For example, an inverse ETF may return 1% on a day when its benchmark falls -1%, but you shouldn't expect it to return 10% in a year when its benchmark falls -10%. All-in-One Our core principles remain low cost, broad diversification and tax efficiency—whether in a roaring bull market, a bear market or something in between. U.S. We’ve also retained the “desert island” feature introduced in the 2019 edition, where each panelist suggests a single ETF they’d be comfortable holding for the long run if they were stranded and couldn’t reach the mainland to contact their brokerage. Inverse ETFs can be found in the following asset classes: Of course, a 65-year-old retiree could live for another three decades, and the longer you live, the more inflation can be a problem. "ProShares Ultra Short Real Estate." Jonathan Chevreau  on May 17, 2020. The fund focuses primarily on Canada-listed companies, with roughly a quarter of holdings representing cannabis stocks in the U.S. market. S&P Dow Jones Indices. The S&P 500's total return over the past 12 months is 17.9% as of November 17, 2020. The best-performing inverse REIT ETF, based on performance over the past year, is the ProShares Short Real Estate (REK). An inverse ETF is an exchange-traded fund that uses various derivatives to profit from a decline in the value of an underlying benchmark. He joined the firm in 2013. Returning for 2020 are the Ottawa-based PWL Capital duo Cameron Passmore and Ben Felix; Robb Engen, a fee-only planner and blogger for Boomer & Echo; former Tangerine advisor Dale Roberts (the blogger behind Cut the Crap Investing); Mark Yamada, CEO of PUR Investing and his colleague Ioulia Tretiakova; Yves Rebetez, formerly of ETFInsight.ca and CIO of Pascal Financial; and Dave Nugent, chief client officer at Wealthsimple for Advisors. Leveraged ETFs can be riskier investments than non-leveraged ETFs given that they respond to daily movements in the underlying securities they represent, and losses can be amplified during adverse price moves. Mark Yamada is CEO of Toronto’s PUR Investing Inc., which provides the ETF Screener for the TMX Money website. As of 12/18/2020. ook at rebalancing into stocks, though consider not doing it all in one go given the context.”. He writes about investment issues for Advisors Edge/Advisor.ca, appears regularly at ETF conferences and publishes academic papers with colleague Ioulia Tretiakova about advanced pension strategies. Apart from the gold miners, you can own gold bullion through vehicles like the GLD ETF and a mutual fund, BMG Bullion Fund, which holds all three of gold, silver and platinum bullion. Leveraged ETFs may also include the inverse REIT ETFs which provide returns in the inverse manner of the underlying index. … BMG’s case for gold can be found here. Required fields are marked *, “you can own gold bullion through vehicles like the GLD ETF”. "REK SHORT REAL ESTATE." Check out the individual sections for Canadian, U.S. and International ETFs to find out who made this year’s list. "DOW JONES U.S. REAL ESTATE INDEX." Who should own them? . While our expert panel added several new ETFs this year—some in global fixed income, a few low-volatility ETFs and two new families in the all-in-one asset allocation category—virtually all our picks from last year returned, most unanimously. 1. The PUR Investing team has long made the case for including low-volatility ETFs in our list. Retail ETF investors hate high MERs as a rule, … Our goal is to provide the most relevant and up-to-date information as possible, but, as with all things you read on the internet, we recommend you digest our content critically and cross-reference with your own sources, especially before making a financial decision. } He’s based in Lethbridge, Alta. ProShares. Lower volatility and outperformance? He can be reached at. Ioulia Tretiakova is vice-president and Director of Quantitative Strategies at PUR Investing Inc. She specializes in risk management, quantitative portfolio construction, and is lead author of several peer-reviewed papers in the Rotman International Journal of Pension Management and the Journal of Retirement. A more efficient approach, he concludes, would be targeting those factors directly to maintain consistent exposure. It seems like they are deliberately hiding information from investors.”