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Three Years Later and Still (Heart) My ETF Portfolios!

September 18, 2012|By David Lester

Hey everyone,

I was reading through my US and Canadian versions of my best selling book (I Heart Money) and I decided to see how well my portfolio reco had done.  I started writing the book in September 2009 and it has been exactly three years since I made my ETF picks.

Last blog I wrote about how my “Zero Effort Million Dollar Portfolio” with the BMO Monthly Income fund would have performed after the last three years and now I’m going to write about my US and CDN index portfolio picks.

I wrote that if you had around $40k to invest, you should not bother with a mutual fund portfolio.  Instead, buy a  properly diversified index portfolio, made up of ETFs.  My argument is that the fees will kill you over the years and the facts show that 80% of mutual fund managers under perform the market.  Just build an index portfolio and save the fees and the chance of under performance!  MERs (Management Expense Ratios) are from 2-3% for mutual funds and my US Index Fund Portfolio, equally weighted, has an MER of .38% and the CDN Index fund portfolio has an MER of .34%.  Those savings will add up very quickly over the years.  The performance has been pretty great too.  You can see below.

 

US Index Fund Portfolio 3 yr performance (Traded on NYSE Arca):

iShares Dow Jones Select Dividend Index Fund   – DVY    21.07%

iShares S&P U.S. Preferred Stock Index Fund   – PFF   14.61%

iShares Dow Jones International Select Dividend Index Fund  – IDV 12.19%

iShares iBoxx $ Investment Grade Corporate Bond Fund- LQD 11.02%

In a $40k equally weighted portfolio like I recommend in the US version of my book, you would have a 14.7% return in the last three years.  Now let’s look at my Canadian index portfolio.

CDN Index Fund Portfolio 3 yr performance:

iShares S&P/TSX Capped Composite Index Fund – XIC  5.81%

iShares S&P 500 Index Fund (CAD-Hedged)  – XSP 12.36%

iShares DEX Universe Bond Index Fund  – XBB 6.24%

iShares MSCI EAFE Index Fund (CAD-Hedged)  – XIN 0.72%

A total return of 6.28% over the last three years.  I also noticed that XIC (TSX Composite)  had outperformed the much more popular XIU (TSX top 60)  which only did 4.14% in the last three years.  It pays to watch out for your money!

Love your diversified ETF portfolios and they’ll  love you back with cheaper fees and better performance,

Dave

David Lester
About David Lester

David Lester is a best selling author and professional Financial Coach, helping people be better with their money. David has written a personal finance book that breaks with traditional attitudes towards finance and describes his own philosophy to money that he has gained through his personal and professional experiences. His philosophy on money applies to many areas of everyday life, including banking, investing, goal setting, shopping and entertainment.