# Yields on Vanguard ETFs VDY and VRE



## dime (Jun 20, 2013)

Anyone have Vanguard ETFs that are new last year VDY or VRE? I hope someone can make sense of the yields for me. 

So far the yields yields seem too low on these the funds. VDY has been distributing at a rate of about 2.5%, but it's index shows 4.47%.
And VRE index shows a yield of 4.75% but it's not paying out at that rate (more like 2%).
Anyone else noticing this? Will the yields start to match by the end of the year because they're less than a year old? 
They've got some catching up to do! Vanguard's low MER is nice, but I'd like the full yield! 
I asked this in an earlier thread but I didn't see that anyone responded, so I'll start a new thread.

Any thoughts?


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## pwm (Jan 19, 2012)

Very good question dime. Glad to see someone else has the same concern.

I hold VDY, and I am equally perplexed. The yield on the underlying index would suggest that the distributions should be much higher. I was assuming the distributions would improve as the fund matures, or that perhaps there will be a "catch up" distribution at year end.


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## KrissyFair (Jul 8, 2013)

I've been wondering that about Vanguard funds for a while. Everyone seems to love them, but for a lot of what I want to hold, I can pay 1/2% more in MER at iShares and get 2% more yield...

In general though, I've noticed Vanguard tends to give mediocre dividends throughout the year and then a big one in December.


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## Spudd (Oct 11, 2011)

I have VRE and I'm wondering the same thing. I don't know why it pays so little. I'm hoping it will catch up as it matures, since it's less than a year old right now.


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## james4beach (Nov 15, 2012)

The place to go is the audited annual financial statements, to see exactly what's going on inside the fund. The income statement portion will tell you exactly how much dividend income the fund generated, and where that income went.


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## Spudd (Oct 11, 2011)

Yeah, unfortunately they cover the period from Nov 2 - Dec 31, so it's not exactly enlightening.


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## warp (Sep 4, 2010)

Why don't you just call Vanguard and ask them??

Go on their Canadian website.....I'm sure a customer call number is on there.

I have also noticed this about the seemingly low yields, but since I'm not buying their Can ETF's right now, I didnt take it further to find out why .


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## james4beach (Nov 15, 2012)

Oh the funds are that new? Yeah then the annual statement won't help.

The semi-annual (interim) financial statements will be available near the end of August, but I don't think it's going to have the info you need. The annual statement has the important "Distributions to unitholders" section but the interim doesn't seem to.


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## Spudd (Oct 11, 2011)

The only phone number I could find on their site was under a section for Financial Advisors. I guess I could call it anyways.


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## Spudd (Oct 11, 2011)

I called. They told me it's because it's starting up, something about cash flows.


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## mike06 (Aug 4, 2011)

Spudd said:


> I called. They told me it's because it's starting up, something about cash flows.


Did they happen to comment on how long this process will take?


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## Spudd (Oct 11, 2011)

No, I already felt kind of bad about calling the advisor-only number, and then he asked me if I was an advisor so I thanked him sincerely and hung up!


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## james4beach (Nov 15, 2012)

I don't mean to sound preachy - but I always wait until there's at least one solid financial reporting period before going into an ETF. Many reasons ... see how the dividends and distributions play out, but also to know the tax characteristics. Plus the fact that annual financials need to be audited externally creates some additional accountability pressure, which is good.

You guys always have the option to sell the shares now, and wait until more data is available. Then you can later decide if you want to come back in.

This also applies the proper market pressure to the fund manager, that is, *prove* to us it's all good before we help grow your assets under management.


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## warp (Sep 4, 2010)

I would generally agree with James that when it comes to buying ETF's , you may be better served to wait as much as 1 year from launch to get a better view of the product.

As for calling them, there must be a number for individual investors....I will look and report back.


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## andrewf (Mar 1, 2010)

As I recall, Vanguard Canada is only really intended for advisor-based clients. It could be that they don't have a customer service line for retail investors.


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## warp (Sep 4, 2010)

OK...here is what I was told.

There is no contact number for individual investors because they are Prohitited by the govt from talking to individual investors. The reason for this apparently has to do with the fact that they are a US company, and are not structured at the moment to talk to individuals, only financial advisors. Thay are working on changing this.

