# MAW104



## Foxsea (Oct 21, 2018)

I have invested in Mawer Balanced Fund to supplement my retirement income. I have a 20 year horizon and prefer a " set and forget" style. Is there a better way?


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## OnlyMyOpinion (Sep 1, 2013)

Do you mean that you are drawing retirement income now for 20yrs - or letting it grow for 20 years and then starting to draw income?
MAW104 is a great MF IMO, particularly for the latter purpose.


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## Foxsea (Oct 21, 2018)

OnlyMyOpinion said:


> Do you mean that you are drawing retirement income now for 20yrs - or letting it grow for 20 years and then starting to draw income?
> MAW104 is a great MF IMO, particularly for the latter purpose.


I'm using it for the former and thanks for your affirmation on this fund.


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## james4beach (Nov 15, 2012)

MAW104 is a good quality, low fee balanced fund with an excellent track record. I think it is appropriate for drawing money for retirement income.

My parents have done the same thing, putting most of their money into this and occasionally taking withdrawals to supplement retirement income. The only additional thing they're doing is keeping a couple years of expenses in savings accounts & GICs. The idea there is that if there is a market crash and sharp drop in the Mawer fund, they could leave the mutual fund alone and let it recover.

MAW104, like any 60/40 balanced fund, _could_ drop significantly if stocks fall hard. But really as far as "set it and forget it" solutions, it's about as good as you can get. You might want to look at holding some extra cash in a high interest savings account though.


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## Speculator (May 9, 2018)

I bought MAW104 for my wife's LRSP she's 57 right now. We will seek to combine her accounts once she turns 71 and we convert all to RRIFs. I love it for the set it and forget it approach and mainly if something happens to me she could understand and manage this money.


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## agent99 (Sep 11, 2013)

I have often looked at MAW104 because it is seems to be a well thought of and popular fund. My conclusion has always been - it may be a good buy in accumulation stage because of it's growth record. But if I wanted to use it to supplement retirement income, distributions are pitiful. A holder would have to sell units on a regular basis in order to achieve any kind of income flow. 

For example, $100,000 invested in fund would have produced a distribution of only $1135 in 2017. 

Past Total Returns are good, but if markets start to pull back after a 10yr bull run, selling units on a regular basis to create income could be a losing proposition. And besides, that would hardly be a set and forget style. Depending on amount of supplemental income desired, there are, I am sure, better choices.


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## Speculator (May 9, 2018)

Ya I'm not going to hold this in a RRIF. IMO retirees should all be income investors so I will convert MAW104 into income generating investments.


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## OrganicRain (Nov 27, 2016)

For truly set it and forget it - MAW104 is as good as it gets. 
However, if you are willing to spend 10 mins a year rebalancing 3 shares, the combination of XAW, VCN and ZAG will give you the same risk profile as MAW104 but at very very low cost. The low cost technically should enable more growth over the long term, with the same level of risk (40% fixed income)


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## AltaRed (Jun 8, 2009)

Maybe. Retail investors don't necessarily balance at the right time, and more truthfully, most should never be permitted in the driver's seat of DIY. VBAL would be the competing alternative to MAW104 at 22bp. Come next Feb, we will have 1 full year of VBAL to compare against MAW104, not that one year is much of a data point. 

As I have mentioned elsewhere at least once or twice, as retirees, I have MAW104 in my TFSA, while my current spouse has VBAL as 50% of her RRSP and my ex has MAW104 in her TFSA. This will be a multi-year experiment on who is 'more right'.


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## agent99 (Sep 11, 2013)

OrganicRain said:


> For truly set it and forget it - MAW104 is as good as it gets.
> However, if you are willing to spend 10 mins a year rebalancing 3 shares, the combination of XAW, VCN and ZAG will give you the same risk profile as MAW104 but at very very low cost. The low cost technically should enable more growth over the long term, with the same level of risk (40% fixed income)


Better yield than MAW, but still not much for a retirees income. And this what the OP said he had MAW for (to supplement income)

MAW104 may be OK in a TFSA, as Alta has it, where it will hopefully be left to grow. But not in unregistered account if you want to supplement current income.


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## AltaRed (Jun 8, 2009)

I don't see it quite as black and white the way you do. Technically it does not matter whether one's income comes from distributions or from sale of units of the fund. It's all part of the Total Return. Yes, there will be years when one has to sell some units when prices are down, but there will be years when the units will be priced way up. Unit prices will grow more rapidly when distributions are small or non-existent because companies that re-invest capital in the businesses grow their earnings. The effect is often apparent when comparing a low yield dividend stock with a high yield stock.

During accumulation, one should not want to receive income and pay tax on it (non-registered). They should want to defer it all to cap gains many decades down the road. My spouse will be RRIFing within 2 years and VBAL with a low yield is part of long term withdrawal plan. It's not that big of a deal.

That all said, I do understand it is more convenient and more transparent to simply count on a dividend stream.... IF it is enough to support cash flow needs.


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## james4beach (Nov 15, 2012)

I agree with AltaRed. I researched this topic endlessly before my parents started their process of taking regular withdrawals out of MAW104. Their fee-only planner agrees: a diversified total return strategy is fine, with units sold to generate income. Dividends and selling shares are equivalent; both methods turn equity into cash, and one is not intrinsically better. People often feel better with dividends, but that's psychological.

Sources:
https://www.moneysense.ca/columns/debunking-dividend-myths-part-1/
https://www.etf.com/sections/index-investor-corner/swedroe-vanguard-debunks-dividend-myth?nopaging=1
https://personal.vanguard.com/pdf/ISGADOS.pdf



> (from Vanguard) A dividend does not create wealth . . . When a stock goes ex dividend, its price falls by the same amount as the dividend payment. Therefore, no wealth is created through paying a dividend; rather, the payment reduces retained earnings . . . *investors should be indifferent as to whether returns arise from dividend payouts or capital gains*


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## agent99 (Sep 11, 2013)

AltaRed said:


> I don't see it quite as black and white the way you do. Technically it does not matter whether one's income comes from distributions or from sale of units of the fund.


Alta - I was responding to the original posters needs. A _set and forget_ investment to provide supplemental retirement income. Having to sell units on an on going basis is hardly _set and forget._. MAW104 probably suits your TFSA, but not suitable for set and forget retirement income. One of the big bank monthly income funds would likely be better.


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## OnlyMyOpinion (Sep 1, 2013)

james4beach said:


> I agree with AltaRed. I researched this topic endlessly before my parents started their process of taking regular withdrawals out of MAW104...


