I have developed a number of ETFs and mutual fund model portfolios that are designed to preserve and grow capital and/or generate cash flow depending on your risk tolerance and income needs.

The benefits of these portfolios include:

  • Low fees relative to what most investors experience owning a portfolio of individual stocks or high MER mutual funds.
  • Intelligent portfolio design using a combination of ETFs and mutual funds.
  • Selecting tax managed income for non-registered investments.

Most investors would benefit from having a large portion of their portfolio invested in Exchange Traded Funds (ETFs) rather than mutual funds or individual stocks. ETFs have evolved to express a wide variety of investment strategies. Unless there is a compelling reason to own a mutual fund, an ETF is a likely the best choice.

There are some strategies still best expressed through mutual funds rather than ETFs.

For non-registered accounts, there are mutual funds which have a tax structure that allow for US dividends to have Canadian tax treatment.

The fixed income portion of a portfolio is supposed to generate yield and preserve capital. However, almost all of the thousands of thousands of mutual funds and ETFs available to Canadians that invest in fixed income share the following characteristic that many investors do not understand: they will lose value when interest rates rise. The fixed income portion of your portfolio or your balanced fund is supposed to preserve capital and generate yield. In a rising rate interest environment it is more likely they will lose money.

The good news is that there are a handful of mutual funds that hedge interest rates and invest in bonds.