This was a surprise to me, which may stop me from buying Vanguard Canada ETf's. 
The good news, although not great, is that you can contact them via email, and request an answer to a question you might have. go to the website..choose idividual invesors. click on the "how to invest" tab
Right below "USING A BROKERage ACCOUNT" is a smaller line saying you can eamil them and to click to do so.

As for the yields seeming too low, as I thought, this is because the ETF is new, and they will ramp up distributions as they get more divs from the stocks the ETf's holds into the future.

the number I called , if you'd like to talk to someone..( the gentleman was very nice and helpfull to me) is their number listed for General Inquiries...1-888-293-6728


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## pwm (Jan 19, 2012)

I just got the July distribution in my TDW account from VDY today. It was $0.09041 per unit. That's the highest number to date. The numbers are on their Web site. It's been increasing steadily this year. The most recent distribution works out to about 3.99%. I will be interested to see if the trend continues. If so that would suggest that earlier lower distributions were just an anomaly due to the start up period.


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## My Own Advisor (Sep 24, 2012)

Makes sense, start up period. 

Although, why not hold these stocks directly?


Top 10 holdings
As of close 30-06-2013
Rank	Holdings
1	Royal Bank of Canada
2	Toronto-Dominion Bank
3	Bank of Nova Scotia
4	Bank of Montreal
5	Enbridge Inc.
6	TransCanada Corp.
7	Manulife Financial Corp.
8	Canadian Imperial Bank of Commerce/Canada
9	Cenovus Energy Inc.
10	Sun Life Financial Inc.
Top 10 approximately equals 62.3% of net assets

No MER and higher yields.


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## leeder (Jan 28, 2012)

My Own Advisor said:


> Makes sense, start up period.
> 
> Although, why not hold these stocks directly?
> 
> ...


Commission by buying each of the top 10 stocks can get pretty high. Typical commission for most brokerages would be 9.99 per trade, after all. 

I do wonder whether it is worthwhile for investors to even invest in dividend ETFs. For example, majority of VDY is financial stocks. A good chunk of the distributions is also return of capital. Also, if investors also have products like XIC, XIU, VCE, or ZCN in their holdings, dividend ETFs essentially give more of the same.

Maybe the best bet is to buy one or two of their favorite stocks listed above to supplement the index ETFs , while holding the index ETFs as their core component. Just a thought...


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## My Own Advisor (Sep 24, 2012)

I like your thinking leeder. I'm biased though since I own dividend stocks and a Canadian ETF like XIU but I actually do the opposite, Canadian dividend stocks are my core holding and XIU is my backup since I don't own all stocks in that index yet.


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## humble_pie (Jun 7, 2009)

leeder may i question that argument. As it happens, i own 6 of those stocks. I like their dividends & i sell their options. Have done this for years. They're among the breads-&-butters, the bricks-&-mortars, the no-brainers & the cash-cows of my portf.

so a 9.95 commish to acquire each such stock works out to a few amortized pennies per annum, if one holds the stock for 10 years or more.

now an etf, on the other hand, is going to bill its management fee, for holding the same stocks, every year. Year in, year out, for 10 years or more.

which version shall be less expensive to own, over a reasonable time frame?

in addition, investor receives 100% of the dividends when he holds the stocks outright. None of this fretting about why their distributions are so small during this, their first year of operations.

lastly, the tax slips! the fortunate investor who holds stocks will know his income in advance, down almost to the last penny. He will receive accurate tax slips by the end of february. He'll be in control.

contrast that with the poor etf holder who sometimes doesn't find out until early april precisely what kind of income his fund, in its infinite wisdom, has seen fit to declare on his behalf.


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## leeder (Jan 28, 2012)

@ humble pie: I'm sure you have much more experience than I do, so I definitely appreciate your feedback.

Firstly, I'm not smart enough to choose stocks that outperform the index in the long run. That's why I stick with buying an index ETFs as my core investment. I believe these index ETFs would provide me with sufficient diversification. I also do subscribe to the theory out there that passive (index) investing style in the long run beats active (stock picking) investing.