James, I recall when you and your parents were going through this exercise. 
I'm interested, do you know when/how they sell their units? In other words do they just sell x units to provide y dollars at the same time each year?

So if in a RRIF, I might sell units on January 15 each year so the required annual minimum RRIF withdrawl cash is available for a date I've set as Feb. 1 of each year. This way there is no second guessing the market, no waiting in case the price improves, no selling in Sept in case market drops, etc...


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## AltaRed (Jun 8, 2009)

agent99 said:


> Alta - I was responding to the original posters needs. A _set and forget_ investment to provide supplemental retirement income. Having to sell units on an on going basis is hardly _set and forget._. MAW104 probably suits your TFSA, but not suitable for set and forget retirement income. One of the big bank monthly income funds would likely be better.


I'd much rather sell units of MAW104 once or twice a year rather than own any of the higher MER bank income mutual funds. MAW104 is a 'set and forget' investment with Mawer doing all the asset allocation and re-balancing work which is where I believe the OP was coming from. The decision to sell units when needed in retirement is not much different than collecting distributions and selling units of an income fund. I think you are forgetting that almost no one can simply live off the income stream alone from any of the income funds (managed payout types excepted perhaps), i.e. some units need to be sold anyway to supplement the distribution income stream.

Example: Someone has $500k in a bank income fund while another investor has $500k in MAW104. With a SWR withdrawal of 4% or VPW withdrawal of 4.4%, an investor is going to have to sell units of the fund in both instances. No income fund has a yield of >4% without return of capital in some form. Remember the idea is to enjoy retirement and draw down one's portfolio within the constraints of the withdrawal methodology, not to leave the original principle to grow untouched until one's death.

There is ultimately no difference!

Added: This is exactly the type of thing my bro and I did for my mother for about the last 20 years of her life. A once/yr withdrawal (sale of units) to supplement pension income is no biggie. The only difference is whether 3% of the units of fund A need to be sold to supplement the 4% withdrawal in a low (1%) yield investment, or 2% of the units need to be sold to supplement the 4% withdrawal in a higher (2%) yield investment.

That is the plan of my spouse who will have the bulk (eventually all) of her RRIF in VBAL. Same principle.


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## like_to_retire (Oct 9, 2016)

james4beach said:


> (from Vanguard) A dividend does not create wealth . . . When a stock goes ex dividend, its price falls by the same amount as the dividend payment. Therefore, no wealth is created through paying a dividend; rather, the payment reduces retained earnings . . . *investors should be indifferent as to whether returns arise from dividend payouts or capital gains*


Yep, the math is there to support that it matters not, but they forget it only works as AltaRed so nicely pointed out when he said, _"there will be years when one has to sell some units when prices are down, but there will be years when the units will be priced way up."_

Uh-oh, I guess we better hope there are just as many up years as there are down years.

How does that math work out for a new retiree at 65, and we get a nice 15 year bear market and they are continually selling shares into low market values that are being eaten up at an advancing rate?

ltr


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## AltaRed (Jun 8, 2009)

OnlyMyOpinion said:


> James, I recall when you and your parents were going through this exercise.
> I'm interested, do you know when/how they sell their units? In other words do they just sell x units to provide y dollars at the same time each year?
> 
> So if in a RRIF, I might sell units on January 15 each year so the required annual minimum RRIF withdrawl cash is available for a date I've set as Feb. 1 of each year. This way there is no second guessing the market, no waiting in case the price improves, no selling in Sept in case market drops, etc...


That is the point! I am not trying to be critical of Agent99's position, but very few retirees have the luxury of living only off the distribution (income) stream of their invested capital. If that is what some retirees do, they will have a huge residual estate on the date of their death, not having enjoyed as 'rich' of a retirement as they could. Whether one has a $300k portfolio or a $3000k portfolio in retirement, the objective should be to grind it down over the 30 years or so of retirement, even if much of the latter has been gifted along the way, and that means tapping into invested capital each and every year.


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## AltaRed (Jun 8, 2009)

like_to_retire said:


> Yep, the math is there to support that it matters not, but they forget it only works as AltaRed so nicely pointed out when he said, _"there will be years when one has to sell some units when prices are down, but there will be years when the units will be priced way up."_
> 
> Uh-oh, I guess we better hope there are just as many up years as there are down years.
> 
> ...


LTR, have you not become acquainted with VPW methodology? You pace your withdrawal based on the value of your invested portfolio on Jan 1 of each year, not some blind SWR approach that does not consider sequence of return risks. I retired in 2006 and faced the 2008/2009 debacle by adjusting withdrawals....long before I had even heard of VPW methodology or even modified SWR methodology. It is not difficult to temper one's withdrawals to consider the market value of invested capital on Jan 1 of each year. That is actually how RRIF minimum withdrawals work anyway.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> LTR, have you not become acquainted with VPW methodology? You pace your withdrawal based on the value of your invested portfolio on Jan 1 of each year, not some blind SWR approach that does not consider sequence of return risks. I retired in 2006 and faced the 2008/2009 debacle by adjusting withdrawals....long before I had even heard of VPW methodology or even modified SWR methodology. It is not difficult to temper one's withdrawals to consider the market value of invested capital on Jan 1 of each year. That is actually how RRIF minimum withdrawals work anyway.


Yeah, I've looked at the VPW method as it adapts withdrawals to market returns. Doesn't sound like much fun to me dropping my income if the market is doing poorly. There are certain things that you need to buy to live. I'd rather have a dividend that doesn't change or even increases and then not worry about how the market is doing. Yes, I know not everyone can live just on dividends, but telling everyone it's the same as selling shares to derive income is folly.

ltr


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## AltaRed (Jun 8, 2009)

like_to_retire said:


> Yeah, I've looked at the VPW method as it adapts withdrawals to market returns. Doesn't sound like much fun to me dropping my income if the market is doing poorly. There are certain things that you need to buy to live. I'd rather have a dividend that doesn't change or even increases and then not worry about how the market is doing. Yes, I know not everyone can live just on dividends, but telling everyone it's the same as selling shares to derive income is folly.
> 
> ltr


It is the same since only a very small percentage of retirees can live off investment income alone. Those of us who can do so live with blinders on to the broader situation most retirees face. What are you going to do with your millions in your residual estate when you die? I am drawing down invested capital because VPW says I can do so AND I can have a richer retirement than simply living off investment income (which I could do if I had too).

