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Model ETF Portfolios

Canadian investors with modest portfolios may find it difficult to find a reasonably priced advisor who also advocates market-based investing. The good news is there are many low-cost, broadly diversified and tax-efficient ETFs available to retail investors. The bad news is there are now too many choices.

To make this decision easier for new investors, I’ve created several Model ETF Portfolios with asset allocations ranging from conservative to aggressive. Since a number of these ETFs have limited performance data, I’ve calculated their hypothetical past performance using index returns minus the current fees (the methodology is available here).

*Note: For an even simpler 3-ETF portfolio, replace VUN, XEF and XEC with the Vanguard FTSE All-World ex Canada Index ETF (VXC) or the iShares Core MSCI All Country World ex Canada Index ETF (XAW).  Sample portfolios can be found on the Canadian Couch Potato blog.   

Before deciding on your asset allocation, pay close attention to the lowest one-year return and ask yourself if you can handle losing this much over the course of 12 months. For example, the model portfolios with 70% stocks would have lost between 20-25% from March 2008 to February 2009. This would have tested the resolve of even the most steadfast investors.

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