Vanguard Launch of Balanced Asset Allocation ETFs
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Putting VGRO in perspective:
Based on funds held within VGRO, the weighted average MER is 0.14736%. Let us round it off to 0.15%. This basically assumes if one bought underlying ETFs individually and in the same proportion as held in VGRO.
The indicated MER for VGRO is 0.22 percent.
This means that for a one million dollar portfolio invested entirely in VGRO one stop shopping, the MER cost would be $150 if invested individually in underlying funds vs $220 in VGRO (excluding taxes etc.). This implies that one can do seven trades a year for rebalancing of assets (at TDDI for example or more at Questrade), if one was to buy underlying ETFs individually. VGRO includes asset rebalancing by Vanguard.
The impact would be somewhat less for VCNS and VBAL (fewer trades available for, rebalancing) due to higher MERs of fixed income portion.
One can choose different asset allocation percentages using the same seven ETFs than VCONS,VBAL and VGRO. By creating these new funds, Vanguard offers a good guide as a starting point.
By comparison, the annual cost a Robofund charging MER of 0.50 percent the cost is $500, or $1000 for MER of 1 percent.
Based on funds held within VGRO, the weighted average MER is 0.14736%. Let us round it off to 0.15%. This basically assumes if one bought underlying ETFs individually and in the same proportion as held in VGRO.
The indicated MER for VGRO is 0.22 percent.
This means that for a one million dollar portfolio invested entirely in VGRO one stop shopping, the MER cost would be $150 if invested individually in underlying funds vs $220 in VGRO (excluding taxes etc.). This implies that one can do seven trades a year for rebalancing of assets (at TDDI for example or more at Questrade), if one was to buy underlying ETFs individually. VGRO includes asset rebalancing by Vanguard.
The impact would be somewhat less for VCNS and VBAL (fewer trades available for, rebalancing) due to higher MERs of fixed income portion.
One can choose different asset allocation percentages using the same seven ETFs than VCONS,VBAL and VGRO. By creating these new funds, Vanguard offers a good guide as a starting point.
By comparison, the annual cost a Robofund charging MER of 0.50 percent the cost is $500, or $1000 for MER of 1 percent.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
kukucanuck: You are out by a factor of ten for your costs on a $1M portfolio
- .15%=$1500
- .22%=$2200
- .5%=$5000
- 1%=$10000
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
Thomas Babington Macaulay in 1830
- snowback96
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
All your calculations are off by a factor of 10x. For example, on a $1 million portfolio, the estimated 0.07% MER difference is $700, not $70. That's a lot of trades!kukucanuck wrote: ↑08 Feb 2018 11:19 This means that for a one million dollar portfolio invested entirely in VGRO one stop shopping, the MER cost would be $150 if invested individually in underlying funds vs $220 in VGRO (excluding taxes etc.). This implies that one can do seven trades a year for rebalancing of assets (at TDDI for example or more at Questrade), if one was to buy underlying ETFs individually. VGRO includes asset rebalancing by Vanguard.
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Since no one else wants to, I shall volunteer to nitpick.
Management fees for these Vanguard ETFs are 0.22%
MERs yet to be determined, but estimated at 0.25%.
Management fees for these Vanguard ETFs are 0.22%
MERs yet to be determined, but estimated at 0.25%.
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
I dare say that even with the correct numbers for 'costs', most investors would still be better off holding that $1 million in one holding of VGRO. Most DIYers (albeit likely not most FWFers) will likely botch their trade decisions enough to underperform VGRO (or Mawer equivalent) on a rolling 10 or 20 year average simply because they will try to market time their re-balancing decisions, never mind their selection of individual holdings in the first place.
The product is well suited to set a new standard against competing offerings, including robo-advisors.
The product is well suited to set a new standard against competing offerings, including robo-advisors.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Yes, my mistake. I was indeed off by a factor of 10. My apologies.
So, the calculation would indicate 70 trades a year for rebalancing. If we use a suggested MER of 0.25 percent, it would mean 100 trades based on TDDI rates.