The original question was about a 'set and forget' investment that could grow over time to provide retirement income in the distant future. MAW104 or VBAL or any other 3rd party managed investment product can do that.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> What are you going to do with your millions in your residual estate when you die? I am drawing down invested capital because VPW says I can do so AND I can have a richer retirement than simply living off investment income (which I could do if I had too).
> 
> The original question was about a 'set and forget' investment that could grow over time to provide retirement income in the distant future. MAW104 or VBAL or any other 3rd party managed investment product can do that.


I'll just leave my millions to my kids. They'll spend it a lot faster than I would.

But, it's not about those people drawing down millions to simply get rid of it (because for that the VPW method is great), it's about people that require income to live - to buy groceries. Tell one of those people that their income from low dividend MAW104 has to follow the market down by 50% as it did in 2008 if they follow VPW method. They'll say forget about that and they'll sell the amount of cheap shares to get their required income to live. If they do this long enough they'll understand why selling capital versus dividend income is not the same.

ltr


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## AltaRed (Jun 8, 2009)

We shall have to agree to disagree because dividend yield is capital itself. Granted it is not as gut wrenching to count on a higher dividend yield (and lower selling) being part of the cash flow stream than it would be with a lower dividend yield. You really missed my point that selling 2% of one's invested capital plus 2% dividend yield, is not really different than selling 3% of one's invested capital plus 1% dividend yield. Very few can live on yield alone, i.e. they need 4+% from their portfolio on an annual basis and must tap into invested capital anyway.

This is the old debate we have had time and again about Total Return vs 'depressed capital appreciation due to dividend yield'.

Added: My portfolio yields about 3% give/take a tiny bit. I pull 4% from the portfolio to fund my 'lavish' lifestyle. I thus sell invested capital each year, but in years when the portfolio is down, I can either reduce spending or tap into my multi-year fixed income reserve. That is a strategy for dealing with 'sequence of returns' risk but it does not invalidate what I said above.


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## OnlyMyOpinion (Sep 1, 2013)

like_to_retire said:


> ... But, it's not about those people drawing down millions to simply get rid of it (because for that the VPW method is great), it's about people that require income to live - to buy groceries. Tell one of those people that their income from low dividend MAW104 has to follow the market down by 50% as it did in 2008 if they follow VPW method. They'll say forget about that and they'll sell the amount of cheap shares to get their required income to live. If they do this long enough they'll understand why selling capital versus dividend income is not the same.
> ltr


Classic sequence of returns risk. Certainly if someone retired at the time of a prolonged market correction, and they were depending on higher withdrawls to cover their necessary expenses, they could be in trouble.
This is where having your 'necessary' costs covered by layering other sources (cpp/oas), and having a fixed income component, and/or 'cash bucket' approach to bridge several years would help. 
ISTM, almost by definition, someone depending on MAW and VPW just to cover their necessary expenses (i.e can't make adjustments to their spending) is not likely to have enough capital saved to just live off dividends as an alternative.


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## like_to_retire (Oct 9, 2016)

OnlyMyOpinion said:


> Classic sequence of returns risk. Certainly if someone retired at the time of a prolonged market correction, and they were depending on higher withdrawls to cover their necessary expenses, they could be in trouble.
> This is where having your 'necessary' costs covered by layering other sources (cpp/oas), and having a fixed income component, and/or 'cash bucket' approach to bridge several years would help.
> ISTM, almost by definition, someone depending on MAW and VPW just to cover their necessary expenses (i.e can't make adjustments to their spending) is not likely to have enough capital saved to just live off dividends as an alternative.


I don't know. From all the articles many here post about people just making due from month to month, I figure if someone was getting by on CPP, plus OAS and 4% dividend income, they might not like having to cut into that portion from the dividend income if they instead had MAW104 with its 1.08% dividend and sell shares to get the rest. If the shares dropped by 50% and they stuck to VPW, they may not have enough every month to live. What else could they do except sell more shares to get their basic income to live?

ltr


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## AltaRed (Jun 8, 2009)

So what do you propose for 'set and forget' for a 4% dividend/distribution yield at retirement time? Remember the OP's boundary condition is 'set and forget' right through to the date of retirement. An individual stock picking and bond/GIC portfolio doesn't qualify.


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## james4beach (Nov 15, 2012)

OnlyMyOpinion said:


> James, I recall when you and your parents were going through this exercise.
> I'm interested, do you know when/how they sell their units? In other words do they just sell x units to provide y dollars at the same time each year?


Currently they haven't sold much because I think CPP + OAS + other pension income pays most of their current needs. I believe they made a single sale with a manual action, but haven't found their routine yet.



> So if in a RRIF, I might sell units on January 15 each year so the required annual minimum RRIF withdrawl cash is available for a date I've set as Feb. 1 of each year. This way there is no second guessing the market, no waiting in case the price improves, no selling in Sept in case market drops, etc...


That sounds sensible. I agree that selling on a fixed schedule is best, to avoid the tendency for market timing. I don't think it would make much difference whether you sell once a year (as you said) or periodically.

To test that, I tried a Monte Carlo simulator for a 60/40 balanced fund with 4% withdrawal rate. I saw identical results from the simulator for annual withdrawals vs quarterly withdrawals -- so yes, it seems that a single withdrawal a year would be fine.


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## like_to_retire (Oct 9, 2016)

AltaRed said:


> So what do you propose for 'set and forget' for a 4% dividend/distribution yield at retirement time? Remember the OP's boundary condition is 'set and forget' right through to the date of retirement. An individual stock picking and bond/GIC portfolio doesn't qualify.


I admit I don't have the answer to the product that distributes 4% dividends/distribution yield. Myself, I stick to individual stocks and don't use any "products", so I'm not up on them.

But I think you may be missing my main point. Respected CMF member "OnlyMyOpinion" said it best in his post, _*Classic sequence of returns risk. Certainly if someone retired at the time of a prolonged market correction, and they were depending on higher withdrawals to cover their necessary expenses, they could be in trouble.*_

Yeah, he's right, and it's the essence of what I've been saying. I don't like to continually read on CMF that there's no difference between deriving income from selling shares versus using dividends. It's a notion that only works under ideal conditions and tends to ignore how irrational the market can be for very long times. You may twist this reality any way you like, but it's the truth.

A lot of novices read these forums, and I just like to add another opinion to that idea and at least give them food for thought.

ltr


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## agent99 (Sep 11, 2013)

AltaRed said:


> So what do you propose for 'set and forget' for a 4% dividend/distribution yield at retirement time? Remember the OP's boundary condition is 'set and forget' right through to the date of retirement. An individual stock picking and bond/GIC portfolio doesn't qualify.


That's not what he said. If I understood his later post, he said he was already retired with a 20yr horizon.

You also said:


> The original question was about a 'set and forget' investment that could grow over time to provide retirement income in the distant future.


