Hub Blogs

Hub Blogs contains fresh contributions written by Financial Independence Hub staff or contributors that have not appeared elsewhere first, or have been modified or customized for the Hub by the original blogger. In contrast, Top Blogs shows links to the best external financial blogs around the world.

Canadian Financial Summit 2021 next week

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Kornel Szrejber’s Canadian Financial Summit 2021 is a virtual event that will go live next Wednesday, Sept. 22. There are dozens of financial speakers featured, including many well-known financial bloggers, including Yours Truly.

My 45-minute Zoom interview with Kornel was pretty wide-ranging but focused on Retirement Income, as opposed to Wealth Accumulation. The working title for the discussion was Semi-Retirement: the Halfway House between Employment and Full Retirement. Or as Doug Dahmer and other retirement gurus have dubbed it, the “Work Optional” phase of our working careers.

Certainly our chat was informative and entertaining: I certainly revealed a lot of how our family’s own personal finances are handled and I learned that Kornel — like Michael James and Robb Engen — has long been a “pure” indexer as opposed to a hybrid investor who mixes core ETFs with a bit of dividend investing and speculation in individual stocks.

We will reprise the full interview and supply a link once the event goes alive. In the meantime, check out Robb Engen’s preview of the event that ran on the Hub earlier today.

 

Vanguard Canada launches two actively managed global mutual funds

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Vanguard Investments Canada Inc. has announced the launch of two new globally diversified and actively managed mutual funds it describes as being “low cost”: Vanguard Global Credit Bond Fund [VIC500] and Vanguard Global Equity Fund [VIC600.] complement the firm’s current line-up of 37 ETFs and four mutual funds.

Management fees will be 0.40 and 0.55% respectively. Asked whether this means payment of trailer commissions to financial advisors, Vanguard Canada spokesperson Matthew Gierasimczuk told the Hub: “No. Vanguard doesn’t pay trailing commissions in any of our markets since we have a longstanding belief it leads to a conflict of interest for investors.” The funds are available through most wealth advisors and also on Questrade and Qtrade, he added.

In a news release issued on Sept. 13, Vanguard Investments Canada Inc. Managing Director and Head Kathy Bock said:

“Within an uncertain investing climate, Canadian investors and their advisors are looking for quality, long-term and high-performing investment products, at a low-cost … These mutual funds provide that and reflect our deep 45-year history in active management with proven portfolio manager expertise that can help investors achieve success.”

Globally, The Vanguard Group, Inc. manages over USD $8.1 trillion in assets and is one of the world’s largest active managers with USD $1.7 trillion in global actively managed assets under management.

“Since introducing our mutual funds three years ago, Canadians have embraced our differentiated approach to active management, providing investors with access to skilled global investment managers with a long-term view,” said Tim Huver, Head of Intermediary Sales, Vanguard Investments Canada Inc. “These two global funds can act as a core holiding or complement to an investor’s equity or fixed income portfolios.”

Vanguard Global Credit Bond Fund seeks to provide a moderate and sustainable level of current income by investing primarily in non-government fixed income securities of issuers located anywhere in the world. The fund will have a management fee of 0.40%. The fund will be sub-advised by The Vanguard’ Group Inc.’s Fixed Income Group, a global team of more than 185 tenured and dedicated professionals overseeing USD $2.1 trillion in total assets. For 40 years, Vanguard Fixed Income Group has been distinguished in the industry by its deep investment capabilities, disciplined security selection process, rigorous risk management techniques and strong long-term performance.

Vanguard Global Equity Fund seeks to provide long-term capital appreciation by investing primarily in equity securities of companies located anywhere around the world. The fund will be sub-advised by Baillie Gifford Overseas Limited and Marathon Asset Management Limited. These sub-advisors have worked with Vanguard for decades and collectively manage over USD $500 billion in assets under management. The maximum management fee for the fund will be 0.55%.


			

	
	


				


	

		
				

			Thinking Big on Small Caps
		

		
		

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By Steve Lipper, Senior Investment Strategist, Managing Director, Royce Investment Partners


(Sponsor Content)


Companies with small market capitalization make up one of the more overlooked parts of the global equity markets. This could be attributed to a lack of coverage of their stocks by analysts, but whatever the reasoning, being overlooked creates opportunities for those investors who know where to look among small-cap equities.


Royce Investment Partners has more than 45 years of experience in the small-cap space. Such longevity brings with it a high level of expertise, allowing the firm to build assets under management (AUM) of US$17.6 billion.1


This has been achieved through a combination of specialization in small-cap investments and a commitment to ownership among the firm’s portfolio managers. With an average tenure of 22 years, Royce’s seasoned group of PMs have substantial ownership in the strategies they manage; in fact, 89% of the firm’s assets are in funds where the portfolio manager has invested at least US$1 million themselves.2 In this respect, Royce stands apart from its competitors: 37 asset managers in the U.S. have more than US$5 billion in small-cap assets, but only Royce has more than 95% of its total AUM invested in the space.3


While developing expertise in small-cap investing is complex, the reasoning for specializing in this area is quite simple: quality small-cap companies have been proven to deliver for investors.


