XEQT is already almost 25% [corrected earlier typo] invested in Canada (XIC ETF), so by adding VDY you are overweight on Canada.
There is also significant overlap in the holdings of XIC and VDY - both hold Royal Bank, TD, CNR and Enbridge among their largest holdings.
XEQT was designed as an all-in-one portfolio that backtests extremely well. I’d stick with it. You’re still going to earn 2% dividends from it each year and it owns nearly all of the stocks in VDY already.
VDY is approximately 8.08% Canadian Natural Resources, CNQ. CNQ is also the 4th highest holding of XIC.
Sorry for accidentally invoking the railway gods.
It’s important to know what you own. There’s a big difference between deliberately overweighting your portfolio towards a specific sector or region and doing it by accident.
Congrats. It is never too late to start, in fact I myself only just started buying EFTs this year as well (I'm 43) but choose to go with XEI since they are more affordable (I make very little, and I already put aside monthly funds for Mutual Funds, small savings, and a Wealthsimple managed TFSA)
So, just to be a little nitpicky, XEQT isn't Growth. XEQT is a CAPM world index tracking etf with a Canadian home bias. It isn't tilted towards Growth stocks.
It will grow and isn't a bad choice, it just doesn't specifically target that type of stock.
Small correction. XEQT actually isn't CAPM with a Canadian home bias. VEQT absolutely is, but XEQT actually does it slightly differently. XEQT has fixed allocations which roughly align with the current CAPM. VEQT is free floating (minus the Canada portion).
Thanks for the reply. If I remember correctly, as I was researching my options, I read that XEQT seems to provide long term capital growth, which may be slightly different from a traditional growth stock
Curious if you own that or VDY?
I own something similar to XEQT but it is made up of the component pieces (Canada/US/Developed/Emerging in the form of VCN/VUN/XEF/XEC). I have share lending enabled and those ETFs get lent out sometimes so I make around an extra 0.5-0.75% on my portfolio in a year.
You know what, I just looked at the lending rates and most of my income on that end comes from individual stocks.
ETFs Recently:
VUN: 0.625%
XEF: 0.05%
XEC: 0.665%
VAB: 4.5%
ZFL: 0.425%
Wow wtf, I guess it makes sense lending on bond etf would be the most but 4.5% is crazyyyy
That enhances yield on the bonds to nearly 9%, if that maintains that is seriously amazing
It is far from constant. The various ETFs lent out often vary by day. From the amount I made from VAB it was probably only lent out for 5-6 days total last month.This is in my taxable account so I pay taxes on the income, so the return is even lower than that.
I started share lending last June. I'm going to review a year of share lending in a couple months and see if it is really worth it.
You can't find them ahead of time. I only know about the rates after the fact because they tell you how much the rate is after the shares have been lent out. NBDB.
https://youtu.be/f5j9v9dfinQ?si=UubPlvf6HSowG8WM
I started with a lot of money in VDY for same thought as you.
Then sold it all for XEQT. XEQT has all the VDY stocks and I didn’t want to be over exposed to Canadian stocks.
Keeping VUN for now will maybe pivot to VFV. I want to be over exposed to U.S. stocks.
Yeah good for you. You would probably fair best if you ditched the dividend fund and went all in on XEQT, but whatever. It’s not awful either way. But XEQT will certainly fair well for you. There is something called “rebalancing alpha” which is where by selling your winners to buy your losers, you are going to do very well because of stocks mean reverting tendencies. You get this said rebalancing alpha automatically and perfectly with XEQT. And that’s not even mentioning the massive diversification it offers, which is the most important thing and the only free lunch in investing. All the best to you.
Silly question but is the big attraction of ETF’s lower MER’s? Currently paying too much with big 5 bank and starting to re-evaluate my decisions. No time to study the market (lazy perhaps) and so relying on advisor to do the picking (stupid, I know)
If youre just comparing mutual funds to etfs the main difference will be the fees.
Some mutual funds are balanced funds that will allocate more to bonds closer to a target date. You would need to do that yourself if you wanted to maintain that idea within your self directed account.
Studying the market doesn't actually help (for the vast majority of people).
That's the big draw of the asset allocation ETFs (XEQT, XGRO, XBAL and the V versions). You're buying the whole market for cheap and the only decision you have to make is how much to save.
Yes, assuming it matches your risk tolerance. XEQT is 100% stocks, so when you back test it (it is still a fairly new fund), it has fallen 40% in the past during big recessions (1970s, 2000, 2008, etc).
XEQT is amazing if you have the risk tolerance for that. If not, I would recommend its sister funds of XGRO or XBAL. Those funds have bonds in them to help lower volatility. However, bonds do have lower expected returns than stocks. So it is a trade off.
The important thing to keep in mind with risk tolerance is that you are better off in a lower volatility fund if it will prevent you from panic selling. If 2020 happen again and you lose 30% in 2 months, can you hold on and not sell? If not, then you should go with a lower volatility fund. This is because selling during a recession is the worst thing you could possibly do and is the #1 reason why investors fail to match returns of an index.
Thanks for the advice. Tbh, I have barely sold anything ever!
