Model ETF Portfolios

Canadian investors may find it difficult to find an advisor who advocates index investing. The good news is there are many low-cost, broadly diversified and tax-efficient ETFs available to DIY investors. The bad news is there are now too many choices

To make this decision easier for newbie investors, I’ve included a step-by-step process below, along with sample portfolios with various asset mixes. Since a number of these ETFs have limited performance data, I’ve calculated their hypothetical past performance using index returns minus the current fees.

Step 1: Choose your portfolio’s asset allocation.

Vanguard Canada has provided this online questionnaire to help you determine the right asset mix for your different investing goals.

Vanguard investor questionnaire

Step 2: Choose your portfolio’s complexity.

I’ve included the Vanguard and Shares Asset Allocation ETFs under the “light” portfolio option. These simple one-fund solutions are ideal for the majority of DIY investors.

However, if you’re a more experienced investor with a larger portfolio, you may be able to save on product fees and foreign withholding taxes by turning up your portfolio’s complexity to “ridiculous”

VANGUARD ASSET ALLOCATION ETFS
ISHARES ASSET ALLOCATION ETFS
Vanguard ETFS
ISHARES ETFS
COMING SOON
COMING SOON

Step 3: Purchase your ETFs.

If you’re still not confident enough to place your first ETF trades, watching these tutorials may help to reduce some of the anxiety.

How to buy ETFs

Step 4: Rebalance your ETF portfolio.

Set-it and forget it is a myth (unless you’re investing in a single asset allocation ETF). When you do need to rebalance your portfolio, let these downloadable calculators do the heavy lifting for you.

Rebalancing calculator

*Note: For an even simpler 3-ETF portfolio, replace VUN, XEF and XEC with the iShares Core MSCI All Country World ex Canada Index ETF (XAW).  For additional model portfolio ideas, check out Dan Bortolotti’s Canadian Couch Potato blog.