In fact, small-cap stocks have consistently provided meaningful outperformance compared to their large-cap counterparts over the long term. Using the MSCI ACWI Small Cap and MSCI ACWI Large Cap indices as proxies, it shows that small caps have delivered higher annual returns over most multi-year time periods (see chart below). In addition, small caps not only provide a much larger set of companies to invest in (approximately four times the amount in large caps), but with valuations that often understate their true worth. This is an important point to consider, especially given some of the pretty elevated valuations in equity markets right now.




 


The opportunities that small-cap stocks present for investors were a key factor in introducing our new strategy for the Canadian retail market, Franklin Royce Global Small Cap Premier Fund.4 Continue Reading…

			

	
	


				


	

		
				

			My virtual MoneyShow talk on MoneySense ETF All-Stars and Financial Independence
		

		
		

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As this link published at MoneySense.ca on Sept 3rd indicates, I will be giving a half-hour virtual presentation on September 21st on how the annual MoneySense ETF All-stars package can help retirees and near-retirees build their nest eggs and then draw income from them. (i.e. Accumulation and Decumulation).


The World of ETF Investing Canada Virtual Expo talk is on Sept. 21. Registration is free.


Here’s how MoneySense describes it:


Jonathan Chevreau, a longtime personal finance journalist, former Editor-in-Chief of MoneySense and the creator of our perennially popular Best ETFs in Canada package has said there’s only one free lunch for investors—and that’s the kind of broad diversification you can get from a low-cost, broadly diversified portfolio “core” based on exchange-traded funds (ETFs).


ETFs have become so popular that there are now roughly 1,000 listed on Canadian exchanges alone, with thousands more on US and international stock exchanges. Now in its 9th annual edition, I write up the feature each spring after conferring with an all-star panel of eight investing professionals and specialists. Together, we narrow the field to the very best options across five categories: Canadian, U.S., International, fixed-income and all-in-one asset-allocation funds.






In addition individual panelists provides their unique “Desert-Island Picks” that they are particularly passionate about and that may merit consideration, but don’t achieve the full-consensus vote otherwise required to make the cut. Continue Reading…

			

	
	


				


	

		
				

			How the Asset Allocation in your ETF can help drive Returns  
		

		
		

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By Kevin Prins, BMO ETFs


(Sponsor Content)


“Diversification” is a word that gets thrown around a lot these days: and for good reason. A diverse and balanced portfolio can help provide more consistent returns versus individual securities. The asset allocation of your exchange traded funds (ETFs) is of paramount importance to help provide more consistent returns and targeting an appropriate portfolio risk level.


The good news is that ETF providers have provided choice in a range of all-in-one portfolios that are delivered as an ETF on the exchange. Now you can choose from a diverse mix of both domestic and foreign equities and fixed income.


Coupled with your specific investment goals and tolerance for risk, you can rather easily determine which ETF is a good fit for you by considering its strategic asset allocation relative to your needs.


Strategic Asset Allocation vs. Chasing the Asset Class with the highest return


Predicting the top performing asset class year to year is extremely difficult and, when poorly executed, can lead to disappointing results for your portfolio.


But with a diversified Asset Allocation ETF, you can take all the guesswork out of investing.


In other words, your portfolio’s fortunes aren’t tied to a single asset class, making it far more resilient, while simultaneously increasing your chance of having exposure to markets when they have bull runs.


Many investors who try to do it themselves will rely on friends, market research, or maybe even an investment blog to help them pick the securities that will comprise their portfolio.


But this can be time-consuming and risky. Not to mention that these portfolios tend to be under diversified.


You’ll gain exposure to both fixed income and equities with a balanced asset allocation ETF. What’s more, you can avoid one of the common pratfalls of overweighing your portfolio with Canadian securities and instead take a global approach, again helping improve your portfolio’s balance.1 


You’ll also be exposed to both cyclical and defensive sectors, ensuring that your portfolio is designed to perform well in a variety of economic conditions.


The fixed income/equity balance is of importance, as this has the potential to bolster your portfolio with both security and reliable income, while also adding growth potential and inflation protection.




 


It’s worth stating that a portfolio’s strategic asset allocation will more than likely have a higher impact on its performance than even the individual stock selection, as the graphic above indicates. 2 


That’s because opting for a conservative, balanced, and or growth portfolio and investing in asset classes based on your preferences will play the determining role in how to allocate your investment.


Whatever your investment goals, an approach predicated on strategic asset allocation can help you reach them.


8 Reasons to look at Asset Allocation ETFs 


    

  1. Simplified Investing: An all-in-one investment solution that provides instant market exposure
    2. 

  2. Broad Diversification: Holds a basket of ETFs that in themselves hold many securities
    3. 

  3. Professionally Constructed: Leverage the asset allocation experience of industry professionals
    4. 

  4. Automatic Rebalancing: This keeps one’s investment portfolio on track to risk and return objectives Continue Reading…
    5.