11 Model Portfolios To Simplify Your Investments
Using a robo-advisor can be a great way to lower your investment costs, diversify your portfolio, and reduce the time you spend worrying about investing. But if you’re a DIY investor like me then you can lower your costs even further by building a portfolio of index funds or ETFs on your own.
Here are a few model portfolios to help get you started:
ETF solutions for your portfolio
A portfolio of three Vanguard ETFs was made popular when it was introduced by the Canadian Couch Potato blog. The chart below shows a balanced portfolio with 60% equities and 40% bonds.
Vanguard ETFs
| Fund name | Symbol | MER | YTD return | Allocation |
| Canada All Cap Index ETF | VCN | 0.06% | 4.38% | 20% |
| Canadian Aggregate Bond Index ETF | VAB | 0.13% | 1.25% | 40% |
| All-World ex Canada Index ETF | VXC | 0.27% | (6.07%) | 40% |
My own two-ETF solution is a variation of the Vanguard model portfolio, minus the bond fund.
| Fund name | Symbol | MER | YTD return | Allocation |
| Canada All Cap Index ETF | VCN | 0.06% | 4.38% | 25% |
| All-World ex Canada Index ETF | VXC | 0.27% | (6.07%) | 75% |
Blackrock’s iShares offers another low cost, broadly diversified set of ETFs for investors to choose from. Here’s another three-ETF portfolio solution with a balanced allocation.
iShares ETFs
| Fund name | Symbol | MER | YTD return | Allocation |
| S&P/TSX Capped Composite Index ETF | XIC | 0.06% | 4.53% | 20% |
| Canadian Universe Bond Index ETF | XBB | 0.33% | 1.31% | 40% |
| All Country World ex Canada Index ETF | XAW | 0.21% | (5.95%) | 40% |
BMO has over 60 ETFs in its line-up and was the first big bank to launch its own robo-advisor platform – BMO SmartFolio. Here’s a model balanced portfolio using BMO ETFs:
BMO ETFs
| Fund name | Symbol | MER | YTD return | Allocation |
| S&P/TSX Capped Composite Index ETF | ZCN | 0.05% | 4.51% | 20% |
| Aggregate Bond Index ETF | ZAG | 0.20% | 1.33% | 40% |
| S&P 500 Index ETF | ZSP | 0.10% | (4.98%) | 20% |
| MSCI EAFE Index ETF | ZEA | 0.20% | (8.93%) | 20% |
Index fund solutions from the big banks
Investors won’t find a cheaper portfolio of mutual funds than the one they can construct with TD’s popular e-Series index funds. I use this for my kids’ RESP fund, and the four funds are also part of the model portfolios from Canadian Couch Potato.
TD e-Series index funds
| Fund name | Symbol | MER | YTD return | Allocation |
| Canadian Index Fund – e | TDB900 | 0.33% | 4.44% | 20% |
| Canadian Bond Index Fund – e | TDB909 | 0.50% | 1.24% | 40% |
| U.S. Index Fund – e | TDB902 | 0.35% | (5.39%) | 20% |
| International Index Fund – e | TDB911 | 0.51% | (9.26%) | 20% |
Let’s say you bank at Scotia and don’t want to go through the hassle of setting up a discount brokerage or switching banks. This set of index funds is still much cheaper than a basket of actively managed mutual funds sold by a front-line advisor.
Scotia index funds
| Fund name | Symbol | MER | YTD return | Allocation |
| Canadian Index | BNS381 | 1.00% | 4.29% | 20% |
| Canadian Bond Index | BNS386 | 0.85% | 1.17% | 40% |
| U.S. Index | BNS382 | 1.08% | (5.16%) | 20% |
| International Index | BNS387 | 1.25% | (10.28%) | 20% |
Here are four RBC index funds – you have to look closely as they’re hidden among no fewer than 112 other RBC mutual funds.
