Simple Portfolios 2014

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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Shakespeare
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Simple Portfolios 2014

Post by Shakespeare » 24 May 2014 19:37

It's been suggested that simple portfolios be updated.

Here are some suggestions. I am sure others will have alternatives.

1. Simple Balanced Fund: Mawer Balanced

2. Two part portfolio: VAB and VT (US$) or XWD (C$).

3. Three part portfolio: VAB, XIC, and VT or XWD

4. Four part portfolio: VAB, XIC, VTI (US$) or VUN (C$), VXUS (US$) or ZEA (C$)

I'm sure there will be other suggestions.
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Re: Simple Portfolios 2014

Post by Norbert Schlenker » 25 May 2014 09:54

Thanks, Shakes. I've done an edit and am happy to do more. The variety of new products makes this a bit challenging, as the lists of options are getting a little long.
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Re: Simple Portfolios 2014

Post by Peculiar_Investor » 25 May 2014 10:19

FWIW, a while back the Simple portfolios portion of the Portfolio design and construction was split out into it's own article. The rationale was Wikipedia's guidance (Wikipedia:Article size), particularly reader attention span for such a long article.

With that in mind, I'd suggest improving the Simple portfolios to reflect the new alternatives.
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Re: Simple Portfolios 2014

Post by Shakespeare » 25 May 2014 10:21

I'm sure there's a clever way you can transclude the separate article into the full article to avoid having to edit the same section twice.

Otherwise, there seems little point in duplication.
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Re: Simple Portfolios 2014

Post by longinvest » 25 May 2014 13:51

When Vanguard Canada's new All World ex Canada ETF becomes available, in a few months, I would add:
  • The Canadian Three Fund Portfolio:
    • Vanguard FTSE Canada All Cap Index ETF (VCN)
    • Vanguard FTSE All World ex Canada Index ETF (V??)
    • Vanguard Canadian Aggregate Bond Index ETF (VAB)
Why only Vanguard ETFs, even if there are some cheaper ETFs (e.g. XIC)? Because Vanguard has, so far, proven trustworthy and to have the interest of investors at heart. If not for Vanguard, ETF management expense ratios would still be unreasonably high, and we would still be forced to use currency-hedged ETFs. I trust that Vanguard will lower its fees when it becomes economically possible to do so.

Other companies have proven their interest in extracting as much money as possible off investors by creating new ETFs with lower fees instead of lowering the fees of nearly identical long-lived ETFs. So, I have no confidence that they'll keep their bait attractive low fees for long, once the new ETFs have gathered enough assets.
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Re: Simple Portfolios 2014

Post by longinvest » 20 Jun 2014 06:54

According to Sedar documents, the new Vanguard All-World ex Canada will appropriately have the VXC ticker.
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Re: Simple Portfolios 2014

Post by squid » 20 Jun 2014 09:47

I own VDU and was considering moving to ZEA due to the direct ownership issue. When looking at the fund data, it seems that VDU holdings are now direct too. Would VDU also be appropriate now?

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Re: Simple Portfolios 2014

Post by Insomniac » 20 Jun 2014 13:45

squid wrote:I own VDU and was considering moving to ZEA due to the direct ownership issue. When looking at the fund data, it seems that VDU holdings are now direct too. Would VDU also be appropriate now?
Are you sure about that? This is in the fact sheet for VDU:
* Information displayed is for the U.S.-domiciled Vanguard FTSE Developed Markets ETF

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Re: Simple Portfolios 2014

Post by longinvest » 11 Jul 2014 08:11

Now that the new ETF has started trading, I repeat my suggestion to add the following simple portfolio in Finiki:
  • The Three Fund Portfolio (for Canadians):
    • Domestic stocks: Vanguard FTSE Canada All Cap Index ETF (VCN)
    • International stocks: Vanguard FTSE All World ex Canada Index ETF (VXC)
    • Domestic bonds: Vanguard Canadian Aggregate Bond Index ETF (VAB)
I personally think that this should be a base portfolio to recommend.

