Vanguard vs iShares ETFs. Which are better?
Vanguard vs iShares ETFs. Which are better if I want 60% in world/Canada Equities and 40% bonds. Which specific ETFs and why?
Mar 9th, 2016 12:03 am
Mar 9th, 2016 3:40 am
Mar 9th, 2016 12:15 pm
Mar 9th, 2016 1:21 pm
I believe this only applies to the US based ETFs. The Canadian side of business is structured differently.SkimGuy wrote: ↑I recommend Vanguard, their corporate structure is designed in a way so that the owners of the fund are the owners of the company itself. But in all honesty, either one is fine.
From a speech in 2004, found in this topic: https://www.bogleheads.org/forum/viewtopic.php?t=16305
https://about.vanguard.com/what-sets-va ... p-matters/
"Vanguard is the only investor-owned mutual fund complex in America. We are known for many things—including our low fees, our commitment to high-quality client service, and our indexing expertise—but I would say the single most defining characteristic about Vanguard is our ownership structure. The Vanguard® funds own The Vanguard Group, which in effect means that the investors in our funds own Vanguard. Unlike other fund firms, we don't have stockholders or a parent company to please. Our mutual ownership structure enables us to focus clearly on the interests of our investors, without the potential conflicts of interest that can occur at other firms."
Mar 9th, 2016 1:36 pm
Mar 9th, 2016 2:19 pm
Mar 9th, 2016 3:11 pm
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Mar 9th, 2016 3:15 pm
Mar 9th, 2016 3:23 pm
First, simple is usually better than complex. You can now build a portfolio that includes hundreds of bonds and thousands of stocks in some 40 countries using just three ETFs, all for a cost of less than 0.20%. No one needs to diversify more broadly than that. A skilled portfolio manager may be able to boost returns slightly by moving beyond traditional index funds in the core asset classes. But many DIYers make costly mistakes when they try to juggle too many funds. Meanwhile, there are exactly zero investors in the universe who failed to meet their financial goals because they did not hold global REITs or small-cap value stocks.
Using US-listed ETFs is a another example: the management fees and withholding taxes may be lower, but the steps involved in currency conversion can be complicated and it’s easy to make errors that wipe out any potential savings. If you don’t believe me, try explaining Norbert’s gambit to your mom.
These model portfolios are not intended to reduce MERs and taxes to an absolute minimum. The suggested asset allocations were not created using Markowitz’s efficient frontier or portfolio optimization software. They are simply designed to provide broad diversification and low cost while remaining easy to manage on your own.
So try not to agonize over the small details: just choose one of the model portfolios with an appropriate amount of risk and get started. It’s OK if convenience trumps cost, especially for young investors with small portfolios: remember, an additional cost of 0.10% works out to $0.83 a month for every $10,000 in your account. The cost of sitting in cash and scratching your head is much higher. And the peace of mind that comes with a simple investing strategy is priceless.
Mar 9th, 2016 4:02 pm
Mar 14th, 2016 12:49 pm
Mar 14th, 2016 5:27 pm
He now calls it the Freedom .12 Portfolio since fees have dropped since he first introduced it:
Not sure why he recommends VSB, other than low cost. A basic tenet of fixed income investing is to match fund availability with need for the funds. VSB is short duration, so unless the money is needed in the next 3 years it is not a good match. I guess you could buy a short term bond fund on the expectation that it will protect against interest rate increases, but people have been forecasting rising rates for years now.The newly renamed Freedom 0.12 Portfolio is an exception. To review, the portfolio includes:
- The Vanguard Canadian Short Term Bond Index ETF (VSB), with a management expense ratio of 0.11 per cent. That’s down from 0.15 per cent last spring.
- The BMO S&P/TSX Capped Composite Index ETF (ZCN), with an MER of 0.06 per cent. That’s down from 0.09 per cent last spring and 0.17 per cent in 2013.
- The iShares Core MSCI All Country World ex Canada Index ETF (XAW), with an MER of 0.21 per cent. That’s down from an estimate of 0.25 per cent last spring.
With a mix of 35 per cent VSB, 40 per cent ZCN and 25 per cent XAW, you get a weighted average MER of 0.115 per cent. I’ve rounded it up to 0.12 per cent.
Mar 14th, 2016 6:36 pm
Mar 14th, 2016 9:06 pm
Mar 15th, 2016 2:44 pm
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Mar 16th, 2016 2:34 am
great advice as always deepwater!! your very helpful.Deepwater wrote: ↑ Truly words of wisdom.
When I set up my current portfolio VXC had just been launched, and XAW was not yet available. If I was starting now with <100k I would probably go with just a CCP style 3 ETF portfolio. At that time I read about buying US domiciled ETFs (VTI etc) and using Norbit's Gambert to convert to US $ cheaply. But I decided to use ETFs from Canadian providers despite the slightly higher MER and FWT. My basic premise was get the $ invested, rather than dither around trying to get the utimate portfolio. The perfect portfolio that you never attain is the enemy of a good portfolio that you can build now. I am really glad now that I did not go the US ETF route, and an evaluation of the possible cost/tax savings is really not worth it to me given my portfolio size. Simplicity rules!
Mar 16th, 2016 2:36 am
Deepwater wrote: ↑He now calls it the Freedom .12 Portfolio since fees have dropped since he first introduced it:
Not sure why he recommends VSB, other than low cost. A basic tenet of fixed income investing is to match fund availability with need for the funds. VSB is short duration, so unless the money is needed in the next 3 years it is not a good match. I guess you could buy a short term bond fund on the expectation that it will protect against interest rate increases, but people have been forecasting rising rates for years now.