I didn't see anything in OP's posts about that either.

What I see, is a retiree with income from other sources (perhaps CPP/OAS/Pension) who is using MAW as a way of supplementing his other income. There are other choices and he wanted us to perhaps discuss those. Not get into same old debate about collecting dividends vs selling units. 

As someone well into retirement, with perhaps shorter horizon than 20yrs, MAW104 just doesn't suit my purposes and I doubt it is the best choice for OP either. Like LTR, I don't use funds, but I am sure there are some that might be a better match than MAW104.


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## james4beach (Nov 15, 2012)

I think the dividend approach is just fine, but I feel like people supporting that technique are glossing over the fact that the share price gets knocked down at each ex dividend date, by the dividend amount. At bad times when the share price is depressed, each dividend payment causes a _severe_ hit on the share price. For example RY pays $0.98 per share per quarter. At present stock values, each dividend causes a practically imperceptible, approx 1% drop in share price -- which easily gets lost in the daily noise (but it's still there).

However if RY trades around $50 during rough times, each dividend will knock the share price down by 2% x 4 times a year = 8% price drop just due to dividends.

This effect is something often not well understood by dividend investors, giving them the perception that the dividend comes for free (or is extra). Taking a dividend during depressed stock prices is just as bad as selling, and poses the same sequence of return risks. You don't escape from all that by using dividends.

The only way to avoid capital erosion in a dividend stock is to reinvest each dividend. If you take the dividend as cash, you erode capital... same as selling shares.


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## AltaRed (Jun 8, 2009)

Okay, I got it all wrong. I see from the OP's followup post back on page 1, s/he is already in retirement....

Added: So much for not reading that second post. One of the higher yield income funds is an alternative to MAW104 for sure.


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## jdc (Feb 1, 2016)

like_to_retire said:


> Tell one of those people that their income from low dividend MAW104 has to follow the market down by 50% as it did in 2008 if they follow VPW method.


I'm quite sure that MAW104 did not fall by 50% at any time in 2008.


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## AltaRed (Jun 8, 2009)

Per Morningstar, MAW104 was -16.11% in 2008 and +16.4% in 2009. That is the way a global balanced fund is supposed to work in a -35% Cdn and US equity market. 

Selling units to supplement yield would not have been a big deal, but the points LTR and Agent99 are valid. One might have not had as much price variation during those 2 years with a higher yielding income fund, but I am not familiar enough with any of them to comment.


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## james4beach (Nov 15, 2012)

iShares CDZ might be an option for someone who wants equity and dividends. It yields 4% to 4.5% but dividends might decline during a bear market. During 2008, it fell -30% for the full year, and at one point was down -49% from its peak. However there are lots of differences between a stock/bond balanced fund and an all-equity strategy.

I still think a well diversified balanced fund like MAW104 is a better way to go for most people.


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## fireseeker (Jul 24, 2017)

The issue with a retired person selling MAW104 units for needed income during a prolonged downtown is not easily skirted with any other investment strategy. 
The value of a dividend portfolio could get hammered, as James and AR have just pointed out. Waiting for a recovery may be workable, or it may not. If you are forced to sell holdings, you are selling damaged equity.
MAW has a 33% weighting in bonds. Any unit sales will also thus eat into the 60%+ equity holding. If you want to maintain a fixed asset allocation you really should be selling both assets, if the downtown is prolonged.
However, if you want to customize your asset sales during decumulation, you could hold dividend stocks (or CDZ) and bonds (or XBB) at a 65/35 ratio (or 50/50). During an equity downturn, you could sell XBB if need be. But you would be market timing, and changing your asset allocation. 
Depending on the investor, that may be OK. Or it may be simpler and safer to hold a balanced fund like MAW or VBAL and stick to your desired AA.
Because that, ultimately, is what underlies this debate: asset allocation, fixed or changing.


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## james4beach (Nov 15, 2012)

fireseeker what are your thoughts on keeping a cash buffer (say 1-2 years of expenses) in high interest savings/GICs separate from the balanced fund? It would be used in the worst-case scenario when equities are depressed. On one hand, this lets you leave the MAW104 alone when it's hammered. On the other hand, this is effectively boosting your fixed income allocation and therefore reducing overall return.

This is the approach my parents took, partly because they don't want to have all their liquid assets with one institution (Mawer). But it seems to me that the ability to spend out of that cash buffer could be a nice advantage in a sharp market downturn.


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## fireseeker (Jul 24, 2017)

I think cash buffers are good for most investors -- mostly because it acknowledges our behavioral tendencies to do the wrong thing.
A two-year buffer (as AR has) lets you leave the equity alone, or rebalance according to your plan.
But it certainly makes your AA more conservative.
Interestingly, MAW104 seems to have recently increased its cash holdings, although I can't figure out the right number. 
According to Morningstar, as of Sept. 30 MAW104 was almost 10% in cash, which is unusually high for such a fund. 
http://quote.morningstar.ca/QuickTakes/fund/PortfolioOverviewNew.aspx?t=F0CAN05MRR

However, as of the same date, Mawer itself reports two conflicting cash numbers -- 5.4% (in the pie chart) and 6.4% (in top holdings) -- on the same web page:
https://www.mawer.com/funds/explore-funds/balanced-fund/


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## hfp75 (Mar 15, 2018)

Mawer does Podcasts that are informative..... apparently they felt markets were frothy and sold equities (few %) and leaned more into FI and cash. You can listen yourself to the Balanced Fund Manager.....

I think it’s this one....

https://www.mawer.com/the-art-of-boring/podcast/quarterly-update-4q-2018-ep26/

* I use MAW104 @ 15% & MAW130 @ 15% for my portfolio.....


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## james4beach (Nov 15, 2012)

Thanks hfp75

MAW104 might hold cash internally, but as an investor you don't get to pick & choose what to sell. When you sell shares for cash, you're mostly selling stocks. I still like the idea of a separate cash buffer. I asked a coworker of mine who's close to retirement, and he keeps 3 years worth of expenses in GICs & high interest savings.


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## dubmac (Jan 9, 2011)

james4beach said:


> iShares CDZ might be an option for someone who wants equity and dividends. It yields 4% to 4.5% but dividends might decline during a bear market. During 2008, it fell -30% for the full year, and at one point was down -49% from its peak. However there are lots of differences between a stock/bond balanced fund and an all-equity strategy.
> 
> I still think a well diversified balanced fund like MAW104 is a better way to go for most people.