. CI First Asset Canadian REIT ETF (TSX:RIT) This REIT ETF is a little different than the rest, putting distance between its competitors in a few interesting ways. For example, the Horizons Beta Pro S&P/TSX 60 Bear Plus ETF (HXD) gives you 200% of the daily inverse in the TSX 60. Returning for 2020 are the Ottawa-based PWL Capital duo Cameron Passmore and Ben Felix; Robb Engen, a fee-only planner and blogger for, ; former Tangerine advisor Dale Roberts (the blogger behind. That bull market, of course, came to an abrupt end in March (and delayed the release of this package by a few weeks compared to previous years). It certainly seems that home entertainment stocks (Netflix and possibly Disney, although perhaps less so because its theme parks have been closed) have bright prospects, and firms such as Amazon and Walmart have benefitted from customers wanting essential items, including groceries, to be delivered to their doorsteps. However, inverse ETFs gain when the underlying index falls. Understand the holdings. The overall objective of the ETF is to duplicate the performance of the Solactive Equal Weight Canada Banks Index. For more details read our MoneySense Monetization policy. Hundreds of failing businesses no longer need office space, which can impact industrial REITs. For older investors—especially those who didn’t pay attention to risk management and appropriate asset allocation—this crash has probably been a traumatic experience. } .best-etfs-2020 { low-volatility stocks result in less diversification, higher costs, more portfolio turnover and time-varying exposure to the factors that explain differences in returns. Cameron co-hosts the, and co-author of Victory Lap Retirement. If the market sell-off pushes stocks down to 50%, the ETF would automatically sell some bonds to bring stocks back to 60%. Investors bullish on the real estate sector can use a REIT exchange-traded fund (ETF) to invest in a basket of REITs. The ETFs with the best 1-year trailing total return are REK, SRS, and DRV. ETF issuers who have ETFs with exposure to Inverse Equities are ranked on certain … } Note that the table below may include leveraged and inverse ETFs. The ETF uses various real estate index swaps to provide bearish investors with a daily return that is -3x the daily performance of its index. While the panel is enthusiastic about our All-in-one ETF picks, keep in mind these asset allocation funds largely consist of different combinations of stocks and bonds, and tend to have only market weights in precious metals and real estate. Inverse REIT ETFs underperformed the broader market over the past year. While the S&P 500 gained 13.5 per cent in Canadian dollars over the past year, the BetaPro S&P 500 2x Daily Bull Canadian dollar ETF advanced 47.3 per cent. Note that ETFs are usually tagged by ETFdb analysts as more than one type; for example, an inverse gold ETF may be tagged as “inverse” and as “gold” and as “commodity”. In Canada, the ETF family best known for these products—assuredly not for the faint of heart—is Horizons ETFs. In a blog post/video on the topic, Felix argues low-volatility stocks result in less diversification, higher costs, more portfolio turnover and time-varying exposure to the factors that explain differences in returns. For more information please read our policies. "SRS – ULTRASHORT REAL ESTATE." That bull market, of course, came to an abrupt end in March (and delayed the release of this package by a few weeks compared to previous years). Five out of eight votes carried the day; in the event of a tie, I was the tiebreaker. Accordingly, I have been adding to a few pre-existing positions, mostly TSX-listed gold miners like Barrick and Newmont, and ETFs holding similar companies, such as the iShares S&P/TSX Global Gold Index ETF (XGD/TSX). (Memory aid: with HXU, the U means you’re betting the market is going up; with HXD you’re betting it goes down.) Would you happen to know why there is a clause in the GLD prospectus that states GLD has no right to audit subcustodial gold holdings? I review the business and the financial statements and buy the ones I like. Still, not all gold enthusiasts believe in electronic or paper gold, which is what you get if you buy gold ETFs or gold mining stocks. I am into CAR, IIP, DRG, DRA, SMU, NWH, H&R, and have lately held CT Reit. Now that the U.S. federal reserve has announced what amounts to QE Infinity, the printing presses are going into overdrive, which should be a plus for gold. The only 2019 selection that was removed for 2020 is BMO’s Laddered Preferred Share Index ETF (ticker: ZPR), with, the panelists agreeing that preferred shares don’t make sense in a long-term passive core portfolio, While this decline was sharp and fast, bear markets are nothing new and—so far, at least—this one hasn’t been anything special, as PWL’s Felix notes in a. . } Yves