) along with corporate strip bonds. What do you think ?
P.S. I am in the process of revamping my RRSP portfolio – could you possibly share highlights of what you own in your RRSP ?
Thanks!
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Mark November 19, 2015 at 8:44 am · Edit
I think for folks that do not want to invest in dividend paying stocks individually, VGG on the U.S. side and XIU on the CDN side, as two examples, are good ETFs to own. Again, not a recommendation, just a comment from me.
Here’s a post on how I manage my DIY portfolio Paul. This is not a recommendation, just some insight. My RRSP is becoming more indexed with a U.S.-listed ETF like VTI over time. That’s my plan anyhow.
https://www.myownadvisor.ca/how-i-manage-my-diy-stock-portfolio/Reply
Paul November 18, 2015 at 7:32 pm · Edit
why not consider VGG (Vanguard US Dividend Growth) instead of the US listed dividend stocks ?
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Mark November 18, 2015 at 7:57 pm · Edit
I have considered that one Paul. Like most dividend ETFs however, if you own the top-10 or top-15 stocks that largely acts as a proxy for the fund and you don’t have to worry about the fund fees while getting similar returns. The yield on this is also less than VTI, which means you’re getting less diversification with VGG and less yield.
That said I won’t rule it out eventually. Do you own VGG? Thanks for your question.
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ARGI November 18, 2015 at 10:16 am · Edit
What is the problem with FTN-15% and DFN-10%, I have never seen these high dividends stocks recommended nor commented. They are my most profitable FERR stocks!
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Mark November 18, 2015 at 11:41 am · Edit
I personally wouldn’t invest in them (FTN or DFN) since those yields will come down eventually, no? I say this because I don’t see how 14% yield is sustainable. Drop me a line ARGI and let me know 🙂
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Brian September 20, 2019 at 4:30 pm · Edit
The yield of DFN, FTN, etc. is sustainable as long as the total return of the stocks held maintains the average. It is a leveraged fund, so it only needs to earn an average of 10% in growth and dividends (total return) to pay the 14% yield. It is now four years since your reply to ARGI and DFN currently has a 13.35% yield and recently declared it 186th consecutive monthly dividend. All it is doing is monetizing the total return of the stocks held. If the average dividend yield of the underlying stocks is 4% it only needs 6% in growth (+ a bit for fees) which is quite feasible. The current YTD of XIU is 16%. If that were leveraged 50% the return on capital would be 32%. After the cost of leverage at 5.25% that leaves a net return of 26.75%, over double that of DFN. The difference is in the down years when XIU is negative, DFN still pays as it builds up a surplus in the good years. It works somewhat like an annuity, paying the same every year regardless of what the market does.
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Mark September 21, 2019 at 8:21 am · Edit
Hard to believe where the time goes Brian…
DFN has paid a ridiculous yield for some time now…I honestly can’t believe there hasn’t been a haircut with 13% yield.
Do you hold this is in a taxable account or registered account?
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Brian September 21, 2019 at 2:08 pm · Edit
I agree, the yield looks ridiculous when compared to the 4% yield of the stocks it holds. The yield of DFN though, is not the same as yield from dividend stocks. The yield from dividend stocks comes from earnings which comes from business operations. Leveraged capital gains and dividends are repackaged as yield for holders of DFN.
You mentioned wanting to buy CNR in a recent comment. CNR has had annual capital gains exceeding 10% the last five years and the dividend yield is currently 1.8% which makes a total return of close to 12%. Leveraged funds like DFN only need a total return of 9% to pay a yield of 12% or 13% yield due to the use of leverage. If 4% of that 9% that is needed comes from dividends (Canadian banks pay about 4%), only 5% is required from capital gains, which most blue chip stocks can deliver annually.
Comparing DFN and CNR at dividendchannel you are better off holding CNR. While the yield of DFN is considerably higher, there is little to no price growth, so CNR wins in the long run, even with a yield of 1.8%.
While the yield of DFN seems high, the return from CNR is actually higher, but it is a mixture of capital gains and dividends while the return from DFN is only dividends as the share price remains about the same.
Investors in DFN will have a lower return, but in exchange they get a stable monthly income without having to sell shares to get it. As far as taxation goes, the yield from DFN is taxed, at least in 2018, as a mixture of eligible dividends (85%) and capital gains 15%.
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Mark September 22, 2019 at 9:50 am · Edit
As yes, so you’re basically swapping capital gains + getting the dividends = yield. Even then, that seems crazy high.
I would be worried about that personally! I’m very conservative as an investor though – probably why I own 30 CDN + some U.S. stocks + U.S. ETFs on top of that. What happens when capital gains fall? For a prolonged period?
I like CNR. I wish I had enough to DRIP it. I think that would mean I would need some 300 shares or about $36k invested.
Do you own a bunch of DFN?