....and MAW105 in taxable accounts. MAW105 is a very good balanced fund that is tax friendly. Same composition as MAW104 but suited for non-reg accounts


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## james4beach (Nov 15, 2012)

dubmac said:


> ....and MAW105 in taxable accounts. MAW105 is a very good balanced fund that is tax friendly. Same composition as MAW104 but suited for non-reg accounts


Yes good point, there's the tax friendly version of it too. Just about identical return for both.


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## gardner (Feb 13, 2014)

james4beach said:


> Yes good point, there's the tax friendly version of it too. Just about identical return for both.


from https://www.mawer.com/funds/explore-funds/tax-effective-balanced-fund/ ...



> The manager minimizes taxes through the application of a tax overlay strategy, with the objective to minimize taxable distributions.


I am unsure how to parse this. Are they saying it is based on swaps or what? How do they really implement the tax efficiency?


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## GreatLaker (Mar 23, 2014)

dubmac said:


> ....and MAW105 in taxable accounts. MAW105 is a very good balanced fund that is tax friendly. Same composition as MAW104 but suited for non-reg accounts





james4beach said:


> Yes good point, there's the tax friendly version of it too. Just about identical return for both.





gardner said:


> from https://www.mawer.com/funds/explore-funds/tax-effective-balanced-fund/ ...
> 
> 
> 
> I am unsure how to parse this. Are they saying it is based on swaps or what? How do they really implement the tax efficiency?




Not sure if I can link directly to this quote on Mawer's site. It sounds like MAW105 holds securities directly so it can use tax loss selling to minimize taxable distributions and capital gains, whereas MAW104 holds other Mawer funds for simplicity. https://www.mawer.com/faq/ (on the Funds tab click on "What is the difference between your balanced funds?")



> The Balanced Fund and the Tax Effective Balanced Fund hold the same allocation of securities. The difference lies in the tax overlay strategy within the Tax Effective Balanced Fund. The Tax Effective Balanced Fund tries to minimize distributions to unitholders to defer their tax liability and allow the investment to grow with less of a tax drag by holding the underlying securities individually (instead of holding funds as is the case for the Balanced Fund) and offsetting capital gains with capital losses. We recommend that investors hold the Balanced Fund in tax sheltered accounts (RRSP, SPRRSP, TFSA, RRIF, LIF, etc), and hold the Tax Effective Balanced Fund in non-registered, fully taxable accounts.


There is also some discussion in the Annual MRFP:
https://www.mawer.com/assets/Annual-MRFP/MAWB001TBALMRFP.pdf


> In equities we search for wealth-creating companies whose equities can be purchased at a discount to their intrinsic value. We then apply a tax overlay strategy, with the objective to minimize taxable capital gain distributions. The philosophy of the Fund is that the security will not be sold to harvest a capital loss unless it can be replaced with a highly-correlated substitute (such as other names in the same industry and sector exchange-traded funds). If a capital loss is harvested, these trades are normally reversed after 30 days (to avoid wash sale rules).


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## james4beach (Nov 15, 2012)

That's a good question. If you click on the Holdings for each fund at the Mawer site, it does look like MAW105 shows individual securities instead of the funds-of-funds structure in MAW104. So I could see them using the tax loss selling approach... seems feasible. Given the extra work involved, I'm actually surprised the fund performs so similarly to MAW104.

I wonder if they're also making their fixed income more tax efficient by choosing discount bonds (or lower coupon bonds), which a couch potato'er can do by holding ZDB instead of XBB. It doesn't sound like they are, but there is some tax efficiency possible there too. The main reason I hold a portfolio of individual bonds non-reg is so I can buy low coupon bonds and minimize taxable interest income.


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## dubmac (Jan 9, 2011)

...and when you check the holdings (of either fund), you'll see that the managers have avoided stocks in the oil/energy space. only 3.3%. they have always avoided oil - which explains (I think) why the fund have done rather well. I often check which holdings they have when I explore stocks to see it they hold them in this fund.


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## james4beach (Nov 15, 2012)

dubmac said:


> ...and when you check the holdings (of either fund), you'll see that the managers have avoided stocks in the oil/energy space. only 3.3%. they have always avoided oil - which explains (I think) why the fund have done rather well. I often check which holdings they have when I explore stocks to see it they hold them in this fund.


Thanks for pointing this out. This makes "avoid energy" a recurring theme between _all_ the outperforming investment methods including Mawer's, ZLB, and many successful individual portfolios we've seen posted here. ZLB is another consistent outperformer that has simply benefited from avoiding all kinds of commodities.

This raises the philosophical question of whether this is intelligent portfolio management (which can add persistent outperformance) -- or -- if this is just a hindsight or survivor effect where a certain decision gave some outperformance, but may not necessarily give a benefit going forward. I don't know the answer to this but am curious what others think.

Mawer Balanced fund only started becoming very popular, if you look at funds under management, around 2013 and then extremely popular after 2015. This is performance-chasing behaviour by investors buying into the fund, because this coincides with the bad performance of commodities and US outperformance, all happening at the same time. In other words, MAW104 investors largely bought in to Mawer's fund, instead of other low fee balanced funds, due to the outperformance of the fund... which appears to be primarily due to these two factors.

Question is, what happens going forward. What if commodities strengthen? What if the US starts chronically underperforming? Just because these bets have worked out so far doesn't mean they will always work in Mawer's favour. Curious what others think about all this because it applies not just to Mawer but many other 5 pack/6 pack portfolios that are popular around here.


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## pearl (Mar 5, 2015)

MAW104 was down from $36.95 to $36.76, which is 0.51% yesterday. But VBAL was down 0.94%. Looks like there is big difference.


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## pearl (Mar 5, 2015)

pearl said:


> MAW104 was down from $36.95 to $36.76, which is 0.51% yesterday. But VBAL was down 0.94%. Looks like there is big difference.


Sorry, it is MAW105. But it is the same


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## AltaRed (Jun 8, 2009)

MAW104/105 and VBAL each have a different mix of 60% equities and 40% fixed income, so there will be aberrations/differences on a day like yesterday. Compare the slices side by side for yourself. 

Examples: Almost all of Mawer's bonds are Cdn and is lower on Cdn equity than VBAL. Investors need to understand that the only commonalities are that each is a 60/40 balanced fund, and is a globally balanced fund. Beyond that, they diverge substantially. The same divergence likely applies to XBAL and ZBAL.


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## pearl (Mar 5, 2015)

Thanks AltaRed.


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## AltaRed (Jun 8, 2009)

pearl said:


> Thanks AltaRed.