Rebetez, CFA, is former editor of ETFInsight.ca and CIO of Pascal Financial, a FinTech company that launched recently with an initiative called Prevail. BMG’s case for gold can be found, Still, not all gold enthusiasts believe in electronic or paper gold, which is what you get if you buy gold ETFs or gold mining stocks. max-width: 400px; h2.termNameTitle { If the index falls 1% on a given day, DRV is expected to rise 3% on that same day. According to the Canadian ETF Association (CETFA), as of this January there were 766 ETFs trading on Canadian exchanges, created by 37 different sponsors. PWL is a Canadian wealth management firm managing $3 billion in client assets using low-cost ETFs and index funds. Some believe only actual gold or silver bullion and/or coins can provide true wealth preservation if times get really tough. Exclude Leveraged and Inverse ETFs… Those so inclined can cherry-pick some of ARKW’s holdings as individual stocks. align-items: flex-start For his part, Robb Engen is adamant about sticking to a long-term plan, and hence most of our prior year’s picks. Such a fund would have a high MER due to the high carry cost of shorting on the TSX. Ben has a bi-weekly YouTube series called. Dave Nugent is Chief Client Officer for Wealthsimple for Advisors. So, a new retiree who is 65 would be 65% fixed income and 35% in stocks. The ETF … padding: 0px !important; “Look at rebalancing into stocks, though consider not doing it all in one go given the context.”. padding: .5em; Overview A more efficient approach, he concludes, would be targeting those factors directly to maintain consistent exposure. Call this the bear-market edition. While this decline was sharp and fast, bear markets are nothing new and—so far, at least—this one hasn’t been anything special, as PWL’s Felix notes in a YouTube video. The CI First Asset Canadian REIT ETF (TSX:RIT) has the highest management fee of all the Canadian REIT ETFs profiled today. My own advisor has long counselled those in the “retirement risk zone” to be somewhere between 50% and 60% fixed income (cash, GICs, bond ETFs). International Read Can life insurance be used as a fixed income investment? Don’t passive investors embrace the idea that they’re accepting market returns, which includes the distinct possibility of losing large sums of money during falling markets?”, Or, as Felix sums it up: “The investment strategy/ETF mix shouldn’t change based on market conditions.”. In the end, the panel did add the three BMO low-volatility funds to our picks, as well as four other U.S. and global low-vol ETFs. The Vanguard FTSE Canadian Capped REIT Index ETF (VRE.TO) grants exposure to small, mid and large-cap Canadian real estate companies … Such a fund would have a high MER due to the high carry cost of shorting on the TSX. Vanguard FTSE Canadian Capped REIT Index ETF . Their time horizon to recoup losses has dwindled. overflow: hidden; Like myself, Roberts believes some investors might consider adding specialized gold or REIT ETFs, although the other panelists declined to consider these options as All-star candidates. There are 3 distinct inverse REIT ETFs that trade in the U.S. For the truly brave (or foolhardy? YCharts. This year, several other panelists pushed to add BMO’s suite of low-vol ETFs to our list (Canadian: ZLB; US: ZLU; and international: ZLI), which opened the door for low-vol ETFs from other suppliers. Accessed Nov. 18, 2020. If you have belatedly reassessed your risk tolerance, but still want to invest at least partially in the market, you could sell whatever asset allocation ETF you’re in and switch down to the fund that’s one or two risk levels below. Furthermore, at the point of publication, we do our best to ensure the information we produce is accurate, however, sometimes prices and terms of the products are changed by the provider without notice to us. Robb Engen is a fee-only financial planner and founder of the award-winning Boomer & Echo personal finance blog. Great article but wondering why the annual performance values were not included? margin-bottom: 1em; These include white papers, government data, original reporting, and interviews with industry experts. Fixed-income ETFs, however, are a different story, as are asset allocation ETFs that hold various proportions of fixed income. A leveraged exchange-traded fund is a fund that uses financial derivatives and debt to amplify the returns of an underlying index. On average, past U.S. bear markets have experienced declines of 30% over a period of 13 months, and recovered within 27 months from the bottom. . In the meantime, about the