Secondly, I rebalance my portfolio annually. I find it's easier to rebalance a simple ETF portfolio than to rebalance individual stocks. As an unsophisticated investor, I would not do a good job managing a large portfolio that holds many individual stocks (as opposed to 1-3 ETFs). If I only hold 5 or 6 individual stocks, I feel I wouldn't be diversified enough.

Thirdly, in terms of expense, you are likely correct in that it is cheaper holding a few individual stocks and paying just the trading commission for them. On the other hand, if I hold $100k of ZCN, the total expense (commission and MER, assuming commission is $9.99) in one year is $179.99. ZCN holds about 235 stocks. I'm actually paying about $0.77 per stock in one year. That's just my perspective; you definitely can disagree on how I measure expense...

Finally, if one is really relying on fixed distributions every month or every quarter, I think one would be better off with higher fixed income component. Of course, the argument is that it is more tax advantageous holding dividend paying stocks in non-registered account. I totally agree, and I have nothing to say there. Hence, my current portfolio consists of mostly index ETFs in TFSA and RRSP and 10 to 15 Canadian blue chip dividend stocks in my non-registered account. That way, I don't have to worry about ETF taxation too, too much. Yes, you can call me a hypocrite...


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## mike06 (Aug 4, 2011)

My Own Advisor said:


> Makes sense, start up period.
> 
> Although, why not hold these stocks directly?
> 
> ...


That is definitely a good strategy if you have a very large account, but for most of us, its probably not efficient because:
1) trading costs - sure buying all 10 and holding forever will only cost you 100$ but what about rebalancing? with the etf you can make 1 trade a year. in order to 'rebalance' your 10 individual stocks, it might take you 5,6,7 trades. 
2) what if those stocks fall out of the top 10 and another canadian dividend player steps up? are you going to sell out of the loser and buy the new one? more fees. 
3) what about that other 38% of the portfolio that youre missing out on? this is not insignificant.

unbundling an ETF makes a lot of sense for some funds (like XRE or XUT for example) but for a broad dividend fund like this, i think the costs of unbundling would be far more significant over the long term if you plan to track this index. 

i completely agree with leeder in that if you already own a broad based canadian ETF like ZCN, adding this fund is redundant and unnecessary, i would suggest just sticking to the low fee broad index etf than a specialty dividend fund. and if you are going to unbundle, it should only be done with a VERY large account


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## fatcat (Nov 11, 2009)

humble_pie said:


> leeder may i question that argument. As it happens, i own 6 of those stocks. I like their dividends & i sell their options. Have done this for years. They're among the breads-&-butters, the bricks-&-mortars, the no-brainers & the cash-cows of my portf.
> 
> so a 9.95 commish to acquire each such stock works out to a few amortized pennies per annum, if one holds the stock for 10 years or more.
> 
> ...


+1 from me .... this is a personal choice with no right answer ... i used to have ETF's but like pie i really prefer the clarity and predictability of direct ownership ... i also own 6 of that list with no intention to sell or do anything other than hold for a long time with occaisional tweaking around the edges ... no way is VDY going to do well and a basket of those stocks lag behind ...


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## james4beach (Nov 15, 2012)

Nothing wrong with direct ownership but it becomes infeasible after a handful of stocks.

VDY has 81 holdings, I think. So sure you can pick some of the top holdings but now you've made your own fund. Again nothing wrong with this... if you want to try it out, benchmark it. Use XIRR in a spreadsheet over time to see what rate of return you're achieving versus VDY. You may outperform it. Give it a couple years and see how it goes, that's probably a good exercise.


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## humble_pie (Jun 7, 2009)

the problem is, as Argonaut used to say, that all those vegetable soups with their 81 & their 237 individual ingredients include a thick swack of losing stocks. These are what drag index-based performers down into mediocrity.

237 stocks in a vegetable soup are likely to produce bland low-quality prison gruel imho. I'd rather have 3 smacking fish, some garlic plus a few hand-picked vegetables in a bouillabaise any day.

as for size of account, argo used to run his 5-pack on 20-25k. He had 5 carefully selected hi-quality stocks. Nothing more. Nothing less. A success recipe.

as for inability to select stock, what's to select? there are so few 5-star companies in canada that choice inevitably boils down to a list similar to the one copied above so many times. One can easily tinker around with the list, but inevitably investors in canadian market are going to end up with banks, telcos, big energies plus a handful of others. Maybe a couple of emerging juniors to add spice to the soup pot.

as for "rebalancing" a stock portfolio, i for one don't understand this at all. Is it some kind of omm-padme mantra that runs around in this forum maybe? one stock out-performs magnificently so thwack! the crazy cook takes it into his head to chop it back with a chinese cleaver?

there's another adage that says Cut your Losses but Let your Profits Run. That's a much tastier recipe imho.