That is lot of trades for passive investments. one would be better off holding a portfolio of seven or even 10 index ETfs even for a portfolio of size as low as $250K. One could rebalance the entire portfolio twice a year and still be ahead.
So, the calculation would indicate 70 trades a year for rebalancing. If we use a suggested MER of 0.25 percent, it would mean 100 trades based on TDDI rates.
That is lot of trades for passive investments. one would be better off holding a portfolio of seven or even 10 index ETfs even for a portfolio of size as low as $250K. One could rebalance the entire portfolio twice a year and still be ahead.
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
If you are smart enough and disciplined enough to re-balance methodically without emotion, or assuming you can outsmart the market. Most cannot do that consistently. Personal judgement and all of its flaws enter the equation.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Which of these would perform better?
VAB 3% return
GIC 3% RETURN
DGS 10% including dividends
@ 40/60 portfolio
100k VAB + 60K Dividend Growth Stocks
100k GIC + 60k dividend growth stocks
160k VCNS according to PDF 10 year return would be about 5.5%
VAB, because of premium bonds, is taxed worse in a non-registered account then a registered account. If VCNS is held in a non-registered account does the way Vanguard attribute costs inside ETFs lessen the tax on VAB? sort of
VAB 3% return
GIC 3% RETURN
DGS 10% including dividends
@ 40/60 portfolio
100k VAB + 60K Dividend Growth Stocks
100k GIC + 60k dividend growth stocks
160k VCNS according to PDF 10 year return would be about 5.5%
VAB, because of premium bonds, is taxed worse in a non-registered account then a registered account. If VCNS is held in a non-registered account does the way Vanguard attribute costs inside ETFs lessen the tax on VAB? sort of
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
It's simply impossible to predict VAB's total return between now and any day in the future.
I don't know where this 3% comes from, but I'm sure it's not a guaranteed total return ahead (without, even, a timeframe for the prediction).
I've often seen senseless comparisons between the yield-to-maturity of a bond fund and the interest rate on a guaranteed investment certificate on internet forums, but I'm sure FWF members know better.
Variable Percentage Withdrawal (finiki.org/wiki/VPW) | One-Fund Portfolio (VBAL in all accounts)
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
That's just a wild guess from a DARI, what yield number do you use on your spreadsheet to get an estimate of yield? I feel I need some number for comparison/ballpark return.longinvest wrote: ↑18 Feb 2018 17:25It's simply impossible to predict VAB's total return between now and any day in the future.
I don't know where this 3% comes from, but I'm sure it's not a guaranteed total return ahead (without, even, a timeframe for the prediction).
I've often seen senseless comparisons between the yield-to-maturity of a bond fund and the interest rate on a guaranteed investment certificate on internet forums, but I'm sure FWF members know better.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
The simple answer is that we don't know which investment will have the highest return over our own investment and withdrawal horizon. We must learn to live with this uncertainty.
Those who are unable to deal with uncertainty can use a guaranteed investment certificate (GIC), at the cost of losing liquidity, and get certainty for a while (the maturity of the GIC).
In my spreadsheet, I use 1.5% real as a general return trend for total-market bond ETFs (nominal and inflation-indexed), and 5.5% real as a general return trend for total-market stock ETFs (domestic and international). These crude trends are not return predictions; they're simply used to calibrate my crude planning calculations, with full knowledge that actual returns will be different, possibly significantly so.
The trick is to make sure that calculations are used in a flexible manner by adapting to actual returns after the fact. VPW is an example of this.
Those who are unable to deal with uncertainty can use a guaranteed investment certificate (GIC), at the cost of losing liquidity, and get certainty for a while (the maturity of the GIC).
In my spreadsheet, I use 1.5% real as a general return trend for total-market bond ETFs (nominal and inflation-indexed), and 5.5% real as a general return trend for total-market stock ETFs (domestic and international). These crude trends are not return predictions; they're simply used to calibrate my crude planning calculations, with full knowledge that actual returns will be different, possibly significantly so.
