[G&M] Vanguard launches ‘one-ticket solution’ ETFs

[hawleyray]

Basically, Vanguard will allow Canadians to follow the CCP strategy with a single ETF.
No rebalancing needed by the investor but slightly higher fees (MER 0.24%) than the traditional 3 ETFs version.

The Vanguard Conservative ETF Portfolio (VCNS-TSX) has a 40/60 mix of stocks and bonds, respectively, the Vanguard Balanced ETF Portfolio (VBAL-TSX) has a 60/40 mix and the Vanguard Growth ETF Portfolio (VGRO-TSX) is 80/20. Each has a management expense ratio that should come in around 0.24 per cent

Investing giant Vanguard launches ‘one-ticket solution’ ETFs

As noted in the article, it may be an interesting alternative to robo-advisers for 1/3 of the fees.

 

[hawleyray]

Another advantage I see in a one-ticket solution is that it may be a safeguard against market timing. You can still wait to invest but it prevents you to temporarily tweak your allocation in a attempt to chase higher returns.

Anyway, even if I'll not use them, I'm happy to see fresh products in the canadian industry and not just new gambling ETFs.

 

[davetownsend]

@hawleyray Vanguard Canada has now added these funds to their website. For those looking for how the funds are broken down into their parts, you can look at the Fact Sheet pdf in the right hand column of each fund's webpage.

https://www.vanguardcanada.ca/individual/indv/en/product.html#/productType=etf&assetClass=balanced

 

[dochoajr92]

@davetownsend Great, we just need Dan Bortolotti or Jason Bender to back-test the performance of these funds and tell me how they compare to their existing couch potato portfolios

 

[dreamer88]

@davetownsend Hmm. Not sure I like the fact that about half the bonds in each case are non-Canadian, and hedged to CAD.

Also don't like the percentage of Canadian equity.

 

[alisis]

@hawleyray Still gotta be on during market hours, and doing the buying, but a good step in the right direction.

Bit more expensive than I expected from Vanguard, but if they catch on they'll probably start gradually lowering the expense ratio I bet.

EDIT: On reflection, and browsing through their fund facts for the foreign bonds and all the weird slices and dices the Globe article says, the MER is probably about where it's gonna be at least unless suddenly a HUGE influx of people switch over to them/Vanguard Canada to afford some cost savings.

Oh well, we'll see when they show exactly how they're breaking things down.

 

[shetel]

@alisis Yeah. The problem with ETFs is that they're more work. They've removed the necessity for re-balancing and spreadsheeting, but you still are left with placing orders on a stock market with ticker symbols, reinvesting distributions, and even just overcoming the inertia to open a brokerage account. What Vanguard needs to do next, is launch a super simple brokerage-like account meant for holding these. It'd automate everything for you and not charge you anything for holding Vanguard ETFs.

 

[davetownsend]

@shetel

What Vanguard needs to do next, is launch a super simple brokerage-like account meant for holding these. It'd automate everything for you and not charge you anything for holding Vanguard ETFs.

I find this highly unlikely to happen. Right now Vanguard Canada has basically zero customer service reps to handle individual investors. And that saves them a lot of money.

No matter how simple a brokerage you create, you are still going to need to hire a significant number of customer service reps. You need people to handle the account opening process, you need to people to deal with accounts being transferred from other institutions, people to deal with the customer problems that always pop up in any financial institution and people to deal with all of the questions that the new investors always have. It's so difficult to do this cheaply.

Through massive economies of scale, Vanguard USA is able to do this and keep their costs reasonable. But Vanguard Canada only has a tiny fraction of the assets that Vanguard USA has. The costs in Canada would be proportionally much higher.

 

[reborndestiny]

@davetownsend If the brokerages were smart they would set up a service like this - deposit money in an account and it will be invested the next day in the fund(s) of your choice. They could even create a mutual fund wrapper with their own brand on it for a small MER markup. Heck, the banks could do this too, and compete with Tangerine's funds and TD's e-series.

 

[sevensong]

@reborndestiny Definitely not discount brokerage like Questrade tho. If any big bank brokerages are to offer this service, I see them requiring a high account balance (50k-200k range)

Essentially this series of funds killed Tangerine funds.

 

[jeanniebeannie4christ]

@sevensong Oh absolutely. I'm moving mine out of Tangerine into VGRO as soon as it's available.

 

[davetownsend]

@jeanniebeannie4christ It's available in 10 minutes when the Toronto Stock Market opens.

But before moving anything, make sure you understand how a brokerage account works and things such as the bid-ask spread. It's not difficult to learn the basics, but you will need to make sure understand everything first.