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## My Own Advisor (Sep 24, 2012)

"as for inability to select stock, what's to select? there are so few 5-star companies in canada that choice inevitably boils down to a list similar to the one copied above so many times. One can easily tinker around with the list, but inevitably investors in canadian market are going to end up with banks, telcos, big energies plus a handful of others."

Well said.

This is why, direct stock ownership can work well. It's not like we have 500 companies to choose from. Look at XIU, XIC, VDY, VCE and ZCN top holdings.

They all look very similar....

Picking "top stocks" in Canada is not that hard. The hard part is holding on to them when everyone else says to sell and/or the market corrects.


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## humble_pie (Jun 7, 2009)

personally i think the simplified tax consequences of holding quality canadian stocks is a sufficient reason to hold these versus any canadian equity etf.

while no fees, no MERs, no delayed reporting plus gains from selling their individual options is very heaven.


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## Eclectic12 (Oct 20, 2010)

leeder said:


> @ humble pie: I'm sure you have much more experience than I do, so I definitely appreciate your feedback.
> 
> Firstly, I'm not smart enough to choose stocks that outperform the index in the long run. That's why I stick with buying an index ETFs as my core investment. I believe these index ETFs would provide me with sufficient diversification. I also do subscribe to the theory out there that passive (index) investing style in the long run beats active (stock picking) investing.


But are you aiming to beat the index or are you aiming to beat the ETF, with less bookkeeping and expenses? 

If you are aiming to equal or beat the ETF, where ten stocks makes up 60+% of the assets, one has a roadmap to focus on IMO instead of trying to pick from the entire TSX range of listed investments (i.e. less work).




leeder said:


> Secondly, I rebalance my portfolio annually. I find it's easier to rebalance a simple ETF portfolio than to rebalance individual stocks. As an unsophisticated investor, I would not do a good job managing a large portfolio that holds many individual stocks (as opposed to 1-3 ETFs). If I only hold 5 or 6 individual stocks, I feel I wouldn't be diversified enough.


If you check out the Argo five pack threads on CMF, for the years he's run the numbers - five stocks have beaten the TSX for several years running. IMO, that has a lot to do with how little choice there is on the TSX.

If you prefer to stick to ETFs for diversification, then by all means ... stick with what you are comfortable with.




leeder said:


> ... On the other hand, if I hold $100k of ZCN, the total expense (commission and MER, assuming commission is $9.99) in one year is $179.99. ZCN holds about 235 stocks. I'm actually paying about $0.77 per stock in one year. That's just my perspective; you definitely can disagree on how I measure expense...


That's fine for the one year ... but if you decide you don't need to rebalance for the next two years, you are paying the MER. If you rebalance, then it's more.




leeder said:


> Of course, the argument is that it is more tax advantageous holding dividend paying stocks in non-registered account. I totally agree, and I have nothing to say there.
> 
> Hence, my current portfolio consists of mostly index ETFs in TFSA and RRSP and 10 to 15 Canadian blue chip dividend stocks in my non-registered account. That way, I don't have to worry about ETF taxation too, too much ...


So you are picking some Canadian blue chip dividend stocks that are likely duplicated in the ETF. 

Is this not doubling your work and introducing the same costs/issues the ETF is supposed to solve?


Cheers


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Nothing wrong with direct ownership but it becomes infeasible after a handful of stocks ...


True ... then again, for ETFs and index funds for Canada where the top ten holding are pretty much the same, are the extra stocks providing value?


Cheers


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## pwm (Jan 19, 2012)

Interesting discussion. 

One thing I think we can all agree on for sure is to avoid a mutual fund that holds mostly the same holdings and is really just an "index fund in disguise", with a 2% MER versus the 0.30% with VDY.


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## andrewf (Mar 1, 2010)

Closet indexers are indeed particularly insidious. The government should almost require transparency about closet indexers, which are really just marketing exercises to justify high fees with low management expense.

