How To Build Your Own All-In-One Fund Using Passiv

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All-in-One funds, also called asset allocation or wrapper funds, have exploded in popularity over the past decade with practically every bank or fund company offering them. They’re marketed as a one stop shop for building your portfolio. The premise goes, why manage a portfolio of 3 or 4 ETFs like how we teach people to do in our Investment Workshop when you can just buy this one fund?

It’s a somewhat appealing pitch because who doesn’t want more simplicity, and you can’t get any more simple than a single fund, right? So when people email me asking whether it’s a good idea to buy these all-in-one funds because they don’t want the hassle of following our workshop, they’re probably expecting me to tell them that while it’s not ideal, these funds are probably fine for the most part, right?

Nope.

Here’s my problem with All-in-One Funds and why it doesn’t make sense for anyone to ever own one.

You’re Not Getting Any Value For Your Money

If you were to rank all ETFs in order of value you’re getting for what you’re paying in fees, passive index funds would be at the absolute top since you’re paying incredibly little (Vanguard’s VTI fund is currently charging 0.03%!) and getting tons of value since they’re managing thousands of individual holdings on your behalf. At the shittier end of the value spectrum would be actively managed funds that charge much higher fees (1%+) for a suspender-snapping fund manager to trade stocks on your behalf in the hopes that your fund will outperform the index. Most don’t, but that’s the hope.

All-in-one funds are an even worse value proposition because they don’t even try to outperform the index, nor do they manage thousands of holdings on your behalf. Instead, all-in-one funds simply hold the index ETFs for you in certain percentages and then charge you a fee for the privilege. So now you’re paying fees for the index ETFs, plus the fees for the all-in-one fund, and you’re not even getting a chance to beat the index.

In fact, if you buy an all-in-one fund, you are guaranteed to underperform the Investment Workshop portfolio since we’re both holding the same index funds, but you’re paying a continuous annual wrapper fee and I’m not.

You Can’t Tax Optimize Your Portfolio

Another thing that you can’t do with all-in-one funds is tax optimization. I wrote an entire article about it here, but in a nutshell tax optimization means holding the right asset classes in the right accounts to minimize taxes. You hold bonds in an RRSP/401(k), domestic equities in a TFSA/Roth IRA, and the rest in a non-registered or taxable investment account. It gets a little more complicated if you have other things like REITs or foreign equities, but for most people, that’s the right arrangement.

But you can only do this if your portfolio holds each asset class in their own ETFs. All-in-one funds hold everything under one ticker symbol, so if you just buy this own fund and fill up all your different accounts with it, you’re going to be holding bonds in your taxable account, or equities in your RRSP/401(k), and as a result you will be paying more taxes than you need to every year.

So in a way, the inability to tax optimize your portfolio means that you’re paying a fee for negative value. You’re paying a fee for the opportunity to over-pay your taxes year after year.

Yay?

You Can Do It Yourself in 5 Minutes

But the best argument against owning all-in-one funds is that you can replicate their work for free in about 5 minutes.

Every publicly traded ETF or mutual fund is required by law to publish a prospectus, and in that prospectus they’re required to list the top 10 holdings they own and in what percentages each of these holdings are weighted.

For an index ETF, this is relatively useless information since 10 holdings is a tiny fraction of what the fund actually holds, and for an actively managed ETF, this is also useless since the holdings change over time depending on the whims of the manager, but an all-in-one fund typically holds less than 10 holdings and their weightings don’t change, so the top 10 holdings basically gives away their entire game.

Which means you can just steal it and build it yourself for free.

Let’s do this for a real-life all-in-one fund now. I went to one of the big banks (I won’t say who because I don’t want them to send lawyers after me) and clicked on one of their all-in-one funds.

Scrolling down through the fund’s website, I find the section that lists all the documents they’re required to provide. Look for anything that sounds like “Portfolio Summary”, “Fund Facts” or “Simplified Prospectus.”

From there, I find the right document and hit the jackpot: The top 10 fund holdings.

HoldingsPercentage
Scotia US Equity Index Tracker ETF (SITU)40%
BMO Canadian Bond Index Tracker ETF (ZAG)25%
Scotia International Equity Index Tracker ETF (SITI)22%
iShares Core MSCI Emerging Markets IMI Index ETF (XEF)11%
Vanguard Canadian Large Cap Equity Index Tracker ETF (VCN)2%

OK now that we have the holdings, we can fire up a portfolio automation tool and plug them in. Fortunately, we already have one handy that we’re using: Passiv!

Passiv just released a new feature called “My Models” which is perfect timing for this article since it does exactly what I need for this demonstration.

On the left hand menu, let’s start by clicking “My Models,” then “New Model”

We shall name this model “Stolen All-In-One Fund…”

Now let’s enter all the ticker symbols we got from that prospectus like so.

Finally, let’s go back to the models list and click apply. I will apply this model to my Portfolio B investment account.

And we’re done! If we go to my Portfolio B investment account, we can already see that Passiv has flagged this account as being way off target and has suggested a series of trades to implement the model portfolio I’ve applied.

If I were to click the “Preview Orders” and then the “Perform Trades” button, Passiv will make the trades on my behalf and my Portfolio B account will now be tracking the All-In-One model I stole.