closest may be the Next Generation Internet ETF from Ark Funds (ARKW/NYSE). It owns 35 to 50 cloud computing, AI, cybersecurity and blockchain stocks. More than $211 billion is invested in these products nationwide. Where to buy real estate now: How we found the best deals in Canada, A guide to the best robo-advisors in Canada for 2020, Best high-interest savings accounts in Canada 2020, Compare the Best GIC Rates in Canada 2020. REIT ETFs are exchange-traded funds (ETFs) that primarily invest in equity REIT securities and aim to emulate REIT indexes. There just isn't enough volume on the TSX to justify a real estate bear ETF. does concede, however, that the Canadian low-vol ETFs have indeed kept their promise of less volatility than the broad market, and more than half the low-vol ETFs he studied produced five-year total returns above their benchmarks. The first low-vol ETF was launched in 2011; there are now 44 in Canada, with assets exceeding $8 billion. SRS resets on a daily basis, resulting in compounding of returns over multiple periods. Rebetez believes inverse ETFs aren’t appropriate for most individuals, and those who are concerned about further downside from here can simply lower their allocation to equities, which can be achieved through asset allocation ETFs and. It is intended for short-term hedging and speculative purposes, and not as part of a buy-and-hold strategy. . border-radius: 4px; , which points out the average MER of low-volatility ETFs is 0.46%, compared to just 0.15% for core ETFs. In Canada, the ETF … Inverse ETFs are investments that deliver the opposite performance of their reference index on a daily basis. } Most of the other panelists were against including any inverse ETFs in our All-stars list. “In fact, both ZLB and ZLU have trounced their respective indexes dating back many years since the funds’ inception. Disappointed those values were not listed considering the decision to stay with many of the same ETF’s. Some believe only actual gold or silver bullion and/or coins can provide true wealth preservation if times get really tough. ProShares. REK offers daily short exposure to the Dow Jones U.S. Real Estate Index, which has 82 constituents with a range of market capitalizations. The ETF uses various real estate index swaps to provide bearish investors with a daily return that is -1x that of its index. As a result, they tend to capture less upside than the broader stock market, but also less of the downside. @media (max-width: 991px) { is CEO of Toronto’s PUR Investing Inc., which. stay the asset allocation course,” he says. “It’s an asset class with very unique qualities and it’s a very good portfolio diversifier,” says Roberts. In fact, the three most popular REIT ETFs - iShares U.S. Real Estate ETF ( IYR), Vanguard REIT Index ETF ( VNQ) and SPDR Dow Jones REIT ETF ( RWR) are still down in … This REIT ETF is a little different than the rest, putting distance … For instance, an inverse bond ETF that is tracking the larger US Treasury market (benchmark) will increase by 2 percent if the benchmark decreases by 2 percent - that is, the returns of the inverse bond ETFs … MoneySense is fully owned by Ratehub Inc, but remains editorially independent. Direxion. Desert-Island Picks Rebetez believes inverse ETFs aren’t appropriate for most individuals, and those who are concerned about further downside from here can simply lower their allocation to equities, which can be achieved through asset allocation ETFs and robo-advisors. Dale Roberts is a former investment advisor with Tangerine and founder of the Cut the Crap Investing blog. div.widgets_on_page ul { Investopedia requires writers to use primary sources to support their work. MoneySense will always make updates and changes to correct factual errors. ETFdb.com. 3-month fund flows is a metric that can be used to gauge the perceived popularity amongst investors of Inverse … } Accordingly, I have been adding to a few pre-existing positions, mostly TSX-listed gold miners like Barrick and Newmont, and ETFs holding similar companies, such as the iShares S&P/TSX Global Gold Index ETF (XGD/TSX). What kind of marketing agent would not know such basic information about a product they are marketing? He joined the firm in 2013. The crash that began in March 2020 certainly coloured some of our panelists’ views this year. ETFs levered doubly or triply to up or down moves in the market are particularly explosive in the wrong hands and circumstances. Below, we address all these ideas, as well as the role of precious metals and real estate ETFs. CI First Asset Canadian REIT