All I have to say to this thread: if it's so easy to beat the index by picking a handful of sterling companies, why isn't everyone beating the index, including active fund managers?

And to extend HP's analogy, sometimes it's those sickly carrots or gristly meat that makes the soup. In plain english, holding only high quality companies does not ensure market-beating returns, because those companies are priced accordingly.


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## fatcat (Nov 11, 2009)

*The 'blazingly simple,' must-have portfolio*
http://www.theglobeandmail.com/glob...ly-simple-must-have-portfolio/article4391968/

i always resurrect this story from the globe because i love the simplicity 
and it involves 4 of the stocks form the list of 10 above



> By picking only seven stocks, a retired professor generated stunning 10-year returns
> 
> Let's strip your investment choices down to the essentials.
> 
> ...


there are a limited number of great companies that pay good dividend and continue to grow

the key to me is having the fortitude to hold through the downturns and learning to manage cash flow
if you can do that you do really well with a basket of top quality canadian stocks and avoid the etf's with their attendant hassles and costs

as far as rebalancing goes for these stocks, yeah just buy more whenever you can


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## humble_pie (Jun 7, 2009)

fatcat said:


> *The 'blazingly simple,' must-have portfolio*
> http://www.theglobeandmail.com/glob...ly-simple-must-have-portfolio/article4391968/
> 
> i always resurrect this story from the globe because i love the simplicity
> and it involves 4 of the stocks form the list of 10 above



there we go! there are Argo's 5 in the list.

someone else in cmf forum - i believe it might be My Own Advisor - has got a very nice list of 10 stocks. It's the 5-pack, expanded.

the reason these small portfs have celeb status is 1) they're easy, 2) also smart, 3) they work.


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## humble_pie (Jun 7, 2009)

i think that "rebalancing" works for 100% index portfs but is a draconian mistake when applied to populations of individual stocks.

my best performer is valeant, now pushing $100. It's the old biovail, which not long ago could be bought for $11-12. I'm donating 50 shares to a local charitable cause.

rebalance theory would have swung the chinese cleaver way back when valeant/biovail crossed $22? what an insane mistake that would have been, the charity would have never received their windfall ...


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## CanadianCapitalist (Mar 31, 2009)

The Foolish Four was supposed to be a simple four pack of stocks too. Picking a few stocks for a portion of the portfolio may not seriously hurt or harm performance but picking a small set of stocks for the majority of their portfolio is a serious mistake for the vast majority of investors (the Warren Buffetts of the world excepted, of course, though with all due respect to stock pickers, there are not too many Buffetts around). Picking four, five or even ten stocks will certainly generate alpha; it just won't always be positive.


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## andrewf (Mar 1, 2010)

Even Buffet doesn't go all-in on 4 or 5 companies.


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## humble_pie (Jun 7, 2009)

but CC how do you explain Argo's success?

argo stuck to large-cap highly liquid stocks with strong but not preposterous dividend histories. TD bank, CN rail, Telus, a pipeline (don't remember which one) (there are no small pipelines anyhow), a utility (ditto.)

this is pruning the choices to the bone, but still i would say that Argo's 5-Pack had excellent diversification.

btw could you please post the Foolish Four. With a small hand, a big weight is tied to stock selection. It's easy to jiffy up a Foolish list, so it's an easy concept to mock.

on the other hand, it takes discipline to drill down to the quality selections that Argo chose.


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## fatcat (Nov 11, 2009)

if you are buying world class companies with some degree of "moat"
it seems to me that a small group with decent diversification can perform extremely well

the problem will arise in two areas: fear, when share prices tank, you need to resist the temptation to unload and then cash flow, you need to make sure you have your cash flow needs covered

if you handle those 2 i think you could pick say less than 10 great canadian companies and do very very well
5 would possible but more risky i think


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## Toronto.gal (Jan 8, 2010)

humble_pie said:


> 1. my best performer is valeant, now pushing $100. It's the old biovail, which not long ago could be bought for $11-12. I'm donating 50 shares to a local charitable cause.
> 2. rebalance theory would have *swung the chinese cleaver* way back when valeant/biovail crossed $22? what an insane mistake that would have been


*1.* Congrats on the fantastic stock-pick; AND the donation!

