2020 Asset Allocation ETF Returns: Vanguard vs. iShares
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- Опубликовано: 10 июл 2024
- To kick off the new year, Justin reviews the 2020 performance of the Vanguard and iShares Asset Allocation ETFs (VCIP, VCNS, VBAL, VGRO, VEQT, XINC, XCNS, XBAL, XGRO, XEQT).
Please feel free to download the model portfolios from my blog before getting started:
www.canadianportfoliomanagerbl...
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Hi Justin, I've just completed your entire RUclips series, this was exactly what I needed. I especially liked your description of the ETFs, i.e. Canadian, US, International and Developing Markets. I've noticed that there isn't much information out there about bonds/bond ETF's. Would love to see you go in details about bond ETF's, similarly to how you did Equity ETF's. Either, thanks for all the videos, and can't wait to keep learning. You guys are really unique in the information you provide (I'm basically recommending your channel to everyone I know).
Great job Justin! I was just thinking about this tonight. Perfect timing.
@Stampede Shane - Glad you liked it! :)
Another top notch video!!! Your presentation and info graphics are amazing.
@Calvin Cheung - Thanks! Ryan Conlin of 5SIDE is responsible for the cool animations. If anyone is looking for a video animator, I would highly recommend him: 5side.tv/author/5side/
Thanks Justin! Your videos are very informative, to the point and easy to understand.
@Amit Kumar - You're very welcome! I'm glad you're enjoying the videos :)
Killin'it Justin! Keep up the great videos!
@MeanderingRios - Thanks :)
More videos are on the way!
Truly excellent content. Thanks Justin!
@Todd Matthews - Thanks for the feedback, Todd (and thanks for stopping by the channel! :)
Great video going VEQT, I have the same pic from the Grand Canyon helicopter tour
Excellent comparison on both giants I am longing for.
@P Chan - Thanks!
Great video, excellent affirmation!
@Nel Fmo - Glad you enjoyed it - thanks for checking it out!
Thanks Justin. Another concise and informative video. Really well done! I own VIU and am holding it at 16% of my portfolio. Would you recommend increasing its % allocation, based on the inclusion of the Korean market alone?
Hi Justin, great video as always. I'd like your take on TD One-Click ETF Portfolios.
@Xavier Grant - I will definitely create a video on the TD One-Click ETF Portfolios in the near future :)
i love people like you and ben felix. yall give people the facts - low cost broadly diversified index funds is the only free lunch in finance. everything else is basically just gambling
@yashen taher - And we love people like you that totally get it :)
Right in time when I have to decide between VEQT and XEQT. Discovered your channel yesterday, I find it simple and interesting with a good place to make our own decisions. Cheers
I would choose iShares purely based on the lower MER (0.2 vs 0.25). Vanguard has a lot of hype behind it since they were the pioneer of the index fund, but what most people do not know is that Blackrock (iShares) actually has more AUM!
@Vincent Blanc - Glad you stumbled across the channel! If you haven't watched it already, check out this video to help you make a decision between VEQT and XEQT:
Asset Allocation ETFs: Vanguard vs. iShares (including VEQT vs. XEQT)
ruclips.net/video/jehooxCWU1k/видео.html
@@JustinBenderCPM I was surprised when I heard that Vanguard's ETFs worlwide balance will vary based on market cap while iShares' are fixed. Hadn't read that anywhere else, thanks for your videos!
@@KarlDag - You're very welcome! Just to clarify - the foreign equity allocation (excluding Canada) will fluctuate based on the region's market cap, but the Canadian/foreign equity split will be 30/70.
@@JustinBenderCPM Vanguard's automatic rebalance of equity allocation based on market cap easily beats iShares' ETFs PLUS Vanguard does not underweight emerging market. The fact that it treats South Korea as a developed market gives more allocation room for other Asian countries to be part of the emerging market.
I just have to decide now whether I will go 100% equities with VEQT or play it a little safer with VGRO's 80/20 split.
great vid. Love it. I have XIC, XEF, VUN,XEC to cover the entire global market. Question where we fit other ETFs like XIT, VRE, EARK or XCS (small cap) here? Also, wondering if I switch it to XEQT? Is there a rule of thumb (based on amount) we should think about single ETF (XEQT) vs individual ETFs?
