You want bonds, but maybe not a full helping. Would a portfolio weighted 75 per cent to stocks and 25 per cent to bonds be of interest?
You’ll find this aggressive portfolio mix in the Tangerine Balanced Growth ETF Portfolio, a mutual fund product from the online bank Tangerine that offers a high level of simplicity as well as a few potentially deal-breaking drawbacks.
Tangerine has three ETF Portfolio funds, which package low-cost index-tracking exchange-traded funds into a mutual fund that can be bought and sold at no cost. The management expense ratio for all three is 0.77 per cent, which is quite a bit more expensive than buying the component ETFs on their own. It’s also much cheaper to use asset-allocation ETFs, which replicate what Tangerine’s ETF portfolios do in ETF form. Buy an asset-allocation ETF through any broker or stock-trading app and you get an instantly diversified portfolio with various mixes of stocks and bonds.
The 75-25 mix is unusual, though. Most balanced ETF portfolios have a 60-40 mix, which up until recently was the no-brainer default mix for middle-of-the-road portfolios. An exception is the Horizons Balanced TRI ETF Portfolio (HBAL-T) at 70-30, but it’s a total-return product that doesn’t pay dividends or bond interest. Instead, the unit price reflects a blended return of share price changes plus income.
There are also 80-20 asset-allocation ETFs that target growth investors, but they may push the aggressiveness level too high for some investors. Going with a 75-25 mix seems a bit less edgy.
Beyond fees, the other potentially deal-breaking aspect of the Tangerine Balanced Growth ETF Portfolio is the surprisingly small weighting to Canadian stocks. As of Aug. 31, the fund had a 45-per-cent weighting in U.S. stocks, a 19-per-cent weighting in international developed market stocks, a 9-per-cent weighting in emerging market stocks and a 2-per-cent weighting in Canadian large-capitalization stocks. The rest is in bonds or cash.
Two final points on this Tangerine product that may account for why it has attracted $340-million in assets: There are no fees of any type beyond the hefty MER, other than a $125 charge for transferring a registered account to another financial company, and the minimum investment is just $25. Small investors are welcome.
-- Rob Carrick, personal finance columnist
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Stocks to ponder
Enbridge Inc. (ENB-T) The pipeline operator appealed to environmentally conscious investors this week when it hosted a forum to showcase its commitment to environmental, social and governance principles – underscoring just how important ESG is becoming to companies in their pursuit of long-term investors. However, Enbridge also stands by its traditional pipeline infrastructure, arguing that conventional energy is essential to meet rising demand while greener energy expands, making its pipelines a kind of bridge to the future. Will Enbridge succeed in winning over long-term ESG investors? David Berman shares his thoughts.
Corby Spirit and Wine Ltd. (CSW-A-T) Who isn’t seeking stability these days? Inflation is hot, the stock market is jittery regarding a potential default of real estate giant China Evergrande Group and COVID drags on, with one wave following another. According to Philip MacKellar of The Contra Guys, stability is what this stock has to offer. The balance sheet is consistently clean with high cash, no debt and ample working capital. Shares outstanding have tallied a stable 28 million for the past decade, which means owners have avoided dilution. The company’s top line has remained steady for the past 10 years. And the dividend is currently yielding an attractive 4.7 per cent, with a firm policy on payouts in place.
The Rundown
Markets flash amber as they enter ‘second stage of interest rate grief’
Rising bond yields are not always bad news for stocks and other “riskier” assets, but the current spike is giving investors justifiable cause for concern as they enter the fourth quarter. The increase in yields comes against a backdrop of stretched valuations on Wall Street, slowing economic growth and falling consumer sentiment. Volatility, while still mostly comatose across a range of asset classes, has shown signs of flickering back to life too. The S&P 500 just had its worst month since March last year. The catalyst and context for this is the Fed indicating that it will raise interest rates earlier and more aggressively than previously thought to rein in inflation. Perhaps you’ve heard this story before. But as Jamie McGeever of Reuters reports, there are signs that, in terms of the Fed preparing to pull the trigger, this time might be different.
Also see:
From chips to ships, shortages are making inflation stick
‘Natural’ for global bond yields to rise from here, say strategists
Investors can still find value in China, but be choosy, financial expert says
China has it all these days – at least in terms of disturbing news. From the spiralling debt problems at giant property developer China Evergrande Group and Beijing’s brutal crackdown on homegrown tech companies to power outages and the abrupt evisceration of the private-education sector, the country has rocked investors in recent months with one shock after another. So has China become “uninvestable” for foreigners? No, but outsiders have to be choosy, says Matthew Strauss, senior vice-president at CI Global Asset Management. The Namibia-born, South Africa-educated strategist has helped to lead CI Emerging Markets Fund to index-beating performance over the past decade and insists tempting opportunities still exist in China. Ian McGugan found out more.
‘Perfect storm’ lifts U.S. dollar over unsettled markets
A grinding rally in the dollar is picking up speed, fueled by a hawkish tilt from the Federal Reserve, rising Treasury yields and concerns over the possibility of a drawn-out battle to raise the U.S. debt ceiling. Will the rally in the greenback last? Gertrude Chavez-Dreyfuss and Saqib Ahmed of Reuters report.
Investors see Japan’s new leader as market-friendly but reforms in question
Investors see Japan’s new leader, Fumio Kishida, as a steady consensus builder who can lead the ruling Liberal Democratic Party and its coalition partner to victory in a general election due in November. But while Japanese equities are expected to benefit from Mr. Kishida’s market-friendly image, fewer political uncertainties and an improving economy, investors are unsure if he can push ahead with the tough measures necessary to boost economic health.
Others (for subscribers)
The highest-yielding stocks on the TSX, plus risk data
Friday’s analyst upgrades and downgrades
Thursday’s analyst upgrades and downgrades
Friday’s Insider Report: Billionaire businessman Eric Sprott tops up his position in this sinking stock
Thursday’s Insider Report: CEO lands nearly $1-million with the sale of this bank stock
Number cruncher: These five pet food stocks offer dividend seekers something to chew on
Number cruncher: Strategy picks through oil patch for stocks offering both safety and value
What’s up in the days ahead
Just how worried should investors be over inflation? Our Ian McGugan will share his perspective this weekend.
U.S. jobs, an OPEC oil gathering and other world market themes for the week ahead
Click here to see the Globe Investor earnings and economic news calendar.
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Compiled by Globe Investor Staff