Building Wealth

For the first 30 or so years of working, saving and investing, you’ll be first in the mode of getting out of the hole (paying down debt), and then building your net worth (that’s wealth accumulation.). But don’t forget, wealth accumulation isn’t the ultimate goal. Decumulation is! (a separate category here at the Hub).

Franklin Templeton Canada unveils suite of low-cost passive Regional and Country ETFs

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On the heels of BMO’s entry into the low-cost asset allocation ETF space (see Hub blog here), one of the world’s largest active money managers has unveiled a suite of low-cost passively managed regional and country ETFs for the Canadian market.

Franklin Templeton Investments Canada today announced the expansion of its Franklin LibertyShares ETF offerings with its first suite of passive ETFs. (Franklin LibertyShares originally entered Canada in 2017 with four actively managed funds branded as Franklin LibertyShares).

The new passive funds gives investors exposure to a specific region or country at rock-bottom fees (below 10 basis points). It says (and I agree) that the management fees for these new Canada, United States, Japan and Europe (excluding U.K.) passive ETFs are amongst the lowest in the industry, ranging between 5 to 9 bps.

The company says these include the first Japan passive ETF and Europe (excluding U.K.) passive ETF available on a Canadian exchange. The ETFs are market-cap weighted.

In a press release, Franklin Templeton Investments Canada president and CEO Duane Green said: “With market-moving events like trade tensions and Brexit, investors and their advisors as well as institutional investors are looking to precisely act upon specific country and regional market views … These new passive ETFs provide Canadian investors with individual country and regional exposure options … at a very low cost.”

Here are the new ETFs and their ticker symbols:

Franklin FTSE Canada All Cap Index ETF (FLCD) invests primarily in equity securities of Canadian issuers, seeking to replicate the performance of FTSE Canada All Cap Domestic Index. The management fee is 5 bps.

Franklin FTSE U.S. Index ETF (FLAM) invests primarily in equity securities of mid- and large-capitalization U.S. issuers, seeking to replicate the performance of FTSE USA Index. Management fee is 7 bps.

Franklin FTSE Japan Index ETF(FLJA) invests directly or indirectly, primarily in equity securities of mid- and large-capitalization Japanese issuers, seeking to replicate the performance of FTSE Japan Index. Fee 9 bps.

Franklin FTSE Europe ex U.K. IndexETF(FLUR) invests primarily in equity securities of mid- and large-capitalization issuers in developed markets in Europe excluding the United Kingdom, seeking to replicate the performance of FTSE Developed Europe ex U.K. Index. Fee 9 bps. Continue Reading…

BMO keeps it simple with its One-ticket Asset Allocation ETF portfolios

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By Dale Roberts

Special to the Financial Independence Hub

Last week we witnessed another entry into the Canadian Asset Allocation One Ticket Portfolio Solutions.

Welcome BMO.

On Friday February 15th BMO launched three asset allocation portfolios by way of the Conservative ZCON, the Balanced ZBAL and the Growth ZGRO.

Here is the overview from the Fact Sheets:

Wonderfully simple or plain vanilla?

Take your pick. These are certainly plain vanilla, they’re not even Lemon Raspberry White Chocolate. But they’re still wonderful.

I am certainly surprised that BMO Global Asset Management kept the portfolios so clean and simple. As you may remember from my review of the BMO SmartFolio. the Robo Portfolios are actively managed. That is to say there is active asset allocation with respect to the core and smart beta ETFs. From my BMO SmartFolio review …

The portfolios will be rebalanced every 2 to 6 months. And back to that human touch, the management team with also make adjustments to that asset mix based on market conditions. They may be more active in periods of market turmoil compared to the current market conditions where we are mostly cruising to the upside for Canadian, US and International stocks. Continue Reading…

Volatility arrived in 2018 but the ETF Exodus didn’t

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Figure 1: Market Share, Canadian ETFs

By Jeff Weniger, WisdomTree Investments

Special to the Financial Independence Hub

 Money managers had a rough year in 2018. The S&P/TSX Composite Index was off 8.8%, while the MSCI World Index of global equities was down 0.1% in Canadian dollar terms. About the only bright spot was the S&P 500 Index, which was down 4.4% in USD but up 4.1% for Canadians because of U.S. dollar strength. But these tepid figures mask the freefall’s extent; many markets met the bear market definition — declining more than 20% — inside the confines of Q4.

Figure 1 above grabbed attention in our 2019 Canadian ETF Industry & Market Outlook. Many didn’t realize how much market share the smaller players have gobbled up recently.

