Every year I track my portfolio rate of return to see how my investments measure up to specific benchmarks. Prior to 2015 I invested primarily in Canadian dividend paying stocks and measured my stock-picking prowess against the iShares Canadian Dividend Aristocrats Index ETF (CDZ).

Last year I sold all of my dividend stocks ($100,000 in total) and bought $25,000 worth of VCN – Vanguard’s FTSE Canada All Cap Index ETF – and $75,000 worth of VXC – Vanguard’s FTSE Global All Cap ex Canada Index ETF.

As I mentioned in my net worth update, the timing couldn’t have been better as VXC gained 14.76% while the Canadian markets were deep in negative territory. VCN was down 9.29%, and my old benchmark – CDZ – was down 7.86%.

The total rate of return on my TD RRSP investment portfolio in 2015 was 9.36%.

My historical rate of return for this portfolio:

  • 2015 – 9.36%
  • 2014 – 8.53%
  • 2013 – 13.62%
  • 2012 – 12.34%
  • 2011 – 9.82%
  • 2010 – 35.54%

TD recently upgraded its WebBroker platform and introduced some fancy new graphs, charts, and statistics – including new performance measurement tools. Take a look at how my portfolio compares to the TSX Composite Total Return Index (-11.09%) and the S&P 500 Total Return Index (+18.38%).

TD RRSP Rate Of Return

I’ve also included an 8 percent expected return as my annual target (before fees and inflation). That’s the number I use for my own retirement projections over the very long term, which I consider reasonable for a low-fee, broadly diversified, all-equity portfolio.

TD Investment Benchmarks

Tangerine RRSP account

Back in February I took advantage of a promotion from Tangerine to get an RRSP loan at 1.5% interest. The caveat was that I had to keep the money invested with Tangerine while I paid back the loan, or else face a stiff penalty for transferring the funds.

So I did that and invested $8,210 in Tangerine’s Equity Growth Portfolio – a mutual fund with 50% allocation to Canadian stocks, 25% allocation to U.S. stocks, and 25% allocation to International stocks. The fund comes with a 1.07% MER.

Tangerine RRSP Performance

Unfortunately, the heavy exposure to Canadian stocks meant a dismal performance for this fund and it lost 2.9 percent for me on the year. With the loan now paid off I will liquidate this fund and transfer the money over to my TD account in the coming weeks.

RESP portfolio / TD e-Series funds

We invest in TD e-Series funds for our kids’ RESP account. It’s easy (and free) to make monthly contributions, which get invested into the Canadian index, U.S. index, and International index funds.

I use my judgement to decide which fund to invest in with the idea of maintaining a 33% allocation for each fund. That becomes trickier when the Canadian markets stumble and U.S. markets surge, but I’ve managed to stick to that rough guideline.

TD RESP Performance

The total rate of return for my TD RESP account in 2015 was 9.18%.

Final thoughts

It was more important to track my portfolio rate of return when I was investing in individual stocks. That’s because I could compare my results (not to mention my judgement and strategy) against an appropriate benchmark to see whether I was adding any value as a stock picker versus just passively tracking the market with low-cost index funds or ETFs.

Last year I decided that my investment returns had more to do with luck than skill (we were in a massive bull market, after all) and so I made the switch to my two-ETF solution.

Now that I’ve switched to indexing I still track my investment returns to see how my portfolio fared – but that’s mostly out of curiosity and so that I can update my retirement plan and net worth projections.

I’ll never look back and say, “well my portfolio did so much better when I was picking stocks,” because it was the market that performed better back then – my stock-picking intuition had nothing to do with it.

I’m happy to have a diversified investment portfolio that requires very little maintenance throughout the year. And I’m even happier to accept market returns, minus a very small fee, to keep my portfolio growing strong while reducing the odds of making a big mistake.

How did your investments perform last year? Were you hit hard by the slumping Canadian markets?

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15 Comments

  1. Jamie Kotlewski on January 3, 2016 at 4:35 pm

    What are your thoughts on hedging your CAD$ in your TD RESP? There are currency hedged versions of the US and INT’L fund. The differences in 2015 between unhedged and hedged was about 20% and 14.5% for US and INT’L, respectively. Time to go hedged after that big gain?

    My approximate rate of return was +11.50 between all accounts, although I don’t yet have a great way to measure returns. That amount was from the weighted averages of what the funds returned over the course of 2015.

