A look inside Canada’s hottest ETFs

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Quick question: Which are Canada’s hottest index funds?

Considering the stampede into Vanguard Canada’s ETFs since their 2011 debut, many would give them the nod. In fewer than two years, their assets under management exceeded $1-billion.

But there’s another fast horse in the ETF race, and it’s hot on Vanguard’s tail.

First Asset launched its first exchange-traded funds in June, 2011. This month, the firm’s indexes surpassed $1-billion under management. They were slower out of the gate than Vanguard, but they’ve made up plenty of ground. During the past 12 months, First Asset’s ETFs have increased its assets under management by more than 300 per cent.





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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7 Responses

  1. James says:

    I understand that you have a home country bias (Canadian short term bonds) in your bond allocation. But why is your Canadian stock allocation considerably higher that your US allocation?

    • Hi James,

      Thanks for your comment. Which portfolio are you referring to?

      Cheers,

      Andrew

      • James says:

        Hi Andrew,

        Thanks for your reply. I’m referring to your Globe and Mail Strategy Lab model portfolio. I saw you have over 700 shares in Canadian stocks but less than 150 shares in US stocks. Why did you decide on such an allocation and not roughly matching the shares without affecting your total stock to bond allocation?

        Thanks,

        James.

        • Hi James,

          Vanguard’s total U.S. stock market index has 3,740 U.S. stocks.

          Cheers,
          Andrew

          • James says:

            True enough. Why is the allocation heavily weighed in Canadian index funds than US?

          • Hi James,

            I created that portfolios for Canadians. Canadian retirees will eventually be paying the majority of their future bills in Canadian dollars. So the lean towards Canadian equities makes sense. If I were asked by a British newspaper to build an index portfolio for a 35 year old British investor, this is what it would look like:

            30% British bonds
            35% British stock index
            35% Global stock index (or I might split this portion, 30% first world stock index, 5% emerging market index)

            Cheers,
            Andrew

  2. Justin says:

    Long time reader, first time comment poster.
    I agree with Andrew. You should always be saving/investing for your expenses 30 years down the road. Potential currency fluctuations +/- can’t be predicted. Why make your life any more complicated when you can always get foreign exposure through funds domiciled in your retirement currency. Add the handling costs of “extra” currency exchanges will only increase your overall fees.

    That being said even as a Canadian (or any other nationality) you might find yourself wanting to spend a few months a year in a non-home currency destination. Particularly, if you have a partner of a different nationality. It never hurts to hold an ETF in another currency.

    I will most likely reallocate a bit more depending on what the future holds but I’m currently happy holding this:

    VSB 30%
    VCE 30%
    VUN 35%
    VEUR 5% – Euro denominated

    Speaking of fees. Vanguard just lowered their fees for Canada, Irish domiciled and UK funds.

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