I might add that over the long term, most of those 60/40 global neutral 60/40 balanced offerings may perform approximately the same, especially if one believes in reversion to the mean among the world's capital markets, with divergences mostly short term noise. We will only know in hindsight looking at, for example, 5 and 10 year rolling averages. To me, it is a roll of the dice on which one might move ahead by a nose on the backstretch and in any event, not material. Investors tend to forget about the value of the product, i.e. looking at the forest, rather than focusing on the decimal points, i.e. looking at the trees.


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## james4beach (Nov 15, 2012)

I agree, short term performance is a roll of the dice. These funds differ in sector & country exposures. But nobody can know in advance which country or sector will perform best.

What you'll want is a 60/40 fund with some kind of sector and country diversification. As long as you have the diversification and a good manager, that's about all you can do. Whether one fund is heavy on the US or light on the US, or Europe, etc, probably makes no difference in the very long term.

One thing you should watch out for is the skill of the fund manager. Not all fund managers are equally good at their jobs, and there are many 60/40 balanced funds out there which have done much worse than their peers even though they have sector & country diversification. It's a matter of implementation and execution skill. I suggest looking for a long track record to make sure that the fund manager has successfully navigated changing market conditions over time, and avoided temptations such as hindsight/chasing returns.

One reason MAW104/105 has become so popular is this long track record of success, along with good diversification and low MER. There are other examples out there too. I've recommended BMO Monthly Income D Series (1.02% MER) to friends because it can be purchased in smaller $ amounts through a discount brokerage.

*Additional thought*: once you've chosen a single fund, it's going to be important to not fall victim to "chasing returns". Eventually you will encounter a stretch of years when your chosen fund lags, does worse and other funds now look more attractive. A very common reaction is to sell the underperforming fund and jump into another one which now looks better in hindsight. This is a huge mistake! It's the reason individual investors tend to achieve worse returns than what they theoretically should be getting. As great a fund as MAW104 is, there will eventually be a time that it underperforms its peers. This will happen if, for example, Canadian stocks outperform US stocks, or if commodities strengthen significantly.

You should buy a fund or use a self-directed strategy that you are confident you can stick with, even through stretches of bad performance. This is a very big challenge to investors... potentially one of the biggest challenges that exists.


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## martik777 (Jun 25, 2014)

AltaRed said:


> Added: My portfolio yields about 3% give/take a tiny bit. I pull 4% from the portfolio to fund my 'lavish' lifestyle. I thus sell invested capital each year, but in years when the portfolio is down, I can either reduce spending or tap into my multi-year fixed income reserve. That is a strategy for dealing with 'sequence of returns' risk but it does not invalidate what I said above.


If you are only yielding 3%, why would you invest in equities? GIC rates are higher than that


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## agent99 (Sep 11, 2013)

martik777 said:


> If you are only yielding 3%, why would you invest in equities? GIC rates are higher than that


They are? At BMOIL I don't see any thing like that in GICs at present. 

Whether 3% is adequate depends, I guess, on how much you have invested. Suppose Alta has $5million - then he can afford to invest conservatively. That 3%, could support his "lavish" lifestyle  

Our portfolio has thrown off on average about 4.75% over 15 years. We draw about 4% on average. This allows portfolio to grow and take care of inflation. I don't feel our portfolio is high risk - but I do avoid low interest highly taxed investments like GICs or bonds under 3%. We could spend more, but not into lavish trips or other big expenses. Later we may need money for old-age care. If not, our kids will receive a small inheritance.


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## AltaRed (Jun 8, 2009)

martik777 said:


> If you are only yielding 3%, why would you invest in equities? GIC rates are higher than that


Yield is only part of the equation... one that so many investors forget. Total return is what matters, i.e. yield plus capital appreciation. My CAGR over my entire portfolio since 1/1/2010 (ignoring 10 years because a start of 1/1/2009 is misleading) is 9.41%. So clearly most of my return has been through capital appreciation.

Focusing on yield is foolhardy because it unduly influences one to chase yield, and why I end up in endless debates with folks who simply focus on 'investment income' and/or yield. I agree that investment income portion of Total Return is a stabilizing influence on a portfolio, especially in withdrawal, and I like that influence, but it is a major faux pas to get fixated on it.


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## martik777 (Jun 25, 2014)

My mistake, I was assuming your yield was your total return. 

agent99: There are still a few institutions offering slightly over 3% on 3+ year terms. I was lucky to get Coast Capital's 33 month 4% term during last year's promo.
There was also a promo in March from Meridian Credit of 3.25% over 18 months + 1% transfer in bonus yielding 3.91%

The bulk of my portfolio is registered so for now, I am using GIC promos for the fixed income allocation

https://www.highinterestsavings.ca/gic-rates/

https://www.highinterestsavings.ca/promotions/


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## agent99 (Sep 11, 2013)

martik777 said:


> My mistake, I was assuming your yield was your total return.
> 
> agent99: There are still a few institutions offering slightly over 3% on 3+ year terms. I was lucky to get Coast Capital's 33 month 4% term during last year's promo.
> There was also a promo in March from Meridian Credit of 3.25% over 18 months + 1% transfer in bonus yielding 3.91%
> ...


We have our few GICs in our registered accounts. But, at least at BMOIL, we can only buy what they have on offer. And really, we don't want to be chasing higher interest rates. Presumably you have to open multiple registered accounts to take advantage of promotional and other offer of high GIC interest?

By the way, the yield figure I quoted was for div/distribution yield - Don't keep track of average total return, but probably about 9% over past 15 years. (Portfolio value doubled in 15yrs while drawing ~4%) Not likely to be maintained looking ahead.


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## martik777 (Jun 25, 2014)

Yes, opening those registered accts is a PITA, then one must pay a ~100 xfer fee which is usually covered by the next institution.

I figured it was just the dist yield, and I agree its not looking too rosy going ahead. 

I am considering an all-in-one solution like MAW104 and/or VBAL once I start to draw income


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## AltaRed (Jun 8, 2009)

agent99 said:


> By the way, the yield figure I quoted was for div/distribution yield - Don't keep track of average total return, but probably about 9% over past 15 years. (Portfolio value doubled in 15yrs while drawing ~4%) Not likely to be maintained looking ahead.


We clearly focus on different things. I measure 'investment performance' via Quicken which is total return (no investment income is re-invested). The only way I calculated yield of 3% for a prior post was to go to my most recent tax return, add up the investment income on it, and divide by my investable net worth. I do look from year to year when I do my tax returns to see if my investment income has gone up by at least inflation....and it always has exceeded it. So obviously dividend growth is going in the right direction and that satisfies me.


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## agent99 (Sep 11, 2013)

AltaRed said:


> We clearly focus on different things.


