Hence my advice to stop reading the personal finance section. The writing is just appallingly bad.
Hence my advice to stop reading the personal finance section. The writing is just appallingly bad.
I personally would not recommend XIU in a indexed portfolio. It's only 60 stocks, and some choices even today remain questionable. (TA/RIM/POW), and the materials and energy are far far too overweight for any kind of reasonable diversification.
Most of these V-soups have been around for at least 10 years, no?Originally Posted by CanadianCapitalist
So the SI returns are approx. 10 yrs., give or take.
If so, those are appalingly poor returns for someone that has kept their money invested into these for 10+ years.
These are not even beating 5 yr. laddered GIC returns, nor short term bond returns.
Only the EM fund returns appear to be great, but the first 5 years of this 10 yr. period happens to be the most bullish period for these regions.
The last 4 years have been far less attractive.
That said, I do agree about the general quality of the personal finance articles.
Very mundane, and not worth the time to spend reading.
And I hear these clowns want us to pay for it soon....
You need to make a distinction between the fund and the asset class. These funds all did a pretty good job of tracking their index, so I would say the fund is good. The returns for the asset class may have been disappointing, but the last ten years have been a challenging time for equities.
I'll leave it to others to determine whether this is a meaningful comparison, but let's look at the Mawer Canadian Equity Fund and compare it's performance to that of the XIU. Note that the Mawer fund has a top 5-star rating by Morningstar and is the top performing Canadian equity fund over the past five years according to Canadian Moneysaver. As of September 30, it has posted a longer term 10 year return of +7.12% while the XIU returned +9.72%. Mawer Canadian Equity has a MER of 1.25%.
The conclusion that I draw from this is that even the best professional money managers cannot successfully beat the indexes over the longer terms.
And I further conclude that, if you are going to pick your own stocks, you have to be a better picker than most professional money managers and good luck with that!! You will perhaps need more luck than skill over the longer time periods while luck may serve you well over shorter periods of time.
Rebuttals welcome.
http://www.theglobeandmail.com/globe...mary/?id=17968
http://ca.ishares.com/product_info/f...rmance/XIU.htm
I am a simple man and so some may judge my conclusions to be too simplistic but perhaps you could explain to me where my thinking goes wrong.
I agree that one can stop reading the investment news and trying to outsmart the markets and just invest in the indexes in the first place and spend one's time on more interesting and productive pursuits.
So, here you have the professional money managers for the BEST performing Canadian equity fund unable to beat the index fund over the past ten years and, as a stock picker, you actually think that you can do better and beat the index fund over the long run? Again, I say good luck with that!!
Over the long term, you can't beat the markets but maybe you consider it good enough that you can have some fun trying. It might be more productive to just invest in the index and spend your spare time watching cartoons instead of beating your head against the wall trying to pick winning stocks and trying to successfully time the markets.
That said, don't necessarily expect superior shorter term results. After all, the five year return of XIU is -0.40%. However, the longer the term, the less likely you are to stock pick and market time and expect to come out ahead.
Last edited by Belguy; 2012-10-11 at 07:17 PM.
Picture this. You're Christmas shopping, and looking through the latest 300 page catalogue. Instead of delving through and choosing yours and your families' favourite items, you decide you don't have time and just order the entire catalogue instead. Come Christmas:
"But mommy, I don't want a sterling silver napkin holder, I wanted an iPhone."
"Sorry son, if it's in the catalogue it must be good! Plus, the iPhone needed to split its packaging 10:1 before it could be included in the catalogue."
Critics will point to this as a strawman argument. To that I reply, it's October.. I need the strawman to keep the crows out of my pumpkin patch.
^ I could say that analogies are for stupid people.
This one is not particularly apt. More like you pick ten things that you think you might really like, but despite all your effort, you like those ten items less than ten items picked at random.
XIU is a picture-perfect ETF.
It boasts
- a razor thin MER
- a razor thin tracking error
- a razor thin bid/ask spread
- huge trading volumes
That's all you can ask of an ETF.
The criticism should be directed at the underlying index, S&P/TSX 60. It's very poorly diversified.
33% Financials
26% Energy
20% Materials
Once you add Industrials (6%) and Consumer Discretionary (4%), you end up with 90% in cyclical sectors. This index is not recession proof at all. No wonder it performed poorly in the last 5 years.
Hold XIU and get your consumer stocks from the U.S. Nothing wrong with the S&P/TSX index returns over a decade or more. 10-year as of Sept. 30, 2012 = 9.8% and 20-year as of Sept. 30, 2012 = 9.2%.
http://www.theglobeandmail.com/globe...mary/?id=53057
My Own Advisor - My blog about saving and investing my way to financial freedom.
there is no 20-year in XIU as the etf only debuted in 1999. I've been a long holder since june 2011. My cost was 11.26, so the increase has been reasonable.
CC is right, the decade-long performance in XIU has been good. It's the seesaw-going-nowhere of the entire past 5 years that has disappointed long holders. CMF is a young message forum, so there are likely to be many here who've held only for a few tread-water years at most.
in my case total returns in XIU were enhanced by selling options. However, even for the entire past decade, XIU lags performance-wise behind my own accounts. I'm content with this because i bought XIU as a defensive holding, somewhat treasury-bond-like in its quality of being unlikely to ever go bankrupt, but paying far better.
my criticism of the V-vegetable soups in international etfs remains. I join with harold in noting their lacklustre returns over many years. I think many new investors are blindsided by misguided hype into believing that 25% US equity + 25% international equity are going to deliver sterling results.
Posting Permissions
Reply With Quote