Pass on all three of these ‘balanced’ ETFs

Article Excerpt

In January 2018 Vanguard Canada introduced three new balanced ETFs with a mix of stocks and bonds. All three have low 0.22% MERs. The Vanguard Conservative ETF Portfolio, $24.78, symbol VCNS on Toronto, holds roughly 40% of its assets in Vanguard stock ETFs and 60% in bond ETFs. The Vanguard Balanced ETF Portfolio, $24.74, symbol VBAL on Toronto, has the opposite proportions to the Vanguard Conservative ETF Portfolio. It holds about 60% stock ETFs and 40% bond ETFs. The more-aggressive Vanguard Growth ETF Portfolio, $24.69, symbol VGRO on Toronto, is 80% in stock ETFs and 20% in bond ETFs. We don’t recommend any of the three funds, or any balanced funds for that matter. Bonds are unlikely to perform as well in the next few years as they have in the past, mainly because interest rates will likely hold steady or rise. (Bond prices and interest rates are inversely linked. When interest rates go up, bond prices go down, and vice versa.) That means the bond…

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