Possibly. I see no need or benefit of doing detailed accounting with Quicken or the likes. BMOIL keeps track of our investments on a daily basis.

I do keep an overall spreadsheet. It summarizes our overall holdings and predicts the flow of income each account in portfolio will throw off. I update it in January after RRIF withdrawals/TFSA contributions and again in December. The income from unregistered is the important part to us. That along with CPP/OAS is what we live off. Our overall income has grown at something better than inflation (~3.3% pa growth - despite lower interest rates)

"Investment Performance" is not something that I can relate to. Maybe just good for bragging rights?  I do calculate Total Return at end of each year. I don't try and calculate ongoing TR since inception. But I do know from growth of portfolio and amount we draw, approximately what it is (I estimated 9% pa above). 

This works for us. YMMV.


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## AltaRed (Jun 8, 2009)

I have more than one brokerage account and also 2 brokerages. So Quicken keeps it aggregated.

My ongoing strategy has developed over the past 10 years to spend down holdings as I go, including amounts I can gift on an annual basis to family, charities and political parties.


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## agent99 (Sep 11, 2013)

AltaRed said:


> The original question was about a 'set and forget' investment that could grow over time to provide retirement income in the distant future. MAW104 or VBAL or any other 3rd party managed investment product can do that.


Being well into retirement, that is not exactly what I need because our unregistered accounts already provide most of the retirement income we need.. I am thinking more of simplifying our RRIFs so that they maintain their 40:60 Eq/FI ratio. Income is not important, but I do want sufficient growth to outpace inflation. Required withdrawals will, in part, add to unregistered accounts and maintain inflation adjusted retirement income.

One option could be to add a 'set and forget' fund like MAW104 or V,X,ZBal type funds. In comparing them, I came across this article: 
VBAL vs. Mawer Balanced Fund For One-Stop Investing 

It seems to question the capability of new managers who may take over the Mawer fund. Another question I have, is - will MAW overcome it's higher MER and beat the newer balanced etfs long term?

We have almost no etfs/funds in our RRIFs. Thinking about adding a small amount of MAW104 to one and an etf to the other. Then as bonds/gics mature or preferreds get called, consider adding if we still think these balanced funds are worth having.


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## dubmac (Jan 9, 2011)

consider VRIF as well.


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## AltaRed (Jun 8, 2009)

agent99 said:


> One option could be to add a 'set and forget' fund like MAW104 or V,X,ZBal type funds. In comparing them, I came across this article:
> VBAL vs. Mawer Balanced Fund For One-Stop Investing
> 
> It seems to question the capability of new managers who may take over the Mawer fund. Another question I have, is - will MAW overcome it's higher MER and beat the newer balanced etfs long term?


I agree we won't know if MAW104 will continue to match or beat VBAL or not (only 3 years history with VBAL) so one option is to hold both.... for those whose portfolios are largely or entirely made up of ETFs. I've elected to use MAW104 in a RESP I sponsor and manage. The smallish sums do not make $10 commissions worthwhile once a year BUT that would be neither here nor there IF MAW104 starts to underperform VBAL or XBAL. Either of these two balanced ETFs are equally competitive. We shall see what the actual experience will be over the next 15 years before granddaughter needs it for secondary education (assuming I am still vertical 15 years from now)


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## agent99 (Sep 11, 2013)

dubmac said:


> consider VRIF as well.


We did discuss this earlier, maybe in a different thread. It seemed more aimed at providing a regular monthly income. Presumably for those who would like a monthly withdrawal from their RRIFs. We withdraw the minimum required amount annually, so it wouldn't suit us. 

If you haven't read it, this is a good summary of VRIF: Unpacking VRIF, Vanguard’s New Monthly Income ETF | Canadian Couch Potato


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## agent99 (Sep 11, 2013)

After looking at how MAW104 would have performed for us, I was a bit underwhelmed  The 0.92% MER vs 0.2% for say XBAL, would require MAW to overperform vs the newer balanced ETFs. No certainty it can do that.

I am about to add a balanced etf or two to our registered accounts. XBAL, ZBAL or VBAL are similar, so will choose based on yield (helps keep pace with inflation) and low MER. Otherwise, how would one choose?

With these, only putting toe in water. I may need to know more about them as the years go by.


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## dubmac (Jan 9, 2011)

I buy Mawer Balanced 104 and 105 because I get a good return, and I sleep well at night not worrying about the market and my investments. I don't expect the fund to beat benchmarks - but I do expect the fund to keep its 4-5 star rating, low MER's and continue to rank among the top global neutral funds (which it does). When it stops, I will consider changing advisors - but so far, so good. 
If you want to check the performance of MAW104 against other global neutral balanced ETFs like XBAL and VBAL, see here. I look at the 3, 5, and SI performance. In almost all cases, these ETF's perform equally well to the ETF
I hate surprises - these funds really don't surprise me that much. I prefer good, steady progress and reasonable returns. In my view, Global Neutral Balanced is the right mix - it just requires one to decide among a suitable Mutual fund, or an ETF (VBAL or XBAL).


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## agent99 (Sep 11, 2013)

I can understand why you like Mawer and this type of investment in general. It's not the way I have gone, but as i get even older, I will add a balanced etf or two to our holdings and keep adding.
One reason I started to look at balanced funds, was because it is so hard to buy fixed income these days. With balanced funds, you get some by default! Individuals have very little FI to choose from compared with fund managers.


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## dubmac (Jan 9, 2011)

there really is very little difference between VBAL and MAW104. 
Mawer didn't invest (much) in energy in the past - they avoided it - as a result their returns were higher than others. Now, however, energy (has been) is doing much better over the past 6 months, so MAW104 has gotten less stellar returns comparably speaking.
Consider HBAL is you want a good balanced fund without any bonds in it.


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## Spudd (Oct 11, 2011)

dubmac said:


> Consider HBAL is you want a good balanced fund without any bonds in it.


Do you mean HGRO? HBAL contains 30% fixed income.


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## dubmac (Jan 9, 2011)

oops. You are correct Spudd...I am in error.


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## CAP (Apr 20, 2021)

Like Dubmac, would always like to avoid "surprises" in retirement so with any sleep well at night factor - MAW104 has been a stellar fund for years.

If not that, then HBAL, VBAL, XBAL and then carry on with your life. 

Good call!


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## james4beach (Nov 15, 2012)

I recently inspected the recent performance of the Mawer Balanced. As some of you know, it's having a pretty bad year so far (as is everyone).