*2.* A lot would depend on the stock in question, and other factors, so it's not as black & white. 

[Trading aside], there are disadvantages to size as well, and just as there are opportunities, and the right time for a long-term investor to buy, the same can be said for selling as well. 

As an example, if one's initial investment of $10K were to grow to $100K in a short-period of time, ie: a year/two or less, I see nothing wrong moving a % of those profits to other solid but undervalued investments. 

Having said that, I also have stocks that I'm holding for a very long-time with no plans to sell, like the ones mentioned in the G&M article.

As for Argo's smart picks, he picked what I often call no-brainers, ie: so simple, but that's not to say that he wasn't an astute investor! 

But the story gets a little more complicated with larger portfolios consisting of more than a handful of stocks & sectors.

I never warmed up to ETFs and don't think I ever will for many of the reasons you mentioned [but never say never].


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## CanadianCapitalist (Mar 31, 2009)

humble_pie said:


> but CC how do you explain Argo's success?


Skill, luck or some combination thereof. Before this discussion devolves into another debate over whether it is possible to be skilled in investing, I'll readily admit that there are skilled investors out there. I just don't think skill is all that common. I can't post the Foolish Four because the Fools shut down the portfolio after a few years in the late 90s.


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## andrewf (Mar 1, 2010)

If you take a million people and give them a coin and ask them to call the toss, even after ten or twenty tosses, you'll have some individuals who look like master coin tossers, accurately guessing every one. Anecdotes are deceptive.


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## fatcat (Nov 11, 2009)

and no amount of backtesting or research can predict the future which is what you do when you buy stocks
as of this moment all theories are equally credible


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## james4beach (Nov 15, 2012)

Eclectic12 said:


> True ... then again, for ETFs and index funds for Canada where the top ten holding are pretty much the same, are the extra stocks providing value?


Yes, looks to me like the non top holdings add value. I think what inevitably happens is that some top holdings become too large and then become a performance drag for years (examples would be Nortel, Potash, or US financials in the S&P 500). Another way to look at it is that by buying just the 10 largest, you're just joining the already most popular, already most crowded trades.

Look through XIU for instance. Here are the next 10 stocks after the top 10, and their 3 year total return:
BCE +54%
VRX +335%
CM +28%
POT -20%
CVE +17%
BAM.A +52%
G -35%
T +66%
SLF +53%
CP +124%

Look to me like that adds value (+67% average return for the group). Another issue is sector exposure. When you pick just the top few, you risk being overly concentrated (e.g. financials). Let's say financials weaken and commodities/metals take off... you would be much better in XIU or ZCN.


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## CanadianCapitalist (Mar 31, 2009)

james4beach said:


> Another way to look at it is that by buying just the 10 largest, you're just joining the already most popular, already most crowded trades.
> 
> Look through XIU for instance. Here are the next 10 stocks after the top 10, and their 3 year total return:
> BCE +54%
> ...


Homework for you: think through your example again and spot the fly in the ointment or the grain of sand in the salad.


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## leeder (Jan 28, 2012)

humble_pie said:


> the problem is, as Argonaut used to say, that all those vegetable soups with their 81 & their 237 individual ingredients include a thick swack of losing stocks. These are what drag index-based performers down into mediocrity.
> 
> 237 stocks in a vegetable soup are likely to produce bland low-quality prison gruel imho. I'd rather have 3 smacking fish, some garlic plus a few hand-picked vegetables in a bouillabaise any day.
> 
> ...


Argo is a successful stock picker, no doubt. However, if it’s that obvious which stocks are considered 5-star companies, hedge fund managers, who are picking 5-star companies, would be outperforming the index constantly. Yet, numerous studies have shown that, over a long term (10+ years), the “mediocre” performance of the index has outperformed hedge fund managers’ stock picking. Why? Are hedge fund managers not looking at the financial statements? Are they not doing sufficient research? Are they purposely picking poor quality stocks? Do they have a hidden agenda to underperform the index in the long run? I say no to all of the above (but you may disagree). I believe they do their best to choose 5-star quality companies to invest in; however, it is those other companies (i.e., the other vegetables, so to speak) that they don’t invest in which drive up (or down) the index performance.

