Author Topic: what to buy - maw150 or vxc  (Read 434 times)

player07

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what to buy - maw150 or vxc
« on: July 06, 2018, 09:58:33 PM »
I currently have a vast majority of my investment portfolio in S&P500 and extended market(mid cap/small cap). I also own the Canadian index fund (TDB900) in small quantities. I have noticed that over the years their return has been very little/poor.

I am thinking about selling out of it and purchasing something else, I do like the US (S&P500) but since i earn in Canadian dollars and have to exchange it, I am thinking about purchasing something else. I came across MAW150(global small cap) and thought their returns were really superior but am against purchasing an active managed fund and prefer to go with one that is passively managed (VXC- vanguard etf). The problem with this etf is that it does not have much history to check out. I would like to purchase something in Canadian dollars. Not sure what others opinions are.

RichMoose

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Re: what to buy - maw150 or vxc
« Reply #1 on: July 09, 2018, 11:25:45 PM »
I currently have a vast majority of my investment portfolio in S&P500 and extended market(mid cap/small cap). I also own the Canadian index fund (TDB900) in small quantities. I have noticed that over the years their return has been very little/poor.

I am thinking about selling out of it and purchasing something else, I do like the US (S&P500) but since i earn in Canadian dollars and have to exchange it, I am thinking about purchasing something else. I came across MAW150(global small cap) and thought their returns were really superior but am against purchasing an active managed fund and prefer to go with one that is passively managed (VXC- vanguard etf). The problem with this etf is that it does not have much history to check out. I would like to purchase something in Canadian dollars. Not sure what others opinions are.
Well, what are you looking for? To chase performance of the latest hot active fund, or to follow the broader market? Mawer has a great reputation and they are on the top end of active fund managers, but their funds are going to experience periods of bad performance too.

If you want international passive, low cost exposure then VXC or XAW are pretty good but they do have around 50% US in them.

If you are looking for a whole passive portfolio, it's really tough to find good reasons not to put your entire portfolio in a multi asset ETF like VGRO or VBAL and not think about it.


player07

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Re: what to buy - maw150 or vxc
« Reply #2 on: July 10, 2018, 03:22:36 PM »
I currently have a vast majority of my investment portfolio in S&P500 and extended market(mid cap/small cap). I also own the Canadian index fund (TDB900) in small quantities. I have noticed that over the years their return has been very little/poor.

I am thinking about selling out of it and purchasing something else, I do like the US (S&P500) but since i earn in Canadian dollars and have to exchange it, I am thinking about purchasing something else. I came across MAW150(global small cap) and thought their returns were really superior but am against purchasing an active managed fund and prefer to go with one that is passively managed (VXC- vanguard etf). The problem with this etf is that it does not have much history to check out. I would like to purchase something in Canadian dollars. Not sure what others opinions are.
Well, what are you looking for? To chase performance of the latest hot active fund, or to follow the broader market? Mawer has a great reputation and they are on the top end of active fund managers, but their funds are going to experience periods of bad performance too.

If you want international passive, low cost exposure then VXC or XAW are pretty good but they do have around 50% US in them.

If you are looking for a whole passive portfolio, it's really tough to find good reasons not to put your entire portfolio in a multi asset ETF like VGRO or VBAL and not think about it.

Thanks richmoose for your post, I really appreciate it. I am not really a huge fan of active management even though it is an offering from a reputable firm as I really don't have much of a clue on what they do. I feel much comfortable investing in a passive index so prefer that over it, lower fees is just an added bonus. I really want to increase by US exposure but not sure how to manage the currency exchange rate so for that reason I am looking for an ETF that is denominated in CAD.

I like VBAL and VGRO but unfortunately they do not have much of a history to go by or look at. Is there anything equivalent to those with a bit more history ?  My only concern about going international or US is the currency aspect of it. Not sure if I am worrying  unnecessarily. I am strongly considering purchasing VXC but VBAL looks very good besides the history part of it.

RichMoose

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Re: what to buy - maw150 or vxc
« Reply #3 on: July 11, 2018, 12:21:09 PM »
Thanks richmoose for your post, I really appreciate it. I am not really a huge fan of active management even though it is an offering from a reputable firm as I really don't have much of a clue on what they do. I feel much comfortable investing in a passive index so prefer that over it, lower fees is just an added bonus. I really want to increase by US exposure but not sure how to manage the currency exchange rate so for that reason I am looking for an ETF that is denominated in CAD.

I like VBAL and VGRO but unfortunately they do not have much of a history to go by or look at. Is there anything equivalent to those with a bit more history ?  My only concern about going international or US is the currency aspect of it. Not sure if I am worrying  unnecessarily. I am strongly considering purchasing VXC but VBAL looks very good besides the history part of it.
I'm not sure what you mean by a portfolio denominated in CAD. Do you mean that it trades on the Toronto exchange? Or that the underlying international positions are currency-hedged to the Canadian dollar? Or that you only want to invest in Canadian stocks and bonds?

Unless you pick currency-hedged products only, you will always get exposure to foreign currency movements even though it is hidden inside the ETF or mutual fund you are buying. For example, a C$10,000 investment in VUN.TO will perform essentially the same as you converting C$10,000 into US currency, buying VTI on the US exchange, and then converting the return on VTI back to C$ at some point in the future. I say essentially the same because the true result depends on currency exchange costs, transaction fees, whether or not withholding taxes apply based on the account you use, and management fees of the fund.

VGRO.TO and VBAL.TO are newer products. However, it will perform nearly identical to the corresponding Canadian Couch Potato portfolios. Here's a simulated look-back done by Justin Bender which might help. https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2018/02/Vanguard-Asset-Allocation-ETFs.pdf

player07

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Re: what to buy - maw150 or vxc
« Reply #4 on: July 11, 2018, 09:48:20 PM »

I'm not sure what you mean by a portfolio denominated in CAD. Do you mean that it trades on the Toronto exchange? Or that the underlying international positions are currency-hedged to the Canadian dollar? Or that you only want to invest in Canadian stocks and bonds?

Unless you pick currency-hedged products only, you will always get exposure to foreign currency movements even though it is hidden inside the ETF or mutual fund you are buying. For example, a C$10,000 investment in VUN.TO will perform essentially the same as you converting C$10,000 into US currency, buying VTI on the US exchange, and then converting the return on VTI back to C$ at some point in the future. I say essentially the same because the true result depends on currency exchange costs, transaction fees, whether or not withholding taxes apply based on the account you use, and management fees of the fund.

VGRO.TO and VBAL.TO are newer products. However, it will perform nearly identical to the corresponding Canadian Couch Potato portfolios. Here's a simulated look-back done by Justin Bender which might help. https://cdn.canadianportfoliomanagerblog.com/wp-content/uploads/2018/02/Vanguard-Asset-Allocation-ETFs.pdf


Thanks for the post. VGRO and VBAL look like solid products, but at this point in the game I am avoiding bonds as they tend to lower the overall returns. I just bought some VXC today, that suits me better for now.