DIY Investing

I recently received a great question from a reader, and I promised him I would follow up with a detailed blog post. Here it is!

In my recent blog post, Breaking Up With Your Vanguard Asset Allocation ETF, I shared a 5-ETF portfolio you could consider for your RRSP accounts.

Like it or not, many ETF investors are about to get an extra dose of China in their portfolios this year, thanks in part to index provider MSCI. U.S. Senator Marco Rubio is certainly not a fan of their decision. He has recently written to MSCI’s CEO, looking for answers as to why the company has included China A shares in their emerging markets indexes.

“It’s not you, it’s me”. These words have been professed during breakups throughout history, so we all know what they really mean: “I can do better”.

Star Trek may have introduced the expression, “to boldly go where no man has gone before,” but we’re the ones who actually get to do it in today’s post. To my knowledge, nobody has ever compared the before- and after-tax returns of Guaranteed Investment Certificate (GIC) ladders versus bond ETFs. At least I’ve not found an unbiased, historical comparison anyplace online.

As the reader correctly notes, the tax-inefficiencies in Vanguard’s AA ETFs mainly lie with the underlying bonds (not with the equities) – at least in taxable accounts. You see, many of the bonds in fixed income ETFs are currently trading at what’s called a “premium” to their maturity value.

So, what did you think of the Game of Thrones grand finale??? I don’t want to spoil it for both of you who haven’t watched it yet, so I won’t share my own thoughts here. DM me if you’re interested.

Our ongoing series on ETF investing may not be quite as thrilling as you manage to catch “Game of Thrones” in real time this season, but I hope we’re at least helping you dominate your own ETF empire.

In our last episode, we learned how to combine international and emerging markets equity ETFs in a madcap, market cap global adventure (by way of Korea). If the entire exercise brought back unpleasant memories of elementary school math drills, you might prefer our next three pieces.

In the last installment of my “Understanding ETFs” series, we toured the U.S. equity ETF landscape, covering solutions you can use to diversify your portfolio’s domestic stock allocation. Today, let’s head overseas, to explore how to further diversify your global portfolio by adding ETFs from other developed markets around the globe.