RBC index funds
| Fund name | Symbol | MER | YTD return | Allocation |
| Canadian Index Fund | RBF556 | 0.72% | 4.33% | 20% |
| Canadian Government Bond Index Fund | RBF563 | 0.67% | 0.95% | 40% |
| U.S. Index Fund | RBF557 | 0.72% | (5.08%) | 20% |
| International Index Currency Neutral | RBF559 | 0.71% | (6.91%) | 20% |
Finally, we have surprisingly broad list of index funds from CIBC. The bank offers a set of regular index funds as well as something called a premium class. For simplicity sake we list the regular index funds below:
CIBC index funds
| Fund name | Symbol | MER | YTD return | Allocation |
| Canadian Index Fund | CIB300 | 1.14% | 4.23% | 20% |
| Canadian Bond Index Fund | CIB503 | 1.16% | 1.09% | 40% |
| U.S. Index Fund | CIB500 | 1.18% | (5.23%) | 20% |
| International Index Fund | CIB510 | 1.23% | (9.00%) | 20% |
One-fund or balanced fund solutions
Tangerine’s balanced fund is a one-fund solution made popular with its inclusion as one of the Canadian Couch Potato model portfolios. It offers a mix of Canadian stocks and bonds, plus exposure to U.S. and International equities.
Tangerine balanced portfolio
| Fund name | Symbol | MER | YTD return | Allocation |
| Tangerine Balanced Portfolio | INI220 | 1.07% | (1.85%) | 100% |
One of the good guys in Canadian investment management, Steadyhand offers simple, transparent, and low-fee funds. Their one-fund solution is called the founders fund, and it invests 2/3 in Canadian, U.S., and overseas equities, with the rest in bonds and cash.
Steadyhand founders fund
| Fund name | Symbol | MER | YTD return | Allocation |
| Steadyhand Founders Fund | SIF125 | 1.34% | (0.50%) | 100% |
Mawer is one of the first names to come to mind when discussing actively managed funds that actually outperform the index. Its funds have a long track record of doing exactly that, and having some of the lowest expense ratios in the business certainly helps.
Mawer’s balanced fund invests in seven Mawer mutual funds to get its exposure to Canadian stocks and bonds, as well as U.S. and international equities.
Mawer balanced fund
| Fund name | Symbol | MER | YTD return | Allocation |
| Mawer Balanced Fund | MAW104 | 0.94% | (0.90%) | 100% |
Another surprise from CIBC adds this balanced index fund to the mix of one-fund portfolio solutions. The fund holds an interesting mix of cash, index funds, and individual stocks.
CIBC balanced index fund
| Fund name | Symbol | MER | YTD return | Allocation |
| CIBC Balanced Index Fund | CIB901 | 1.20% | 0.49% | 100% |
Final thoughts
Often our readers are looking for ideas to help design their investment portfolios. As you can see from the 11 model portfolios highlighted above, no one-size fits all.
In addition to your age, risk tolerance, size of portfolio, and time horizon, there are still a number of factors to consider before designing your personal investment portfolio.
That includes having the skill, desire, and temperament to manage your own portfolio instead of hiring a financial advisor or robo-advisor to build and manage one for you.
The best approach is to find a simple investing solution that works for you and stick with it for the long term.
“The best approach is to find an simple investing solution that works for you and stick with it for the long term.”
Well said Robb.
No doubt I will simplify my portfolio over time.
Cheers,
Mark
Hi Robb
I’m curious about the portfolio of e-Series funds that you hold in your kids’ RESP. Do you incur foreign withholding tax on dividends earned through the TDB902 and TDB911 funds (since an RESP isn’t a registered account)?
Michael
Hi Michael, my understanding is that foreign withholding taxes apply to the dividends earned in those funds and the taxes are not recoverable.
The cost is somewhat trivial, though, especially when it applies to a relatively small portfolio like an RESP.
Here’s a good explanation of the true cost of foreign withholding taxes – http://canadiancouchpotato.com/2014/02/20/the-true-cost-of-foreign-withholding-taxes/
Thanks Robb – and thanks for the link. : )
Thanks for sharing this. I would like to see how each of these portfolios performed during each of the last 5 calendar years, and compare these to relative briad market benchmarks, such as the TSX, and S&P 500.
Rob, if you were wanting to set up an ishares ETF portfolio, the newer XQB is a less expensive option with an MER of 0.13% compared to 0.3 for XBB. I don’t see Blackrock advertising it, as I guess they don’t want their XBB shareholders to switch.
Robb, these are good for growth, but I am retired. What do you have for retirement income?
Malcolm, a good way to generate income from capital is to de-emphasize income investments and focus instead on investment income. Capital gains, dividends and return of capital all spend the same as interest. My point is you’ll get more investment income from a retirement portfolio that grows over time than one that sentences you to a meagre fixed income in a rising cost world.
Excellent, article, thank you!
Hi,
About the different portfolios, do the %-ages in parentheses indicate that it is a negative return? Forgive the noob question!
Thanks
Hi John, that’s correct – those numbers in brackets represent a negative return.