The trick is to make sure that calculations are used in a flexible manner by adapting to actual returns after the fact. VPW is an example of this.
Variable Percentage Withdrawal (finiki.org/wiki/VPW) | One-Fund Portfolio (VBAL in all accounts)
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
There's a big tradeoff between potential rewards (or losses) and more certainty. Bonds are contracts to pay specific amounts of money on specific dates. As such, they offer more certainty than stocks, despite their fluctuating market value. Stocks are merely titles of partial ownership entitling their holder to a fair share of unknown future dividends.
The return of broad-market stock and bond ETFs can't be predicted, but mathematics allow us to know that broad-market stock ETFs will be more volatile than broad-market bond ETFs.
The return of broad-market stock and bond ETFs can't be predicted, but mathematics allow us to know that broad-market stock ETFs will be more volatile than broad-market bond ETFs.
Variable Percentage Withdrawal (finiki.org/wiki/VPW) | One-Fund Portfolio (VBAL in all accounts)
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
TDDI is showing a little more info on these now dividend date of April 4 2018.
Dividends of
vcns .20
vbal .26
vgro .32
Maybe they will adjust as these gain some time in the market.
Dividends of
vcns .20
vbal .26
vgro .32
Maybe they will adjust as these gain some time in the market.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
- Shakespeare
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
? From Vanguard https://www.vanguardcanada.ca/individua ... s=balanced
TD is x4. Probably should be about x6 given inception date.Balanced ETF Portfolio .064366
Conservative ETF Portfolio .049535
Growth ETF Portfolio .078897
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Right. TDDI reports annual dividend. Vanguard is reporting quarterly payment.
Div yield reported by TDDI today is:
VCNS 0.80%
VBAL 1.06%
VGRO 1.31%
- Shakespeare
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
I would expect more like 1.6% for VBAL when correctly annualized.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
It's ironic that the growth portfolio yields more than the conservative portfolio. I suspect the investment in global bonds is dragging things down. Yields are bad enough here without adding a 30yr German bond at 1.2%.
"Everybody has a plan until they get punched in the face." Mike Tyson
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
I don't see that higher yield in VGRO is ironic. One would expect VGRO to have a higher yield AND a higher overall total return long term as the risk premium for higher risk and volatility. The more conservative options are more about protection of capital, than return on capital.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
At least it's not negative.
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“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
I had thought that bond yields normally exceeded dividend yields - but maybe I was wrong:AltaRed wrote: ↑31 Mar 2018 13:30I don't see that higher yield in VGRO is ironic. One would expect VGRO to have a higher yield AND a higher overall total return long term as the risk premium for higher risk and volatility. The more conservative options are more about protection of capital, than return on capital.
"Everybody has a plan until they get punched in the face." Mike Tyson
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
Until the early 60's the common wisdom was that bonds should yield less than stocks, because they are safer.
We may be heading back there.
finiki, the Canadian financial wiki
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
The long bond bull market as a result of double digit interest rates to tackle inflation can be deceiving. The bulk of the baby boomers and elders never had fixed income investing so good.....until very recently.
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Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
From behind the G&M pay wall:
https://www.theglobeandmail.com/investi ... -obsolete/
https://www.theglobeandmail.com/investi ... -obsolete/
Note: VBAL is 30% of my portfolio.Robos do all the work for you, while the Vanguard ETFs do a lot of work. There’s definitely room for both in the investing world.
Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
Re: Norbert, your wish has been granted [Vanguard launching cheap balanced index ETFs]
I think I will be selling off my 4 E-Series funds and buying VBAL or VGRO and the same with my wife's portfolio.
The biggest thing for me is re-balancing and keeping emotions out of it.
I feel like I am very disciplined, yet I still struggle with only 4 funds!
Is there any point of waiting a bit more for the fund to have some more history?
Trading volume average is around 35,000.
The biggest thing for me is re-balancing and keeping emotions out of it.
I feel like I am very disciplined, yet I still struggle with only 4 funds!
Is there any point of waiting a bit more for the fund to have some more history?
Trading volume average is around 35,000.