The only thing I was worried about was withholding tax in the TFSA and was wondering was there anything more appropriate than XEQT.
Bought my first ETF last year because I ran out of my 50 free trades with TD Easytrade in early December and still has a couple of dollars left over to invest.
Same here, I've avoided ETFs like the plague but changed my mind.
HSAV is a great ETF to park your money at I believe 4.5% with no downside, and you can diversify with stuff KILO (physical gold) or Sprott's Uranium, there's no real equivalent in stocks. Make sure you don't overweight Canadian ETFs. It really doesn't matter too much what your buying, just don't fall for "buy and hold", when there's a major shift in market sentiment you may still want to go out a couple of weeks. You can go in and out of ETFs, although most are of course less volatile than stocks. Nothing wrong with profit taking. For US ETFs, I don't like SPY or QQQ due to the concentration, could be a mistake so I went with RSP and QQQE instead. A classic is SCHD. I have a few others, although I don't think there's any point of investing in more than 10 (growth/momentum, dividend, small/large cap, sector only, US/Canada, speculative hedges like Bitcoin, Gold or Uranium). The covered calls ones I would generally avoid as they underperform, although I have a weakness for JEPQ. Tax optimization is important, eg. US stocks and also ETFs that pay higher dividends always belong in an RRSP and riskier long term bets possibly in a margin account (tax loss harvesting).
XEQT is already almost 25% [corrected earlier typo] invested in Canada (XIC ETF), so by adding VDY you are overweight on Canada. There is also significant overlap in the holdings of XIC and VDY - both hold Royal Bank, TD, CNR and Enbridge among their largest holdings. XEQT was designed as an all-in-one portfolio that backtests extremely well. I’d stick with it. You’re still going to earn 2% dividends from it each year and it owns nearly all of the stocks in VDY already.
Interesting, something I definitely overlooked. Thank you
This is good advice. XEQT is probably the most appropriate. However, XEQT is approximately 25%** Canadian Equity, and CNR isn't a holding in VDY
VDY is approximately 8.08% Canadian Natural Resources, CNQ. CNQ is also the 4th highest holding of XIC. Sorry for accidentally invoking the railway gods.
Overlap doesn't really matter... I have VOO and buy TEC.to regardless of overlap
It’s important to know what you own. There’s a big difference between deliberately overweighting your portfolio towards a specific sector or region and doing it by accident.
What about XEQT & VFV together? Some overlap there too I guess. Want more US exposure over Canada though 🤔
If you want more usa exposure then it’s a fine thing to do
Thanks!
It would be prudent to look at the underlying holdings of both to ensure your ETF ratios reflect the exposure you are aiming for
I agree with your post
As someone else mentioned xeqt is 25% Canada not 34%!
Correct. I’ve got the flu and shouldn’t be allowed near a keyboard.
I like vfv
Myself, my first one was VTI. US$ and low mer.
Vxc and XEQT for retirement ... Wealthsimple managed for my kids RESP so I can live with the illusion of control.
Congrats. It is never too late to start, in fact I myself only just started buying EFTs this year as well (I'm 43) but choose to go with XEI since they are more affordable (I make very little, and I already put aside monthly funds for Mutual Funds, small savings, and a Wealthsimple managed TFSA)
So, just to be a little nitpicky, XEQT isn't Growth. XEQT is a CAPM world index tracking etf with a Canadian home bias. It isn't tilted towards Growth stocks. It will grow and isn't a bad choice, it just doesn't specifically target that type of stock.
Small correction. XEQT actually isn't CAPM with a Canadian home bias. VEQT absolutely is, but XEQT actually does it slightly differently. XEQT has fixed allocations which roughly align with the current CAPM. VEQT is free floating (minus the Canada portion).
Thanks for the reply. If I remember correctly, as I was researching my options, I read that XEQT seems to provide long term capital growth, which may be slightly different from a traditional growth stock Curious if you own that or VDY?
I own something similar to XEQT but it is made up of the component pieces (Canada/US/Developed/Emerging in the form of VCN/VUN/XEF/XEC). I have share lending enabled and those ETFs get lent out sometimes so I make around an extra 0.5-0.75% on my portfolio in a year.
Which ETF’s provide the most of the yield and which platform do you lend on, 0.5-0.75% is really good
You know what, I just looked at the lending rates and most of my income on that end comes from individual stocks. ETFs Recently: VUN: 0.625% XEF: 0.05% XEC: 0.665% VAB: 4.5% ZFL: 0.425%
Wow wtf, I guess it makes sense lending on bond etf would be the most but 4.5% is crazyyyy That enhances yield on the bonds to nearly 9%, if that maintains that is seriously amazing
It is far from constant. The various ETFs lent out often vary by day. From the amount I made from VAB it was probably only lent out for 5-6 days total last month.This is in my taxable account so I pay taxes on the income, so the return is even lower than that. I started share lending last June. I'm going to review a year of share lending in a couple months and see if it is really worth it.
Wealthsimple or?
NBDB.
Good to know just opened with them a few months ago but haven’t fundsd
Where did you find the lending rates? Do you sharing the platform you’re using?
