Investing

XAW replacing VFV, VEA, VWO in RRSP

  • Last Updated:
  • Jan 10th, 2019 11:33 pm
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[OP]
Deal Addict
Dec 24, 2006
1047 posts
69 upvotes

XAW replacing VFV, VEA, VWO in RRSP

So I get the whole VEA & VWO saves the 15% withholding tax from the US that would be taken on Canadian funds.

But the Norbit Gambit just complicates the whole "supposed to be simple" CCP portfolio approach. And the currency exchange just hurts.

I basically have in my portfolio (and totally agree I need to re balance):

VWO 5.28%
VEA 4.69%
VFV 28.11%

The rest are dividend Canadian shares which I will sell and rebalance with as I understand more about the markets now.

But I'm thinking of just going dead simple to XAW, which will involve selling VWO VEA and VFV.

My goal is to be 80% equities and 20% bonds (VAB currently).
International should be:

30 % Canadian (Dividends mostly - Will tackle rebalancing this later and selecting a fund)
35 % US
10 % Developed
05 % Emerging

Question:
- Any thoughts, or equivalent funds to consider with the information above other than XAW?
- When looking at VXC (https://www.vanguardcanada.ca/advisors/ ... ?portfolio) the holdings look to be the individual equities. I thought it was a wrapper like XAW
11 replies
Sr. Member
Jul 13, 2007
725 posts
247 upvotes
Toronto
Who's your broker and what's the size of your RRSP portfolio?

And what, if anything, are in TFSA? Or cash?

2 of 3 of your funds are USD already, no?
Are you sure you wish to carry out this operation? You betcha.
Deal Addict
Oct 4, 2009
2200 posts
928 upvotes
Montreal
menaknow wrote:
Jan 6th, 2019 11:37 pm
So I get the whole VEA & VWO saves the 15% withholding tax from the US that would be taken on Canadian funds.
True with VWO but not VEA as XEF(component of XAW) directly holds the EAFE equities.
But the Norbit Gambit just complicates the whole "supposed to be simple" CCP portfolio approach. And the currency exchange just hurts.
First sentence is fair enough but what do you mean by the second?
But I'm thinking of just going dead simple to XAW, which will involve selling VWO VEA and VFV.

My goal is to be 80% equities and 20% bonds (VAB currently).
International should be:

30 % Canadian (Dividends mostly - Will tackle rebalancing this later and selecting a fund)
35 % US
10 % Developed
05 % Emerging
Why do you hold VFV instead of VOO or VTI? You clearly are ok buying ETFs listed in the U.S. It is by far the highest impact when it comes to saving foreign withholding tax.

You aren’t going to get your desired international asset allocation with XAW. I would choose XAW’s AA over yours any day but just realize it doesn’t match the proportions you posted.
Question:
- Any thoughts, or equivalent funds to consider with the information above other than XAW?
- When looking at VXC (https://www.vanguardcanada.ca/advisors/ ... ?portfolio) the holdings look to be the individual equities. I thought it was a wrapper like XAW
No, either go XAW or go all out with ETFs from U.S. exchanges by buying VOO or preferably VTI. You could simplify with VTI+VXUS or even just VT from your 3 fund non-Canadian approach but VFV has got to go.

VXC is a wrapper, for some reason Vanguard lists the underlying holdings instead of the funds it holds and has always done so. They should have fixed this by now, the fact they haven’t shows it is intentional and doesn’t reflect well on them.
[OP]
Deal Addict
Dec 24, 2006
1047 posts
69 upvotes
HammerRFDer wrote:
Jan 7th, 2019 12:04 am
Who's your broker and what's the size of your RRSP portfolio?

And what, if anything, are in TFSA? Or cash?

2 of 3 of your funds are USD already, no?
CIBC InvestorsEdge, approximately 150K.

Yes 2/3 are USD.
[OP]
Deal Addict
Dec 24, 2006
1047 posts
69 upvotes
S5 wrote:
Jan 7th, 2019 5:57 am
True with VWO but not VEA as XEF(component of XAW) directly holds the EAFE equities.
I thought VEA held the equities directly.
S5 wrote:
Jan 7th, 2019 5:57 am

First sentence is fair enough but what do you mean by the second?
If I don't do Norbit Gambit, and do a straight exchange.
S5 wrote:
Jan 7th, 2019 5:57 am

Why do you hold VFV instead of VOO or VTI? You clearly are ok buying ETFs listed in the U.S. It is by far the highest impact when it comes to saving foreign withholding tax.

You aren’t going to get your desired international asset allocation with XAW. I would choose XAW’s AA over yours any day but just realize it doesn’t match the proportions you posted.
VFV was bought later as my stomach couldn't do the gambit, the amount was too low and I was "parking" my contributions until I could flip it to VTI.

Where can i figure out the overall allocation for XAW? I see the breakdown by country but just want what percentage is Developed and what is Emerging..
S5 wrote:
Jan 7th, 2019 5:57 am

No, either go XAW or go all out with ETFs from U.S. exchanges by buying VOO or preferably VTI. You could simplify with VTI+VXUS or even just VT from your 3 fund non-Canadian approach but VFV has got to go.

VXC is a wrapper, for some reason Vanguard lists the underlying holdings instead of the funds it holds and has always done so. They should have fixed this by now, the fact they haven’t shows it is intentional and doesn’t reflect well on them.
Ha, well VXC is now out of consideration.
Deal Addict
Oct 4, 2009
2200 posts
928 upvotes
Montreal
menaknow wrote:
Jan 7th, 2019 12:41 pm
I thought VEA held the equities directly.
It does but so does XEF so no U.S. tax withholding savings.
Where can i figure out the overall allocation for XAW? I see the breakdown by country but just want what percentage is Developed and what is Emerging.
Look at its holdings. 32.15% is XEF(dev) and 12.34% is IEMG(EM), rest are U.S. equities.

If you are scared to do NG, then XAW is a no brainer IMO. Unless you insist on a different region allocation but I would not recommend it.
Deal Fanatic
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Jul 17, 2008
8545 posts
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XAW is what I have together with XIC, at a ratio of 2:1

That gives me 33% CAD, 33% US, 33% rest of world. XAW is 50% US and 50% rest of world.
Deal Expert
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Oct 26, 2003
29332 posts
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Messerschmitt wrote:
Jan 7th, 2019 10:07 pm
XAW is what I have together with XIC, at a ratio of 2:1

That gives me 33% CAD, 33% US, 33% rest of world. XAW is 50% US and 50% rest of world.
how is that working out for you? all EFT have been hit hard in the last month.
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Jul 17, 2008
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divx wrote:
Jan 8th, 2019 2:26 am
how is that working out for you? all EFT have been hit hard in the last month.
Great. The more they drop, the more I buy
[OP]
Deal Addict
Dec 24, 2006
1047 posts
69 upvotes
S5 wrote:
Jan 7th, 2019 1:24 pm

If you are scared to do NG, then XAW is a no brainer IMO. Unless you insist on a different region allocation but I would not recommend it.
Well I tried NG a couple of days ago with CIBC IE. Instead the rep moved the equities from US to CAD and the sale was registered but did it that I paid via my Canadian account in USD fund???

Yeah now I'm kinda in a WTF sorta moment working with them to correct.

Yeah don't think I'll be doing NG unless I go to RBI at one point.
[OP]
Deal Addict
Dec 24, 2006
1047 posts
69 upvotes
S5 wrote:
Jan 10th, 2019 5:31 pm
Thanks, saw that before I did the whole strategy along with various other reddit, redflagdeals threads.

Apparently the rep misunderstood or something. They resolved it.

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