    • Echo on January 3, 2016 at 5:20 pm

      Hi Jamie, thanks for your comment. I recommend using Justin Bender’s portfolio rate of return calculator. http://www.canadianportfoliomanagerblog.com/calculators/

      Just plug in the month-end values of your portfolio (from your account statements) and then enter any contributions you’ve made along the way (on the corresponding date), minus any withdrawals, and you’ll get your true portfolio rate of return. Very handy!

      As far as currency hedging goes, it’s a nice thought to try and take advantage of a rebounding Canadian dollar, but all the research I’ve read says currency hedging isn’t all that effective – in addition to being another type of active management to know when to hedge or unhedge.

      • Jamie on January 4, 2016 at 11:08 am

        Thanks for the calculator! Very handy. I calculate +9.8% for the year across all accounts.

    • Richard on January 4, 2016 at 10:05 am

      The time to do something would be before a big gain, not after 🙂

  2. Chris I on January 3, 2016 at 4:36 pm

    Nice to see this post as I look to invest my new TFSA limit increase and do my final RRSP buying to maximize my tax return and hit my limit for 2015 in the last 60 day window. I notice you only have VCN and VCX with no VAB, what are your thoughts on holding bonds? Do you plan to keep your current purchasing allocation in 2016?
    Cheers

    • Echo on January 3, 2016 at 5:36 pm

      Hi Chris, the new year is definitely a good time to revisit your asset allocation. As you’ve probably noticed, my two-ETF solution is the same as Canadian Couch Potato’s model portfolio – minus the bond component. I’m confident that I can remain invested in an all-equity portfolio and won’t do anything dumb when markets are down, although I should note that I actually haven’t been through a true bear market yet.

      I think, however, that most investors should stick with the three funds (including the bonds) to decrease volatility and increase the chances of staying invested during tough times.

      As far as my allocation goes, I plan on sticking with a 25/75 split, and I’d even be okay with 20/80 if the Canadian market continues to struggle.

      The bigger question will be once I start contributing heavily to my TFSA next year. I think VCN is the ticket there, so I might need to adjust my RRSP allocation (increase VXC exposure) to keep the 25/75 split in balance with my overall portfolio.

  3. JM on January 4, 2016 at 9:15 am

    Why hold the ETFs with TD vs a no-buy broker like Questrade? Convenience?

    • Echo on January 4, 2016 at 10:26 am

      Hi JM, yes it’s due to the convenience of having all of my accounts in one place. I don’t trade all that often, but if trading fees become an issue then I would certainly look to move to a broker like Questrade.

  4. satuk on January 4, 2016 at 9:55 am

    Happy new year!

    I am interested in knowing how to track the return on the investments. I invest in e-series through TD easy web online banking site. When I go to see my statements online, the statements don’t show the purchase price and the market value at the end of the month. I don’t receive monthly statements as I opted for online statements. Thank you.

  5. Richard on January 4, 2016 at 10:10 am

    That’s a great return considering everything that happened last year. I only managed 6.5%, maybe because of the timing of cash flows and having a bit more in Canadian markets. Either way, 6 – 9% is an average return so that’s good to see.

    • Echo on January 4, 2016 at 10:29 am

      That’s a pretty solid return, Richard. I was pleasantly surprised with how well VXC performed. Hopefully the Canadian market picks up this year.

  6. Grant on January 4, 2016 at 10:55 am

    Indeed, that was great timing last January making those changes to your portfolio. Was it skill or luck!:)

    This year has certainly been a good illustration of the benefits of being globally diversified, and how risky owning just a handful of blue chip Canadian stocks really is.

    My 60% equity (1/3 each Canada/US/international/10% REITs, small value tilt) 40% bonds (mix of bonds and GICs targeting a 5 year term) portfolio came in at 6.6%.

  7. Sugith on January 4, 2016 at 1:52 pm

    That’s a remarkable rate of return for a Canadian investor. Is this net of fees?

  8. Mary R on January 5, 2016 at 4:27 am

    I notice that VXC is various Vanguard ETFs. Wouldn’t there be fees although fairly small with each of these? I’m wondering if it would be better to invest in an ETF such as XEF that invests directly in equities.
    Also, for tax efficiency, should Intl and US ETFs be inside or outside an RRSP?
    Thank You.

  9. Louise on June 19, 2017 at 1:12 pm

    Hello! It’s now 2017 but I just came across this post while researching how to balance my portfolio. Thanks for all the helpful information! I’ve also been attracted by dividend funds but I’m now planning to simplify for the same reasons as you mentioned.
    I have one question, same as previous post- for tax efficiency, should Intl and US ETFs be inside or outside an RRSP? I’ve read somewhere about different tax rules on US dividends, but I’m not too clear on it.

    Thanks again!

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