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Vanguard launches ‘one-ticket solution’ ETFs

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Vanguard launches ‘one-ticket solution’ ETFs

https://www.theglobeandmail.com/globe-i ... t-solution
The Vanguard Conservative ETF Portfolio (VCNS-TSX) has a 40/60 mix of stocks and bonds, respectively, the Vanguard Balanced ETF Portfolio (VBAL-TSX) has a 60/40 mix and the Vanguard Growth ETF Portfolio (VGRO-TSX) is 80/20. Each has a management expense ratio that should come in around 0.24 per cent, less than one-quarter the cost of the average comparable balanced mutual fund.

Each of the three Vanguard funds invests in seven of the company's own ETFs covering Canadian, U.S. and international bonds, as well as the shares of large, medium and small companies in Canada, the United States and in both developed and emerging markets around the world (there are no additional costs for the underlying ETFs).

The portfolios are rebalanced frequently to keep the target mix intact.
This makes following the CCP strategy easier with a single ETF since no re-balancing is required.
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Aznsilvrboy wrote: https://www.theglobeandmail.com/globe-i ... t-solution



This makes following the CCP strategy easier with a single ETF since no re-balancing is required.
Nahh... True CCP followers will balk at this for two reasons:

1. Since it automatically rebalances, it's a form of active management as the mix of the seven ETFs is decided on by someone else.
2. The MER is too high considering many of the ETFs that Vanguard offers has lower ETFs.
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craftsman wrote: Nahh... True CCP followers will balk at this for two reasons:

1. Since it automatically rebalances, it's a form of active management as the mix of the seven ETFs is decided on by someone else.
2. The MER is too high considering many of the ETFs that Vanguard offers has lower ETFs.
Seems to be a reasonable alternative to robo advisors like Wealth Simple.
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Nifty. Going to recommend this to people who want a simple solution.
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craftsman wrote: 1. Since it automatically rebalances, it's a form of active management as the mix of the seven ETFs is decided on by someone else.
Well, the whole CCP thing is a form of active management since it applies a subjective % to assets that is not consistent with their market capitalization. A true passive "buy the market" approach would allocate 100% of the equities to a Total World Stock market index like Vanguard's VT.
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Aznsilvrboy wrote: Seems to be a reasonable alternative to robo advisors like Wealth Simple.
It is reasonable for many people as balance funds are the number #1 selling fund. However, it just might not appeal to a certain crowd.
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Thanh wrote: Well, the whole CCP thing is a form of active management since it applies a subjective % to assets that is not consistent with their market capitalization. A true passive "buy the market" approach would allocate 100% of the equities to a Total World Stock market index like Vanguard's VT.
I agree but don't tell the CCP crowd as they firmly believe that it's a passive investment ;)
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this could be a better option than Mawer balanced fund MAW104/105? MER is .75% lower, and probably hold the same stocks.
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Certainly a nice option and I look forward to seeing if this causes any ripples in the market. I'll stick to my couch potato mix though, a bit lower MER and with the way I contribute rebalancing isn't a problem. Very cool though!
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greg123 wrote: this could be a better option than Mawer balanced fund MAW104/105? MER is .75% lower, and probably hold the same stocks.
No. With the Mawer Balanced fund, the fund manager decides on the ultimate mix of everything and can vary that mixture as well as assets within that mixture. With the 3 Vanguard products, the asset allocation is fixed to certain percentage points depending on which of the 3 product you have.
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craftsman wrote: Nahh... True CCP followers will balk at this for two reasons:

1. Since it automatically rebalances, it's a form of active management as the mix of the seven ETFs is decided on by someone else.
2. The MER is too high considering many of the ETFs that Vanguard offers has lower ETFs.
Thanh wrote: Well, the whole CCP thing is a form of active management since it applies a subjective % to assets that is not consistent with their market capitalization. A true passive "buy the market" approach would allocate 100% of the equities to a Total World Stock market index like Vanguard's VT.
What? I don't think you guys understand the principles behind passive index investing.
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This is awesome and actually I was wondering why it took so long to make a one stop shop.