Additionally, while it’s normal for investors to be happy with huge gains in their individual stock holdings, it can be pretty gut wrenching if a stock drops a substantial % in a short period. Case in point, many people in this forum has invested in Potash Corp. From July 29 to the close of July 30, it dropped 19.1%. To some people, it’s a perfect opportunity to back up the truck. To others, it’s mayhem. ZCN, on the other hand, only dropped 0.81%. By investing in the vegetable soup, I feel a bit more buffered from dramatic losses.



Eclectic12 said:


> So you are picking some Canadian blue chip dividend stocks that are likely duplicated in the ETF.
> 
> Is this not doubling your work and introducing the same costs/issues the ETF is supposed to solve?


I already admitted I was a hypocrite… don’t rub it in.  That said, I had some extra money sitting in my HISA, and I wanted to put into use. I admit that my portfolio isn't the lowest cost ever. I could’ve invested in ETFs, but I did want to make my life easier at tax season. Am I pure index investor? No, I'm not. I readily admit it, but I subscribe to the theory and would encourage people to look at index investing, if they feel they cannot choose the best companies out there that can beat the index in the long run.


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## james4beach (Nov 15, 2012)

CanadianCapitalist said:


> Homework for you: think through your example again and spot the fly in the ointment or the grain of sand in the salad.


Hmmm... perhaps that if you go further down the list, you get to all the miners & commodity stocks with horrible returns?

Or - I don't know, fill me in?


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## CanadianCapitalist (Mar 31, 2009)

james4beach said:


> Hmmm... perhaps that if you go further down the list, you get to all the miners & commodity stocks with horrible returns?
> 
> Or - I don't know, fill me in?


The list of numbers 11 to 20 is made of stocks that returned an average 67% in the past. It's what stocks were in the same list 3 years before and their returns you should be looking at.


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## Synergy (Mar 18, 2013)

CanadianCapitalist said:


> The list of numbers 11 to 20 is made of stocks that returned an average 67% in the past. It's what stocks were in the same list 3 years before and their returns you should be looking at.


That's a good point CC. Back in 2010 XIU was comprised of the following stocks (11-20).

CNR
CM
G
TRP
ECA
BCE
TCB
CVE
SLF
ENB


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## james4beach (Nov 15, 2012)

Wow good points. How are you finding the list of holdings from past history? In the financial reports it doesn't rank them by weighting.


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## Synergy (Mar 18, 2013)

I couldn't seem to find anything on the ishares website but I was lucky enough to come across the following chart.

http://2.bp.blogspot.com/_hYeIYPkb8PY/S7IIx_n6WPI/AAAAAAAAAwA/hgvk8tNAZLk/s1600/XIU-vs-CRQ-2010.png


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## Eclectic12 (Oct 20, 2010)

leeder said:


> Argo is a successful stock picker, no doubt. However, if it’s that obvious which stocks are considered 5-star companies, hedge fund managers, who are picking 5-star companies, would be outperforming the index constantly.
> 
> Yet, numerous studies have shown that, over a long term (10+ years), the “mediocre” performance of the index has outperformed hedge fund managers’ stock picking. Why?
> 
> Are hedge fund managers not looking at the financial statements?


There's a whole range of factors that play into this. A fund typically gets money in & *has to invest* it. 
Depending on the fund, there may or may not be a choice as to what is bought. In comparison, an individual can park the cash in something like TBD8150 and be far more selective, if they choose.

Then too - how does one assess the index adding/dropping versus the fund manager, who again may or may not have a choice as to what can be added. 

As for reviewing financial statements - I'm sure some are not as thorough as others and likely in some cases, with a committee style of management, I'm sure some of the gains/limiting losses are due to the delays.




leeder said:


> I already admitted I was a hypocrite… don’t rub it in.  ...
> 
> Am I pure index investor?
> 
> No, I'm not. I readily admit it, but I subscribe to the theory and would encourage people to look at index investing, if they feel they cannot choose the best companies out there that can beat the index in the long run.


I'm not trying to rub it in nor am I concerned if you are a pure anything ... (I am Eclectic after all :biggrin: ... so I'm not pure anything!).

I am trying to make sure of what the target is.


Cheers


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