It could be used as-is (by first selecting an appropriate asset allocation between stocks and bonds, and then dividing the stock allocation between domestic and international). The choice of specific securities can be done as a last step (e.g. VCN vs XIC vs HTX vs TDB900, VAB vs HBB vs GICs, etc.).

It could also be used as a starting point for further customization (e.g. tilting to small-value, slice and dicing, etc.) for those inclined to do so.
Bogleheads investment philosophy | Simple index portfolios | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VAB/ZRR

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Re: Simple Portfolios 2014

Post by adrian2 » 11 Jul 2014 08:33

Finiki appreciates new editors, why wouldn't you become one?
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Re: Simple Portfolios 2014

Post by parvus » 11 Jul 2014 22:26

Ditto!
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Re: Simple Portfolios 2014

Post by longinvest » 12 Jul 2014 18:30

Nice offer... But, that's a challenging task. I have been unable, so far, to compose half a decent page about VPW in the Bogleheads Wiki. Somehow, I find it much easier to play with spreadsheets and numbers. Do you think it would be possibe to copy over into Finiki parts of http://www.bogleheads.org/wiki/Three_fund_portfolio ?
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Re: Simple Portfolios 2014

Post by parvus » 19 Jul 2014 00:03

It's summertime, so some of the caretakers are away. Have you made any progress?
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Re: Simple Portfolios 2014

Post by longinvest » 19 Jul 2014 11:07

As you say, it's Summer and I haven't been proactive...
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Re: Simple Portfolios 2014

Post by LadyGeek » 01 Aug 2014 21:37

I'm one of the finiki caretakers, but have a different challenge - I'm a US resident. As long as someone can guide me on the Canadian aspects, I'll put the info into finiki.

I took a stab at it here: Simple portfolios ("Three component and four component portfolios")

and here: Portfolio design and construction ("Three component and four component portfolios")

What portfolios would you like copied from the Bogleheads wiki? Lazy portfolios

(I also did a minor update to: Variable percentage withdrawal)
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Re: Simple Portfolios 2014

Post by longinvest » 03 Aug 2014 16:49

LadyGeek wrote:I'm one of the finiki caretakers, but have a different challenge - I'm a US resident. As long as someone can guide me on the Canadian aspects, I'll put the info into finiki.

I took a stab at it here: Simple portfolios ("Three component and four component portfolios")

and here: Portfolio design and construction ("Three component and four component portfolios")
Great!
What portfolios would you like copied from the Bogleheads wiki? Lazy portfolios
I'm not sure, actually. I was thinking of a Canadian Three-Fund Portfolio finiki page inspired from the information on the Bogleheads wiki The Three-Fund Portfolio and Taylor's awesome Three-Fund Portfolio post.
(I also did a minor update to: Variable percentage withdrawal)
I'll have to work on the upstream page. It's on my todo list.
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Re: Simple Portfolios 2014

Post by LadyGeek » 04 Aug 2014 22:08

I created a draft sandbox page we can use for development: User:LadyGeek/Sandbox

Comments / questions / suggestions are welcome. Finiki editors are encouraged to edit the page directly.

Also, I added the Canadian 3-fund portfolio to the Bogleheads wiki: Canadian versions of lazy portfolios
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Re: Simple Portfolios 2014

Post by BRIAN5000 » 04 Aug 2014 22:21

Also, I added the Canadian 3-fund portfolio to the Bogleheads wiki: Canadian versions of lazy portfolios
First time to this page just had a quick look for now but looks really good. :thumbsup:
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Re: Simple Portfolios 2014

Post by Shakespeare » 04 Aug 2014 22:35

At the end should be "VT and VXC" with necessary wording changes.
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Re: Simple Portfolios 2014

Post by SkaSka » 05 Aug 2014 13:18

I can't seem to come to a choice between VTI or VUN for our RRSP accounts.

I understand the benefit of VTI would be exemption from US foreign withholding taxes in a RRSP account, but the added layer of complexity and costs with conducting Norbert's Gambit for currency exchange a couple times a year... is it worth it? And potentially issues with US estate taxes.

