In the case of a smaller Canadian retirement portfolio, you would move to 7 asset classes. Obvious, a po:
-Domestic Stocks
-US Stocks
-EFA Stocks
-Emerging Markets Stocks
-Corporate Bonds
-Government Bonds
-International Bonds
These could be done with the following ETF’s:
-Domestic Stocks:
-XIU – Ishares ETF that tracks the TSX60 index)
-HXT – Similar exposure to XIU but it automatically reinvests dividends, charges lower fees but has derivative exposure
-US Stocks:
-XSP – $CAD hedged exposure to the S&P500 (through IVV
-IVV or SPY: Two very popular and low fee US ETF’s that track the S&P500, they are both traded on US markets
-EFA Stocks:
EFA – Ishares ETF that tracks much of the developed world
XIC – $CAD hedged Ishares ETF that tracks the developed world
-Emerging Market Stocks
VWO – Vanguard’s Emerging markets fund, traded on US markets
XEM – $CAD hedged Ishares ETF that tracks emerging markets
-Corporate Bonds
XCB – Ishares ETF that tracks a Scotia index of Corporate bonds
HAB – Alphapro ETF that provides exposure to Corporate bonds
-Government Bonds
XBB – Ishares ETF that tracks a Scotia index of 3-10 year Canadian government bonds
-Foreign Bonds
BND – Vanguard ETF that tracks the total bond market in the US (public, corporate, etc)
TIP – US ETF that provides exposure to inflation protected bonds issued by the US government
As you can see, there are many different possibilities even for a simple portfolio that only includes 4 ETF’s. I think the first step would be to select what you want in each of those asset classes. When you will combine that with your investor profile, you will get a very good idea of what to include in your portfolio. Here is the table again:
XIU/HXT XSP/IVV/SPY EFA/XIC VWO/XEM XCB XBB BND
Investor 1 - Most Conversative investor 5 5 0 0 40 50 0
Investor 2 7.5 7.5 0 0 40 45 0
Investor 3 10 10 0 0 40 40 0
Investor 4 12.5 12.5 2.5 2.5 35 35 0
Investor 5 12.5 12.5 7.5 7.5 30 30 0
Investor 6 15 15 10 10 25 25 0
Investor 7 17.5 17.5 12.5 12.5 20 20 0
Investor 8 17.5 17.5 20 20 15 10 0
Investor 9 17.5 17.5 22.5 22.5 10 5 5
Investor 10 - Most Aggressive investor 17.5 17.5 25 25 5 5 5