This week, a chunk of Canada’s financial community and media commentators are descending on the Windy City for a half-week conference on ETFs and mutual funds.
They include CBC’s Rick Mercer, BNN’s Larry Berman, author and radio host Andrew Busch, BMO Capital Market’s chief investment strategist Brian Belski and BMO private Bank CIO Jack Ablin, robo-adviser pioneer Randy Cass, Morningstar director of global ETF research Ben Johnson, ShareOwner CEO Bruce Seago and even myself.
You can find the full agenda here. Located at the Trump International Hotel, there are two concurrent streams, one devoted to mutual funds, the other to ETFs.
Wednesday morning (April 8th) kicks off bright and early with a keynote by Brian Belski on the market outlook: It’s titled (reassuringly) The Secular Bull Market is Very Much Alive.
Robos crash the party
One of the big topics within the ETF stream is robo-advisers, most of which have ETFs as their fundamental building block. Continue Reading…
Here’s an interesting development in the general field of discount brokers, ETF makers and robo advisers.
Last November, Questrade Wealth Management Inc. (QWM, a subsidiary off Questrade Financial Group Inc.) launched an “online wealth management” service called Portfolio IQ that bears a strong resemblance to so-called “robo” advisers.
A fact sheet bearing the slogan “Wealth Management isn’t just for the Wealthy anymore” described Portfolio IQ as “an online wealth management service” delivering professionally and actively managed portfolios at an ultra-low cost. It promised customized portfolios for those with as little as $2,000.
The investment seeks to replicate the performance, net of expenses, of the S&P/TSX Capped Composite Index. The index is comprised of the largest (by market capitalization) and most liquid securities listed on the TSX, selected by S&P using its industrial classifications and guidelines for evaluating issuer capitalization, liquidity and fundamentals.
Another go-to vanilla ETF, XIC, provides exposure to the S&P/TSX Composite, which skews heavily into Canadian financials and commodity stocks. One bad habit Canadians investors get into succumbing to home country bias — holding way more Canadian companies than foreign companies. The Canadian stock market represents only 6 per cent of the global market so it is positive to see ROBO allocating a smaller weighting to Canadian stocks. It’s sad to say that in terms of investing opportunities, there are way way more of them outside Canada.
I contributed $5,000 to meet the minimum investment required and the account was set up.
Two business days later, the money was invested according to the asset allocation weightings the ROBO created based on my responses to questions about my risk tolerances.
To recap, this is my portfolio, along with portfolio weightings allocated by my ROBO:
Dividend Stocks 15%
Risk Managed Bonds 15%
Foreign Stocks 15%
US Stocks 15%
Canadian Stocks 10%
Risk Managed Equities 10%
Real Estate Stocks 10%
Emerging Markets 10%
The ROBO calculated my risk score to be 9, which is high. According to ROBO,
“You seek a portfolio that provides long term growth. Your assets are invested primarily in equities. You accept a high degree of market fluctuation, with the goal of achieving superior long term returns. You accept that there will be times of negative performance.”Continue Reading…
Interesting piece by financial TV guru Suze Orman about why she’s decided to quit her 13-year long TV gig. She sounds excited about moving on to whatever will happen after TV: clearly she’s ready for an equally exciting and influential encore career.
This week, MarketWatch zeroedin on 5 Disastrous Trends impacting future retirees. They are plunging savings rates, vanishing workplace pensions, lack of emergency savings, rising life expectancies [see the Hub’s Longevity & Aging section devoted to this theme] and over dependency on Social Security and Medicaid.
Well, perhaps retirement is overrated anyway? That’s the stance Lawrence Solomon takes in a piece this week at the Financial Post: Here’s a Retirement plan — Don’t! This is more or less what we’ve been arguing all along here at the Hub. I call it the JKW Retirement Plan: JKW stands for Just Keep Working.
However, as I’ve also argued, just because you never plan to retire, doesn’t mean you don’t need to seek Financial Independence. Findependence is always a desirable goal and the sooner the better. Retire by 40 asks the question How long will it take to achieve Financial Independence? It includes an interesting chart that reveals the hard reality: it all depends on your savings rate. If it’s low, it could take more than half a century to reach Findependence. If you could save 90% of your income it could take as little as three years. Note this observation:
The average retirement age in the U.S. is 62. That means most people have about 40 years to save and invest. If your saving rate is 5%, then you probably will not reach financial independence before retirement. Even 10% is iffy.
The Christian PF blog has an enthusiastic book review of a book that’s already a NYT bestseller: Living Well, Spending Less. The reviewer notes that while it’s not a “Christian” book per se, it’s packed with scriptural references but should resonate with anyone in this materialistic culture: it’s all about decluttering, being content with what you have, cutting your grocery bill in half and more. A bit like the phrase “guerrilla frugality” in Findependence Day!
North of the border, Boomer & Echo takes a look at how the financial advice business is going to be shaken up by a term that may make your eyes glaze over: CRM2. Sounds like inside baseball but read why Robb Engen says CRM2 will usher in A New Age of Enlightenment for Investors.
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