ETF. Some of the top Canadian ETFs that invest in Canadian companies are the iShares Core S&P/TSX Capped Composite Index ETF, the BMO S&P TSX Capped Composite IDX ETF, the Horizons S&P/TSX 60™ INDEX ETF, and Vanguard FTSE Canada All Cap ETF. @media (min-width: 992px) { Compare the Best Online Brokerages in Canada >. He is a partner in the firm as well as a Portfolio Manager in Ottawa. Fixed-Income iShares S&P/TSX Capped REIT Index ETF (CAD) The above results are hypothetical and are intended for illustrative purposes only. a.flex-item { Our three All-star all-in-one ETF families, which have asset allocations that range from 100% stocks to 20% stocks/80% fixed income, help investors handle this volatile environment, since they take care of rebalancing automatically. max-width: 100% had, until now, benefited from an 11-year bull market that began in 2009. It's important to note that our editorial content will never be impacted by these links. They also have decent tax efficiency. The panel is largely the same as last year’s, although we sadly bid adieu to portfolio manager Alan Fustey, who had been with us almost from the beginning. An ETF is a fund that owns many investments on behalf of a group of investors. We suspect this whole coronavirus experience has only served to accelerate a trend that was already picking up steam: telecommuting and working from home, if only some of the time. display: inline-block; BlackRock created the fund in 1996 and it had no true competition until JP … display: none Kerzérho does concede, however, that the Canadian low-vol ETFs have indeed kept their promise of less volatility than the broad market, and more than half the low-vol ETFs he studied produced five-year total returns above their benchmarks. We examine these 3 inverse REIT ETFs below. “Opening statements perhaps may not be useful for a while,” says Nugent, adding that investors should try to remove emotion and not get caught up in all the noise. The average expense ratio is 1.02%. flex-wrap: nowrap; “If you follow those rules, you’ll achieve your goal,” he says. We feel confident the ETF All-stars will hold up over that kind of timeframe. It currently stands at 0.75%. width: 93% The ETF uses a variety of real estate index swaps to provide bearish investors with a return that is -2x that of its index. Many ETFs buy REITs in the form of a stock that meets the requirements to be considered a REIT… While travel-related stocks like airlines, hotels and cruise lines have cratered since the virus hit, investors have been flocking to other sectors, especially technology companies that provide work-at-home solutions such as videoconferencing (Zoom), and laptops and peripherals (HP Inc.). } Accessed Nov. 18, 2020. Those in their 70s may prefer the most conservative one, VCIP, which is only 20% in stocks. Accessed Nov. 18, 2020. But investors with a bearish outlook have the option of putting their money in inverse REIT ETFs. Given the almost 800 ETFs now trading on Canadian stock exchanges, we divided our experts into four teams: the PWL team, the PUR team, the blogger team of Engen and Roberts and, last but not least, team Nugent and Rebetez. CI First Asset Canadian REIT ETF (RIT) Ticker: RIT. Commissions, trailing commissions, management fees and expenses all may be associated with investing in exchange-traded funds (ETFs). He can be reached at [email protected]. Cautious investors should keep in mind the old adage that fixed-income exposure should roughly equal your age. There just isn't enough volume on the TSX to justify a real estate bear ETF. Canadian By  “Did our previous year’s picks suddenly become losers because they got clobbered [in March]? Vanguard FTSE Canadian Capped REIT Index ETF VRE Factsheet | November 30, 2020 Sector weighting VRE Benchmark Retail REITs 22.0 % 22.0 % Office REITs 20.3 % 20.3 % Residential REITs 18.2 % 18.2 % Real Estate Services 18.1 % 18.1 % Diversified REITs 8.9 % 8.9 % Industrial REITs 8.1 % 8.1 % Real Estate Holding and Development 4.4 % 4.4 % With REIT ETFs, you can invest in a diverse range of properties with one low-cost investment — ETFs can be bought and sold like shares of stock on the stock market, and just like stocks, the companies that create and manage ETFs have to provide information to the public that helps you decide if it is a good investment. We also reference original research from other reputable publishers where appropriate. } Now in its eighth edition, the MoneySense ETF All-stars had, until now, benefited from an 11-year bull market that began in 2009. On the other hand, if the bull market resumes it