You want bonds, but maybe not a full serving. Would a portfolio weighing 75 percent stocks and 25 percent bonds be of interest?
You can find this aggressive portfolio mix in the Tangerine Balanced Growth ETF Portfolio, an investment fund product from the online bank Tangerine, which offers a high degree of simplicity as well as some potentially damaging disadvantages.
Tangerine has three ETF portfolio funds that bundle low-cost, index-tracking exchange-traded funds into one mutual fund that can be bought and sold free of charge. The management expense ratio for all three is 0.77 percent, which is significantly more expensive than buying the individual ETFs individually. It’s also much cheaper to use asset allocation ETFs, which mimic what Tangerine’s ETF portfolios do in ETF form. Buy an Asset Allocation ETF through any broker or stock trading app and you will get an instantly diversified portfolio with different mixes of stocks and bonds.
However, the mix of 75-25 is unusual. Most balanced ETF portfolios have a 60-40 mix, which until recently was the simple standard mix for mid-range portfolios. One 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 share price reflects a mixed return from changes in the share price and income.
There are also 80-20 asset allocation ETFs that target growth investors, but they can overpower the aggressiveness for some investors. Going with a 75-25 mix seems a little less edgy.
Aside from fees, the other potentially groundbreaking aspect of the Tangerine Balanced Growth ETF portfolio is the surprisingly low weighting of Canadian stocks. As of August 31, the fund had a 45 percent weight in US equities, a 19 percent weight in developed international markets, a 9 percent weight in emerging market equities, and a 2 percent weight. Cent weighting on Canadian large cap stocks. The rest is in bonds or cash.
Two final points about this Tangerine product that may explain why it attracted a fortune of $ 340 million: There are no fees of any kind beyond the high MER except a fee of $ 125 for the Transfer a registered account to another financial company and the minimum investment is only $ 25. Small investors are welcome.
– Rob Carrick, personal finance columnist
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Compiled by Globe Investor Staff