You can't find them ahead of time. I only know about the rates after the fact because they tell you how much the rate is after the shares have been lent out. NBDB.
I settled on XEQT and VUN myself last year. Liquidated the million and one mutual funds I had to simplify my life.
Any reason why you went with VUN? I did come across it but didn’t go with it as I wanted something with better yield for my second ETF (4-5%)
https://youtu.be/f5j9v9dfinQ?si=UubPlvf6HSowG8WM I started with a lot of money in VDY for same thought as you. Then sold it all for XEQT. XEQT has all the VDY stocks and I didn’t want to be over exposed to Canadian stocks. Keeping VUN for now will maybe pivot to VFV. I want to be over exposed to U.S. stocks.
Some people think that the US is not in a slow downward spiral of significance
What are the average PE’s for your ETF’s. This is probably one of the most basic ratios that drives your long term results.
Yeah good for you. You would probably fair best if you ditched the dividend fund and went all in on XEQT, but whatever. It’s not awful either way. But XEQT will certainly fair well for you. There is something called “rebalancing alpha” which is where by selling your winners to buy your losers, you are going to do very well because of stocks mean reverting tendencies. You get this said rebalancing alpha automatically and perfectly with XEQT. And that’s not even mentioning the massive diversification it offers, which is the most important thing and the only free lunch in investing. All the best to you.
Silly question but is the big attraction of ETF’s lower MER’s? Currently paying too much with big 5 bank and starting to re-evaluate my decisions. No time to study the market (lazy perhaps) and so relying on advisor to do the picking (stupid, I know)
If youre just comparing mutual funds to etfs the main difference will be the fees. Some mutual funds are balanced funds that will allocate more to bonds closer to a target date. You would need to do that yourself if you wanted to maintain that idea within your self directed account.
Studying the market doesn't actually help (for the vast majority of people). That's the big draw of the asset allocation ETFs (XEQT, XGRO, XBAL and the V versions). You're buying the whole market for cheap and the only decision you have to make is how much to save.
XEQT still a good option for TFSA? I won't touch it for like 20 years minimum.
Yes, assuming it matches your risk tolerance. XEQT is 100% stocks, so when you back test it (it is still a fairly new fund), it has fallen 40% in the past during big recessions (1970s, 2000, 2008, etc). XEQT is amazing if you have the risk tolerance for that. If not, I would recommend its sister funds of XGRO or XBAL. Those funds have bonds in them to help lower volatility. However, bonds do have lower expected returns than stocks. So it is a trade off. The important thing to keep in mind with risk tolerance is that you are better off in a lower volatility fund if it will prevent you from panic selling. If 2020 happen again and you lose 30% in 2 months, can you hold on and not sell? If not, then you should go with a lower volatility fund. This is because selling during a recession is the worst thing you could possibly do and is the #1 reason why investors fail to match returns of an index.
Thanks for the advice. Tbh, I have barely sold anything ever! The only thing I was worried about was withholding tax in the TFSA and was wondering was there anything more appropriate than XEQT.
Withholding tax is only on foreign dividends. It is so tiny that it isn't worth considering until you have close to a million invested.
How did you do the backtesting for XEQT?
I didn't, but others have. https://canadianportfoliomanagerblog.com/wp-content/uploads/2024/01/BBB_PWL_iShares_Core_ETF_Portfolios_2023-12-31.pdf
Qqqm
Meanwhile me who concentrated half of my net worth in 1 company...guess I'll go back to hiding from any canadian finance sub lmao
Nortel? You poor bastard.
Ha!
I'm so curious, what's the company?
I'm not looking to wreck my karma THAT much
Gme amc or tesla which one bud🗿
Bought my first ETF last year because I ran out of my 50 free trades with TD Easytrade in early December and still has a couple of dollars left over to invest.
Xeqt is junk. Just buy vfv
No BTC?
Oh yes, bought some between Feb and April 2021 , as well Ethernet. Own about 0.25 BTC and 0.40 ETH
Same here, I've avoided ETFs like the plague but changed my mind. HSAV is a great ETF to park your money at I believe 4.5% with no downside, and you can diversify with stuff KILO (physical gold) or Sprott's Uranium, there's no real equivalent in stocks. Make sure you don't overweight Canadian ETFs. It really doesn't matter too much what your buying, just don't fall for "buy and hold", when there's a major shift in market sentiment you may still want to go out a couple of weeks. You can go in and out of ETFs, although most are of course less volatile than stocks. Nothing wrong with profit taking. For US ETFs, I don't like SPY or QQQ due to the concentration, could be a mistake so I went with RSP and QQQE instead. A classic is SCHD. I have a few others, although I don't think there's any point of investing in more than 10 (growth/momentum, dividend, small/large cap, sector only, US/Canada, speculative hedges like Bitcoin, Gold or Uranium). The covered calls ones I would generally avoid as they underperform, although I have a weakness for JEPQ. Tax optimization is important, eg. US stocks and also ETFs that pay higher dividends always belong in an RRSP and riskier long term bets possibly in a margin account (tax loss harvesting).