This will really benefit investors from tinkering or making unintended changes to portfolio.
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craftsman wrote: I agree but don't tell the CCP crowd as they firmly believe that it's a passive investment ;)
Because it is passive investing by definition
Passive management (also called passive investing) is an investing strategy that tracks a market-weighted index or portfolio. The most popular method is to mimic the performance of an externally specified index by buying an index fund.
Passive management - Wikipedia
https://en.wikipedia.org/wiki/Passive_management
When somebody do not gambling with 10% chances just to match the index. Or. I'd say with 90% chances to fail to beat it :)

It looks OK in retrospective to know 10% beat the index, the problem you do not know which of them WILL do the same in NEXT 10 years. Also, once you'd factor NET returns after the fees, which usually do not low for active investment funds.
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Aznsilvrboy wrote: https://www.theglobeandmail.com/globe-i ... t-solution



This makes following the CCP strategy easier with a single ETF since no re-balancing is required.
Actually not bad, and 0.24% fee is a bit higher than you'd have DIY with SAME sets of fund (quite marginaly, however, 0.05-0.1% imo). But if you'd factor ETF fees on purchase/re-balance (like 10$ per fund) this one could be better for many sticking with "default" AA.

Personally I will stick with homemade XAW/XIC/(XBB ) solution peppered with a grain of hedged funds :)

P.s. I wonder if they will bring their target date mutual funds(!) to Canada - no fee, fractional shares and 0.06% MER...
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asa1973 wrote: Because it is passive investing by definition
But there isn't an index or a set independent portfolio for these ETFs to track. The portfolio is determined by Vanguard alone unless you can show me an independent index/portfolio where the mix between stocks and bonds as well as the mix between the 7 underlying ETFs which these all-in-one ETFs track.
asa1973 wrote: When somebody do not gambling with 10% chances just to match the index. Or. I'd say with 90% chances to fail to beat it :)

It looks OK in retrospective to know 10% beat the index, the problem you do not know which of them WILL do the same in NEXT 10 years. Also, once you'd factor NET returns after the fees, which usually do not low for active investment funds.
I don't believe you understand how fund performance reporting works. All performance figures released are always AFTER the fees and expenses or subtracted. ie. If a fund states that it made 14% last year, that's 14% after all fees and expenses are subtracted - ie. that's what the investor sees. That's the same for ETFs and Mutual Funds - all performance numbers are always after all fees are subtracted. I don't understand how ETF/passive supporters always bring up fees when they talk about posted returns as if some how they weren't included in the posted returns because it's simply not true that they aren't included.

I'm not even sure why you are bringing this point of the discussion up in this thread as we were discussing it in another thread.
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acekiller wrote: it's pretty good, less than e-series MER
Remember it's Vanguard's own mix of 7 ETFs so even with the lower MERs, we don't know what the mix actually is and how that mix compares to the e-series and returns.
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craftsman wrote: Remember it's Vanguard's own mix of 7 ETFs so even with the lower MERs, we don't know what the mix actually is and how that mix compares to the e-series and returns.
These funds are 'funds of funds' and are comprised of passively tracked index funds. The only thing that's being decided by fund managers is the percentage mix of these funds. This does not make these actively managed funds. For example, here is what their Balanced Fund is comprised of:

Vanguard Canadian Aggregate Bond Index ETF 23.5%
Vanguard U.S. Total Market Index ETF 22.6
Vanguard FTSE Canada All Cap Index ETF 18.0
Vanguard FTSE Developed All Cap ex North America Index ETF 15.0
Vanguard Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged) 9.3
Vanguard U.S. Aggregate Bond Index ETF (CAD-hedged) 7.2%
Vanguard FTSE Emerging Markets All Cap Index ETF 4.4

Source: Fact Sheet

If I decide to invest my money like this: 50% Total Stock market + 50% Total Bond market, would you call this an actively managed strategy? If not, how is the above any different? All the managers will be doing is bringing the asset allocation to the desired percentages over time through rebalancing. If you consider this active management, I don't think there is a single fund out there that can be classified as passive.
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asa1973 wrote:

P.s. I wonder if they will bring their target date mutual funds(!) to Canada - no fee, fractional shares and 0.06% MER...
A lot of pensions offering them now, ours just switched to using Blackrock target date fund. But I don't know how retail investor can buy these. They are a great idea too and even better.

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