No doubt, the biggest ETF providers are doing just fine. In fact, we imagine most of the 33 Canadian ETF companies in our corner of the asset management industry must be downright giddy. Many are hitting the sweet spot where track records are becoming seasoned, brand recognition is solidifying and product users are now proselytizing for them.

Grasping at straws

“Active” mutual fund managers have for years been tossing around a prediction that needs to be checked at the door.  To paraphrase them: Wait until we see a downturn in stocks. That’s when everyone is going to dump their ETFs and come back to active mutual funds.

Be careful what you wish for; we think the exact opposite.

The stock market peaked in September, but the exodus from ETFs and into mutual funds never materialized. As an industry, our collective AUM is ever so slightly off its peaks, but that’s because of market losses, not outflows. Continue Reading…

Three times you might want to change your asset allocation

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By Steve Lowrie

Special to the Financial Independence Hub

2018 was a tough year for many investments: including equities, which delivered negative returns.”  As we covered here, periodic negative returns are nothing new. But it’s been a while since they’ve lined up with a calendar year: not since 2011 here in Canada.

I suppose it’s human nature to want to try to avoid the dive by heading for higher ground. So, when markets trend down, this FAQ heats up: Is it time to change my asset allocation?

In past posts, like this one here at the Hub, I’ve generally advised sticking with your investment plans, including your asset allocation, rather than reacting to market volatility. But that doesn’t mean you can’t ever change your asset allocation. Today, let’s cover three times you may want to.

1.) If you’ve built your portfolio on shaky ground

If your current “allocation” is actually just a random assortment of investments, there’s never a bad time to establish an underlying plan to guide the way, and to alter your allocations accordingly. Especially if your current portfolio is high-priced and premised on active management (trying to dodge in and out of winning/losing markets or securities), the sooner you can transition into a solidly built portfolio, the better. In this piece, I covered how to determine and document your asset allocation with an Investment Policy Statement.

2.) If your financial circumstances have changed

What if you receive a financial windfall such as an inheritance, or you encounter a hardship such as losing your job? If your financial “landscape” changes, it makes sense to revisit your asset allocation and adjust it if needed, to reflect any changes in your personal financial goals, and any increased or decreased capacity to take on investment risks.

3.) If your life has changed

Even if your financial circumstances haven’t changed, your life may. Marriage, divorce or widowhood; the birth of a child; a career change or retirement. These are the sorts of events that might call for a fresh look at whether your current asset allocations continue to reflect your evolving needs.

You may have noticed a theme here: If particulars in your own life change, it can make good sense to alter your asset allocation to reflect your revised circumstances.

The flip side of this coin holds true too: Avoid changing your asset allocation just because the markets are heading up, down or sideways.

So, if your annual performance reports had you seeing red at year-end, please ask yourself: Has anything in your own life changed, or are you reacting to market mood swings? If you’ve built a plan and it still reflects your goals, your best bet is to stick with it. That still doesn’t guarantee success, but it still gives you your greatest odds.

Steve Lowrie holds the CFA designation and has 25 years of experience dealing with individual investors. Before creating Lowrie Financial in 2009, he worked at various Bay Street brokerage firms both as an advisor and in management. “I help investors ignore the Wall and Bay Street hype and hysteria, and focus on what’s best for themselves.” This blog originally appeared on his site on Dec. 1, 2018 and is republished here with permission. 

Can you afford to launch a startup? Yes!

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By Emily Roberts

(Sponsored Content)

There is a common misconception that starting a business is an expensive proposition. You need equipment, a website, an office, and staff to get the venture off the ground. Sure, in some instances, you will need all that and more: but there are ways to minimize your expenditure and secure funding to help you get going.

Why start a business?

Whether you have been ‘packaged out’ or are looking to transition into a new career, there has never been a better time to start a business. Working for yourself gives you unprecedented freedom. You can work flexible hours, from home if you choose, and any profit you make is yours. For anyone tired of working for someone else, while they reap the benefits, there’s a lot to like about being your own boss.

Financial support for entrepreneurs

There is a ton of support available for entrepreneurs. Fundera recently compiled a list of 105 different ways to secure money for your small business. You might not be eligible for all of them, but it’s worth taking a look.

Look for free loans first. These don’t need to be repaid, so it’s a win-win for you. If your startup is in a tech, science, or health niche, there are Federal small business grants available. These include the Small Business Technology Transfer Program and the Small Business Innovation Research Program. Check grants on offer in your state too, as there is less competition for state funding.

To check the full list of available grants and funding packages, click here.

Tools and equipment

Many businesses need tools and equipment to get started. For example, if you want to set up a handyman business, you’ll need a truck, basic tools, and possibly gardening equipment. Some of these you’ll likely already have, but you may need to purchase other items. Continue Reading…