As the owner of a 100% Canadian Bacon Maple RRSP Portfolio I decide it was time to supplement it with some ETFs. I just felt the need to get some exposure to the rest of the world. I know my dividend growth guru would spit up in his mouth over the news.
To do this I needed to sell stocks to buy the ETFs. I sold all my positions in AQN, ECI and POW.
I chose to carefully dump these positions because there was no 10 year growth record for AQN and ECI and in the case of POW very low growth for the last 10 years. There is little to no capital appreciation, however the dividend is safe. I just don't see much increase in that yield going forward.
I don't want to bet part of my retirement on mutual fund or insurance companies any longer.
Anyways, the point was to increase diversification to the rest of the world. With the almost 20K in cash I purchased 2 ETFs in equal dollar amounts. With new cash generated by dividends, I will continue to add to these funds.
TD International Equity Index ETF - TPE.TO
MER: .20%
Number of Holdings: 595
Dividend Yield: 3.13%
Inception Date: Mar 22, 2016
Inception Date: Mar 22, 2016
P/E: 17.6
Price to Book:1.6
Performance: 12.6% since inception
2017 return: 16.9%
2017 return: 16.9%
Portfolio Mix: European Union 52%, Japan 26.7%, Asia 11.5%
I think I'm getting good exposure for a cheap price to a nice basket of European and Asian stocks. The ETF is fairly new but I'm willing to give it a shot for only a .20% fee.
Vanguard S&P 500 Index ETF - VFV.TO
MER: .08%
Number of Holdings: 507
Dividend Yield: 1.5%
Inception Date: Feb 11, 2012
Inception Date: Feb 11, 2012
P/E: 21.5
Price to Book:3.1
Performance: 19.4% since inception
2017 return: 6.1%
2017 return: 6.1%
Top Holdings Include: Apple, Amazon, Microsoft, Facebook, J&J, Exxon and Bank of America etc. etc.
I now have exposure to the top big companies in the US. I don't have the money to buy them individually so this is a great option and at only a .08% management fee.
Why These ETFs?
I try not to overthink things like this. There are a ton of ETFs and ETF families to choose from. Up until this point I've never owned anything by these two companies. I also wanted to give one of the new kids a chance to see what type of performance it can deliver.
I also subscribe to the Globe and Mail and I saw them as components in a cheap ETF portfolio that Rob Carrick had put together. Good enough research for me. Thanks Rob.
With these two ETFs I'm invested in 1,104 stocks from all over the world for an average fee of just 0.14%. That is pretty good if I do say so myself. My Canadian Bacon Maple Portfolio is now a little more diversified with these two new additions.
I hold NO bonds or fixed income products of any kind in my RRSP.
I hold NO bonds or fixed income products of any kind in my RRSP.
What do you think? Good move or not?
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I've tried to find some good etf choices, but each time I look at all their holdings and how each stock has preformed I keep saying "Why would I want it when 60% to 70% of the stocks I would not want". Of course 50% to 60% are invested in the top 10, but then again why add most of the rest. I then found NOBL the US Dividend Aristocrats and it invested almost evenly among the 53 holdings. Wow I said and then looked deeper into the holdings. Based on my simple guidelines I found that I would not want almost half of the stock, even though they supposedly raised their dividend each year, for the past 25 yrs. Never mind the other factors I why I don't like etf's, I just haven't found any I'd be willing to buy. But each to their own.
ReplyDeleteI stopped following advice from articles long ago. I read them for different view points, look to see if them make sense and if they recommend the stocks I like I feel good. I prefer to make my own choices and my own mistakes.
DeleteYes for sure but in my case I want to diversify outside Canada where all we have is mostly resources and financials. I don't know what US stocks or Int'l to buy so I settle for the ETF. I'm happy.
DeleteWith the exception of US we lost money with all the Int & other funds. At least with Cdn & US stocks you know the companies and can to some extent trust that there are regulations and controls. Not so in Asia and other countries.
ReplyDeleteHi Henry, yes I agree Cdn and US markets are so much more stable. All the experts on TV are constantly recommending Emerging Market ETFs. It really is baffling because they constantly preach this kind of diversification. It's just not for me. Thanks for dropping by:)
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