Cheers,
MarkReply
Really a super solid list of Canadian and U.S. stocks mentioned. Any of these names can be a basis for a long term dividend growth portfolio. Of course, I’m still a big fan of the large Canadian banks with TD, BNS and RY in my ROTH. Happy to own many of the American stocks mentioned as well. Long term dividend investing doesn’t have to be difficult at all. Just stick to quality, long term dividend payers/raisers, diversify and be patient. Thanks for sharing.
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Mark November 10, 2015 at 6:42 am · Edit
“Just stick to quality, long term dividend payers/raisers, diversify and be patient.” Agreed. Hopefully you’ll see a reflection of that in my latest dividend income update coming out later today. Thanks for the comment.
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Aki November 8, 2015 at 3:33 am · Edit
Mark,
I always wonder how to balance between Dividend stocks and index funds. My RRSP around is TD eseries (canadian, US, International) equity and 20% e series bond. But, MY TFSA is not very big probably few thousand worth dividend stock from top list of few canadian companies. My question is what would you advise, are Index funds are good enough..Your website is loaded with information, whats your idea of hybrid investing, I always wonder how you distribute between dividend stocks and index funds. I just started making portfolio and would love to peek inside yours to see how you distribute it.
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Mark November 8, 2015 at 8:27 am · Edit
Thanks for reading Aki. Nothing wrong with TD e-series products. Low fees and good diversification.
I only keep CDN dividend paying stocks inside my non-registered account and within our TFSAs.
https://www.myownadvisor.ca/dividends/As for your question I cannot provide any advice on this site for many reasons but the quick answer is yes “index funds are good enough”.
If you wish to take on more risk for potentially more reward you can invest in dividend paying stocks but the challenge will always be matching or beating the index with this strategy.My idea of hybrid investing the best of both worlds: dividend investing and indexing. I hold about 40 stocks for passive income/cash flow for (hopefully) early retirement in another 10 years and I index invest everything else for safety. I don’t hold bonds because I have a pension from work and because I’m very lucky to have it I consider that a “big bond”.
Based on that post, there are a number of holdings in that article I own and probably always will unless the dividend gets eliminated.
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Aki November 10, 2015 at 12:14 pm · Edit
I also think, its easy to invest in TD eseries or other ETF. As there is no fee and you can pretty much put 400$ every month. But, for buying something like TRP or individual stocks, you need to have atleast 1000$ aside..So instead of investing monthly it become once in 2 month or sometime more which requires discipline. Also, I cannot ignore the fact that people always like to look at 52 week bottom for buying which delays the investment.
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Mark November 10, 2015 at 5:30 pm · Edit
I think you’re right Aki, probably good to wait until about $1000 to invest as to keep transaction costs low/close to 1%. I admit to trying to wait to the 52-week lows to make a purchase. I don’t always follow this advice but I try.
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I prefer dividends over ETFs, but this is a great list all the same! 😛 Especially agree with most of your Canadian Stocks. Good choices. I think you went with classic choices for US, but can’t go wrong with them either!
Cheers!
Mike
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Mark November 5, 2015 at 10:54 am · Edit
I prefer dividends over ETFs as well – don’t worry about that – I like the passive income of doing nothing!
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We’re slowly getting into the index ETF world as well. Vanguard Canada has definitely upped their games when it comes to amount of different index ETF’s available for us Canadians.
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Mark November 3, 2015 at 6:13 pm · Edit
Absolutely. I feel some indexed products are worth owning given the super low cost diversification they provide.
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Dividend Growth Investor November 2, 2015 at 5:42 pm · Edit
Hi Mark,
Do you have a listing anywhere of all your holdings, asset allocations, portfolio weights etc?
Best Regards,
DGI
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Mark November 2, 2015 at 7:47 pm · Edit
Good question and I have been asked before but I don’t provide this information online since I already share many details about myself. If you want some more insight I can always drop you an email.
Thanks for understanding!
MarkReply
Investing Pursuits November 1, 2015 at 1:01 pm · Edit
Investing in quality companies that have paid dividends for a very long time are great stocks to hold for the long term. These companies raise there dividends every year almost. The banks dividend raise their dividends during the financial crisis but kept the dividends the same.
As far as ETFs go, they are a great vehicle for any one to get started in investing when they do not have a lot of money to start with. As if an individual buys commissions ETFs, providing the ETF price doesn’t move very much, will get a higher yield that what a savings account gets today.
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Mark November 1, 2015 at 3:55 pm · Edit
As far as ETFs go, I think the ones I mentioned in the article are excellent starting points for most investors. The key is an investors savings rate. The higher, the longer, the better. Thanks for reading!
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Roadmap2Retire November 1, 2015 at 12:21 pm · Edit
Those are some great picks..although I think if you own a VXC (and probably the same for XAW – didnt know there was a iShares product out to compete with VXC) – you wont need a VXUS, and might result in quite a bit of overlap. For my wife’s portfolio, we ended up with ZCN and VXC for equity exposure.
Really like the mix of individual Canadian and US stocks as well.
R2R
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Mark November 1, 2015 at 3:56 pm · Edit
Agreed, if you own VXC you probably don’t need VTI or VXUS. Thanks for reading and sharing R2R, I appreciate it.
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