@kapil V - It sounds like you already have a well-diversified portfolio with XIC/XEF/VUN/XEC (there's no need to add any other equity ETFs to the mix).
XEQT is certainly easier to manage (as it rebalances the equity portfolio for you). There's no rule of thumb for when it makes sense to break up the underlying ETFs - most DIY investors are better off with a single fund solution.
I had XGRO for almost one year, then in November I sold all my shares to go with individual ETFs! ITOT/XUU depending if it's in the rrsp or tfsa/resp. VIU, VEE, ZCN and ZAG. The March crash told me I could be less conservative, I did not panic and kept investing normally, so I went from the 80/20 that XGRO had to 90/10 with my 5 fund solution. Thanks to your foreign withholding tax ratio sheet and the portfolio examples!
@Phil Landry - Glad I could be of assistance :)
Thanks again Justin for making these high qualites videos. What would be your advice/outlook concerning the ETF portfolio style to invest in for the first semester of 2021? More conservative (like VCIP) or agressive (like VGRO/VEQT)? Thank you!
@Jeremie Bisson - Determining which asset allocation ETF to invest in is a very personal decision. Here's a blog post I wrote on the topic that may help:
www.canadianportfoliomanagerblog.com/choosing-your-ideal-vanguard-asset-allocation-etf/
Would love to see a comparison vs other approaches such as Wealthsimple
@JD Fraser - I may create a robo-advisor video at some point. But with the introduction of one-fund solutions (like the Vanguard/iShares asset allocation ETFs), investors don't really need robo-advisors (as long as they can place an ETF trade, which this channel shows you how to do).
@@JustinBenderCPM Totally agree, the advantage for some for Robo Advisors is the ease of monthly contributions, as well as the more visual and tracking of your money. Thanks for the reply :)
Thank you Justin for your video! Just a question. I am planning to invest in VGRO or VEQT. I have a long time horizon and I will be using a cash account. How beneficial is it for me to hold VEQT instead of VGRO in my cash account when considering taxes due to the 20% bond holding? If the difference is small would it still be beneficial to hold VEQT over VGRO in a cash account or should I not consider this tax difference.
@Velibor J - You should first decide whether you want a 20% bond allocation. If so, then VGRO would be more appropriate than VEQT in a taxable account (you don't need to compare the tax implications of VEQT vs. VGRO, as the asset allocation decision should take priority).
@@JustinBenderCPM Thank you very much for your reply and help!
What do you think of buying the veqt and vab? Just the two etc on my portfolio. New to the investing world.
@Asdf - That's certainly an option, although most DIY investors opt for an even simpler one-fund solution, with either the Vanguard, iShares or BMO asset allocation ETFs (video links below):
ruclips.net/video/jehooxCWU1k/видео.html
ruclips.net/video/LvUoxbVzCV8/видео.html
I'm a new DIY investor, it's been an eye opening experience for sure. Question: why does Morning Star report a return of 11.58% on XGRO while this video reports 11.4%? I thought published returns already had their MER deducted? How do we know this when seeing return numbers shared by an advisor, or the bank/firm managing the fund?
@Francis Cossette - You're looking at the 2020 "market value" or "price" return on the Morningstar site. Just below it, you'll find the "net asset value" or "NAV" return, which is 11.43% (the same as my figure in the video). The NAV return is generally used when discussing ETF performance (not the market value return).
@@JustinBenderCPM Thank you!
IEMG is traded in USD on the NYSE and VEE is traded on TSX in CAD. It's not really an apples to apples comparison as they are in different currencies. Same with ITOT and VUN. iShares XUU and XUH are the CAD versions of the total market indexes. There are many for the S&P 500 for both Vanguard, iShares and BMO etfs.
@MartyisGreat2020 - When I calculated the returns for IEMG, I converted them to Canadian dollar terms and deducted 15% from its dividends to mimic the 15% U.S. withholding taxes applied for a Canadian investor. I did the same thing for ITOT. This literally makes them applies-to-applies comparisons to Canadian-based foreign equity ETFs.
XUU is the Canadian-based version of ITOT, but the iShares Core ETF Portfolios do not hold XUU ... they hold ITOT (which is why I used ITOT for the comparison, after converting its returns to CAD terms, and deducting 15% from its dividends).
XUH is a Canadian-based currency-hedged version of ITOT, so it is not relevant to the discussion.