I'm figuring that the costs of currency conversion (even through NG) and trading costs would bump that 0.05% MER of VTI up to around an amount that VUN is at (0.17% + 30% foreign withholding tax) which would make me seriously reconsider going through the troubles of buying VTI.

I was leaning towards VTI but I think I'm swaying to VUN now for simplicity sake.

*Edit - Now I'm considering just buying VXC and getting both US and International (excluding US and Canada) exposure and calling it a day.

*Edit 2 - And since I'd buy the ETFs for free through Questrade, my hunch is that VTI vs VUN or VXC would be a wash in terms of cost effectiveness/efficiency.
Last edited by SkaSka on 05 Aug 2014 14:08, edited 2 times in total.

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Re: Simple Portfolios 2014

Post by newguy » 05 Aug 2014 13:35

LadyGeek wrote:I created a draft sandbox page we can use for development
The simplest portfolios, also known as lazy portfolios, use Guaranteed Investment Certificates (GICs) or single mutual funds
One of the simplest ways to obtain a diversified portfolio is to purchase a single balanced or income mutual fund.
I would suggest balanced, instead of mutual as you allude to later on.

http://ca.ishares.com/product_info/fund ... ew/CBN.htm is one such product that's an ETF.

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Re: Simple Portfolios 2014

Post by longinvest » 05 Aug 2014 19:46

SkaSka wrote: *Edit - Now I'm considering just buying VXC and getting both US and International (excluding US and Canada) exposure and calling it a day.

*Edit 2 - And since I'd buy the ETFs for free through Questrade, my hunch is that VTI vs VUN or VXC would be a wash in terms of cost effectiveness/efficiency.
Simplicity is attractive, isn't it? That's why I switched to VCN/VXC/VAB when VXC came out. It's not a perfect portfolio*, but it is good enough for me with its high diversification for a low average management fee of .19%. It is a portfolio I intend to stick to for the long term.

* Using cheaper Canadian or U.S. ETFs with Norbert's Gambit could be somewhat cheaper and a little more tax efficient, but would be more complex for a gain of maybe a few basis points.
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Re: Simple Portfolios 2014

Post by LadyGeek » 05 Aug 2014 22:09

Shakespeare wrote:At the end should be "VT and VXC" with necessary wording changes.
I understand the ticker symbols, but I don't know where you are referring to; nor what to change.
newguy wrote:
LadyGeek wrote:I created a draft sandbox page we can use for development
The simplest portfolios, also known as lazy portfolios, use Guaranteed Investment Certificates (GICs) or single mutual funds
One of the simplest ways to obtain a diversified portfolio is to purchase a single balanced or income mutual fund.
I would suggest balanced, instead of mutual as you allude to later on.
http://ca.ishares.com/product_info/fund ... ew/CBN.htm is one such product that's an ETF.

newguy
I updated the page: User:LadyGeek/Sandbox

skaska - I'll work in-between your questions, keep asking. :)

BRIAN5000 - Thanks. Do you have any more suggestions?
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Re: Simple Portfolios 2014

Post by LadyGeek » 05 Aug 2014 22:30

Looking at the organization, I moved the FPX indexes to the bottom of the article. It's useful info, but perhaps not relevant as a main point of the article. User:LadyGeek/Sandbox

If the intent is to construct a portfolio aligned with these indexes, then specific suggestions should be made. The four-component portfolio is one such suggestion.

Now, the article flows from diversification to the funds in increasing order of complexity.

Should the diversification section be part of this article? I think this section and the FPX indexes belong in Portfolio design and construction - which is currently a duplication of the simple portfolios article. Some reorganization is needed.
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Re: Simple Portfolios 2014

Post by Shakespeare » 05 Aug 2014 23:00

I understand the ticker symbols, but I don't know where you are referring to; nor what to change.
finiki wrote:As Rob Carrick has suggested [8], it is possible to replace two of the components (VEA and SPY) by the single all-world ETF XWD, offered by Barclays Canada. Vanguard offers a similar ETF, VT.
This sentence has a problem if located after the introduction of VXC. It's actually a 3-fund portfolio, so it should either also refer back to VXC or be moved up and rephrased.
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