would do the opposite, selling stocks to bring them down to 60%, and adding to bonds to keep them at 40%. Unless the COVID-19 crash brought to light a mismatch as far as allocation versus risk tolerance/capacity. iShares MSCI Canada ETF is the old guard in the Canadian ETF space, but it still has plenty to offer investors. From the get-go, the idea was to create a low-cost “set it and forget it” shortlist of ETFs that rarely needs tweaking. The fund resets on a daily basis, resulting in compounding of returns when held for multiple periods. Exploring the Benefits and Risks of Inverse ETFs, Direxion Daily Real Estate Bear 3x Shares (DRV), Direxion Daily Real Estate Bear 3x Shares. a.flex-item:hover { Additionally, the GLD organizations promise that this fund is 100% backed by actual physical gold but yet they staunchly deny retail investors the right to any of their listed physical gold. Share on Email, Your email address will not be published. But losses are also amplified, meaning that when the index rises 1%, the inverse REIT ETF offering -2x leverage falls 2%. ETFdb.com. Inverse Real Estate and all other inverse asset classes are ranked based on their aggregate 3-month fund flows for all U.S.-listed ETFs that are classified by ETFdb.com as having inverse exposure to a given asset class. On average, past U.S. bear markets have experienced declines of 30% over a period of 13 months, and recovered within 27 months from the bottom. is Chief Client Officer for Wealthsimple for Advisors. This year-to-year consistency seems to validate our long-term approach. It was later found that this “GLD” bar actually belonged to ETF Securities.”, “Did anyone try calling the GLD hotline at (866) 320 4053 in search of numerical details on GLD’s insurance? We have several fixed-income picks, as in previous years, and the all-in-one asset allocation ETFs provide a range of options for all ages and risk tolerances. People who view this as a way to preserve wealth could check out the Hard Assets Alliance. Please contact us here. Cameron co-hosts the Rational Reminder podcast. For those interested, refer to some of the REIT ETFs flagged in last year’s edition (2019) of the ETF All-stars. Share on Twitter These products provide inverse 1:1 exposure to the S&P/TSX 60 and S&P500 respectively: BetaPro S&P/TSX 60 Daily Inverse ETF (HIX) and BetaPro S&P 500 Daily Inverse ETF (HIU). Furthermore, leveraged ETFs are designed to achieve their multiplier on one-day returns, but you should not expect that they will do so on longer-term returns. "ETF Screener." Set a plan, save regularly, keep costs low, diversify and don’t pick stocks. Fees: 0.75% Dividend Yield: 5.21% | 5.18% … That’s 50 recommended ETFs in total, which should be a good start for readers looking to narrow down the wealth of possible options in this growing cornucopia of choice. As of mid-April, markets had rallied well above 20,000 again, but whether this proves to be a bear market rally or a genuine recovery remains to be seen. Note that the table below may include leveraged and inverse ETFs. Traditional ETFs gain when their underlying index rises in price. ), there are also two double-inverse ETFs: HXD and HSD. Accessed Nov. 18, 2020. Long-term investors not looking to “time” markets can improve their returns by substituting low-vol ETFs for broad market ones. Approximately 57% of the portfolio’s base rent is generated from large urban markets, mainly in Toronto, Calgary, Vancouver, and Montreal. joined PWL Capital in 1997. Some REITs offer interesting preferred shares as well. Nevertheless, the market situation created fodder for our panelists to consider many things, including low-volatility ETFs, inverse ETFs, how all-in-one ETFs can mitigate risk, whether investors should change their asset allocations, and how some ETFs may be poised to capitalize on the telecommuting and stay-at-home trends. (Zoom fell back in March over security concerns as millions of users flocked to it during the crisis.). Horizons ETF Management is the main provider of leveraged and inverse ETFs in Canada. Open a Wealthsimple Trade account for commission-free ETF trading* >. is a fee-only financial planner and founder of the award-winning. The PWL team of Felix and Passmore voted against including them, citing. ETFdb.com. a.flex-item { While our expert panel added several new ETFs this year—some in global fixed income, a few low-volatility ETFs and two new families in the all-in-one asset allocation category—virtually all our picks from last year returned, most unanimously. 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