And yes, there are many S&P 500 tracking ETFs, but again, this has nothing to do with the video discussion. Neither the iShares Core ETF Portfolios or the Vanguard Asset Allocation ETFs hold an S&P 500 tracking ETF, so there was no reason to discuss its returns.
Justin, would you recommend these all in one ETFs for people with million dollar portfolios?
@neolithic3 - The main benefits of these one-ticket asset allocation ETFs is simplicity, low-cost, diversification, and a disciplined investment approach. If you value all of these things, it doesn't matter if you're investing $1,000 or $1,000,000 :)
I am so annoyed that vanguard does NOT allow automatic investments every month whereas XEQT DOES! I really like VEQT but the auto investment makes my life so much easier! Will vanguard ever allow that?
Hey Justin, what are your thoughts on the idea supported by individuals like Jack Bogle that international diversification outside US isn't necessary? I've been researching and considering owning VEQT long-term. However, because of things like home country bias and long-term historical underperformance of non-US international equities, I'm leaning towards just owning VUN/VTI. Bogle argues that ~40% of US company profits come from overseas anyways and US has had one of the best and most stable environments for businesses to thrive, making owning non-US equities unnecessary (and historically a performance drag).
I suppose the biggest risk with this approach could be a black swan such as what happened with Japan but the vast majority of innovation has come out of the US in the past and it seems if something extreme happened to hinder the US economy over a prolonged period, we'd have far greater problems anyways considering Canada's reliance and close ties to the US. Would love to know your thoughts on owning something like VEQT vs simply VUN.
@Neovi - As no one can predict the future (not even Jack Bogle), I can't see why anyone would not diversify their portfolio when it's incredibly easy to do (especially with a one ticket ETF, like VEQT).
@@JustinBenderCPM Hmm I think you're right. Biggest factor for my reluctance was the fact that VEQT is overweight on canadian equities for which I haven't found a compelling reason so far (other than slightly better tax treatment which is again void in a TFSA or RRSP). However, now I realize I'm probably overthinking this and it may be better to just go w/ VEQT for the simplicity alone, compared to a multi-etf solution which requires rebalancing or taking on additional risk w/ only owning VUN. Thanks for the reply! Your's and Ben's channels have both been invaluable to me since I first started investing in early 2019!
Good morning Justin, could you make a video about NASDAQ index returns vs SP 500 index returns vs your portfolio returns? Thank you for your excellent video. I am a couch potato investor
@Paulo Ascurra - I likely won't compare these index returns in a future video (as the indexes are very different from one another). The S&P 500 Index includes all 11 U.S. sectors, while the majority of the Nasdaq 100 Index holdings are tech companies (so the Nasdaq 100 is much less diversified).
For what it's worth, between January 1, 2000 and December 31, 2020, the S&P 500 returned 6.0% annualized (in CAD), while the Nasdaq 100 Index returned 6.3% (in CAD). The risk of the S&P 500 Index was significantly lower though, with an annualized standard deviation of 12.7%, compared to 21.5% for the Nasdaq 100 Index (in other words, the S&P 500 Index outperformed the Nasdaq 100 Index on a risk-adjusted basis, with a Sharpe ratio of 0.3954 for the S&P 500 Index vs. 0.2461 for the Nasdaq 100 Index).
@@JustinBenderCPM Thank you very much Justin for taking the time to answer my question. The additional information about the 20 years returns is very reassuring for us.....to stick to the plan.....a well diversifed portfolio 😃
Whoops - my international holdings are in XEF and VEE meaning no Korea. I wouldn't mind taking some gains now (expecting Trudeau to whack me soon) so will sell VEE and buy what?
@Brian Stendel: Check out this video, which should answer all your questions :)
Combining International and Emerging Markets ETFs:
ruclips.net/video/5qv0TXZba4E/видео.html
@@JustinBenderCPM Yes - I actually found the blog last night. I was wondering why you were referring to IEMG rather than XEC when comparing but now I see that is because of the holdings in XEQT. I would like to know why iShares isn't using USD versions in XEQT.
Ahhhhh I really need to pull the trigger on XEQT already over some individual ETF's and series D Mutual funds from RBC.
Sold all my individual stocks and went to veqt. Cross fingers
First!
First to retire?
Thanks for commenting.. For more guidance
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