MAW104 had very strong performance over the last few years for various reasons. The managers tended to be pretty light on commodities, and that *improved* their performance for a long time. One could say that the managers preferred the "growth" factor to "value", both domestically and internationally. They also had a pretty high equity % allocation, more aggressive than a typical 60/40.

Both their Canadian and US equity portfolios (the funds held inside MAW104) were slightly beating their respective indexes.

Anyway, those kinds of trades are always a double-edged sword, and currently it's working against them. Growth has been doing notably worse this year, and resource stocks (which they don't have much of) have been leaders this year.

I don't see anything to worry about. Managers make active decisions and these are the natural consequences of them. Sometimes they outperform, other times they underperform. One should not expect Mawer to always outperform. That would be an unreasonable expectation.

Still looks like a solid long-term holding.


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## pedanticus (Apr 30, 2014)

Taking excessive duration risk and falling for the "oil is dead" narrative doomed their recent returns. Not exactly consistent with "being boring and making money" in my eyes. I've held MAW105, the presumably "tax effective" version of 104, since 2016, contributing $1000 a month and various larger sums at irregular intervals. Nearly all gains have disappeared. Another annoyance of mine is that, unless I'm misunderstanding something, the "tax effective" version of this fund has, for many years, been less tax efficient than the 104 version, spinning off higher distributions every year since at least 2014.

It is, by far, the worst performing part of my portfolio. I'm thankful it's a <5% portion thereof. At this point I'll give them the benefit of the doubt, continue adding monthly, and hope they can once again justify their fees.


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## AltaRed (Jun 8, 2009)

It is a long term hold and it has been disappointing the last few years. They occasionally miss on their bets but MAW104 will play out over the longer term. I have it in an RESP for a granddaughter and will continue to stay with it for the next 10 years but am not adding to it. I've decided to juice the RESP a bit with VGRO (that I get commission free with BMO IL) where I will continue to add some annual contributions for awhile. It will be 13-15 more years before the RESP will be tapped for funds.

Added: With the exception of the past 12 months or so, MAW104 still looks good on Morningstar on a multi-year basis. Mawer Balanced A, Fund, performance | Morningstar


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## james4beach (Nov 15, 2012)

Any mutual fund that takes any kind of active bet is guaranteed to sometimes do better, and sometimes worse, than average. Mawer made their allocation choices (which worked out great for many years), then we entered a market environment where they underperformed. That will happen to ANY active portfolio, and I don't see any big deal here.

Looking at trailing returns versus XBAL, another perfectly fine balanced fund, shows

Over 3 years, Mawer has done a bit worse
Over 5 years, Mawer and XBAL have the same performance


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## james4beach (Nov 15, 2012)

Another thought. I think part of the frustration with Mawer Balanced (including from my own family members) comes down to unrealistic ideas about what balanced funds should be returning. We got into some crazy years where balanced funds had insanely strong returns. Even my own very conservative portfolio, similar to a balanced fund, had a return of 7.5% CAGR at some point.

People saw the MAW104/105 trailing returns and began to expect continuous 6% to 8% returns.

What is the realistic and normal range of balanced fund returns? To get an idea of this we can look at Portfolio Visualizer using this model for a 60/40. Click on Rolling Returns to see how the rolling 60 months (5 years) varies over time. *This shows that a balanced fund has rolling returns that are usually in the range 3% to 9%*

Anything within that range is very normal. It's also worth noting that if you change the start date to 2000, the overall performance of the balanced fund is more like 5% CAGR. Personally I don't think 8% is a sustainable return for balanced funds.

Something closer to 5% may be more realistic in our modern era.

The model/perfect balanced fund I linked to has
1 year return: -14.7%
3 year return: 3.8%
5 year return: 4.3%

How does that compare to Mawer? The Mawer fund is totally on par with the above no-fee model:
1 year return: -13.9%
3 year return: 2.3%
5 year return: 4.9%


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## cainvest (May 1, 2013)

james4beach said:


> People saw the MAW104/105 trailing returns and began to expect continuous 6% to 8% returns.


That is reasonable over the long term, well, given past history of the fund. IIRC, MAW104 since inception (1988) is around 8%. These funds are long term semi-conservative holds so looking at a few years of performace is really meaningless unless it deviates significantly from its peer funds in a negative manner.

In other words ... move along, nothing to see here.


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## dubmac (Jan 9, 2011)

Mawer stayed out of oil and gas in the period 2015 - 2022 when the roof was collapsing on O&G sector. They also did well with some growth pics - like constellation software etc. Jeff Mo made was quite impactful as one of their fund leaders. Since then, Oil & gas has gone through the roof in 2021-present. not a surprise really that it is a middling fund. That said - still a very good fund, with good leadership.


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## Covariance (Oct 20, 2020)

Choosing an active fund is itself an active decision. Made by the investor themselves who should put some thought to it.

Evaluation of an active fund requires an evaluation of their strategy. Some might say style, or factor exposure. Then a determination of the market regime expected going forward, whether the fund strategy will stay the same, and whether it is an appropriate for the expected market.

As we can see here they had a strategy that worked. Until it didn't.

It's worth reinforcing. Active requires a level of involvement and decision making. The alternative is passive, which is less time sensitive leaving time for other pursuits. But then a passive strategy will not "beat the market".


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## dubmac (Jan 9, 2011)

I purchased MAW104 for 2 reasons - their MERs are low, and their performance was quite impressive. Now, the only real reason is that their MER is low. No question the euphoria of a few years ago is long gone - the question is whether or not they can demonstrate that their value-added active fund performs better than VBAL or XBAL.


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## AltaRed (Jun 8, 2009)

dubmac said:


> I purchased MAW104 for 2 reasons - their MERs are low, and their performance was quite impressive. Now, the only real reason is that their MER is low. No question the euphoria of a few years ago is long gone - the question is whether or not they can demonstrate that their value-added active fund performs better than VBAL or XBAL.


The next few years may answer that question, or it may be that it becomes a 'dead heat'.


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## pedanticus (Apr 30, 2014)

Covariance said:


> Then a determination of the market regime expected going forward, whether the fund strategy will stay the same, and whether it is an appropriate for the expected market.


I would argue that this is largely what the fees are supposed to pay for.


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## Covariance (Oct 20, 2020)

pedanticus said:


> I would argue that this is largely what the fees are supposed to pay for.


Not unless you mean fees to someone that is picking the fund for you. It's a macro decision as to whether to go active versus passive. And another macro decision is which manager to pick once you go active.

The micro decisions are those made by the manager in terms of how they invest the cash entrusted in them.And effectiveness is whether they beat their benchmark. If you read their material they indicate that they beat their performance benchmark.


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