Conclusion

Remember when I said that practically every bank offers all-in-one funds? The reason that’s true is because these things are cash cows. All-in-one funds are usually structured so that the funds they own are run by the same company, so now the fund company makes money off you twice: once from the wrapper fund’s fees and again from all the underlying holdings. I looked into the financial statements of one of these funds and it made $70M in fees last year. $70M! For something that I can replicate in 5 minutes.

But you know what? I don’t blame them. If I could create these funds, market them to lazy people, and make $70M a year on an ongoing basis, I’d be doing it too. It’s a pretty sweet racket. Well, for the bank, not for the investors. The investors are getting fleeced.

So there you have it. Now that we have such easy-to-use tools like Passiv and low-cost brokerage accounts like Questrade, there’s absolutely no reason anyone should ever own one of these funds. Unless, of course, they’re so incredibly lazy that they can’t even be bothered to open up and read a prospectus, but at that point, I’d argue they shouldn’t be investing at all.

And just a reminder: Passiv is free if you also have a Questrade account, so if you haven’t tried it out yet, please use this referral link to open up an account. Thanks!

Edit: The Passiv teamed reached out to me after this article went up to point out that you can share models you’ve created with other users, so if you want to import this model into your account, here you go. Hey, I’m basically running my own all-in-one fund! Where’s my $70M?!?


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61 thoughts on “How To Build Your Own All-In-One Fund Using Passiv”

  1. “So now you’re paying fees for the index ETFs, plus the fees for the all-in-one fund, and you’re not even getting a chance to beat the index.”

    Based on https://www.vanguardcanada.ca/individual/faq.htm

    Do I need to pay an additional fee for your asset allocation ETFs (i.e. is there double charging with the underlying funds)?
    No. There is no duplication of management fees chargeable in connection with the asset allocation ETFs. Investors only pay the stated management fee of the asset allocation ETF. Investors do not pay the management fees of the underlying funds.

    I agree that doing yourself in passiv is better but all in one fund still have their place for some people.

    1. The fees charged on the underlying ETFs are much lower than the all in one, so yes you are paying more in fees by buying the all in one eg vgro, xgro.

    2. That’s nice of Vanguard to not double-charge, but most other all-in-ones still do. Even then, the fees of Vanguard’s all-in-one fund is still higher than the underlying ETFs, so my point still stands.

  2. Wait, so XGRO and VGRO are no good? I’m an absolute newbie to investing, bought your book and all I’ve done for 4 months is buy those 2 above. Thank you for writing the book, I’d like to implement your concepts on my high school math classes, just gonna leave out the swearing 😆.

    1. Dave,

      If you are 4 months into your investing journey, keep putting money in XGRO and VGRO while you read, learn and try things out over the coming months and years.

      Optimizing for 0.5% in fees is totally secondary to the mere act of saving and putting money away somewhere. All of us have changed our holdings, and even our portfolio design over time. Keep your eyes on the big prize and the important factors.

      Especially early on, when your portfolio is small, your saving rate is way more important than your fees. As time goes by and your portfolio grows, fees (and taxation) become more important, but by then you will be smarter and more experiences and your portfolio will more more than two wrapper funds.

      1. I have six figures + in combine RRSP , TFSA and Non Registered account. I am only using VGRO based on my risk tolerance. So does that mean I am doing it wrong ? Beat the Bank suggested these kind of ETFs.

    2. Hey, don’t sweat it. When your portfolio is relatively small it’s not a big deal, but at some point you’re going to want to transition to holding the underlying ETFs directly.

  3. Yeah, no. All in one ETFs listed by vanguard, BlackRock, BMO and maybe even horizons are definitely the cats meow for most amateur investors as they remove the necessity to have to research which index etfs to use and remove the analysis paralysis of starting to learn to invest due to too many choices. They’re a great step up for noob DIYers from roboadvisors. Your first premise of no value is completely false, as is the higher fees. I pay 0.2% on XEQT. Boom, done. For that I’m globally diversified with 9000 holdings in small and large cap companies. The only thing you’re correct on is that they’re a little less tax efficient than your model, but I think for most people its letting the perfect be the enemy of the good.
    In fact they are now the canadian couch potato model. Buy a short term bond etf along with VEQT or XEQT, stuff it in your rrsp in whatever weighting you want and other than the fancy short term yield shield stuff you do for the first 5 years of retirement, you’re done.

  4. Too right about the banks. You want to own their stocks, not the investments they peddle. I did a quick calculation what owning the big 6 banks stocks in Canada would have yielded since Aug 1995 (this was as far back as I could find data). A $10,000 investment then in each of the big 6 banks (so $60,000 total) would be worth $2,128,996.37 as of Friday May 28, 2021’s closing prices, with the dividends re-invested. This ignores tax, but if you held the shares in a non taxed account, or a tax deferred account, this is what you get. That’s 14.81% on a compound annual basis.

    That kicks the shit out of index investing returns. So, they say “past performance is no guarantee of future performance”. This is only TOO TRUE. Yet do you think that the big 6 banks in Canada have a moat so wide that it is very unlikely to be breached? That’s my thinking.

    Having said that, I would never go “all in” on just one strategy: my wife and I have committed 6.67% of our assets to this strategy, in her RRSP. But the whole point of the article is that sheep buy expensive stuff from banks, that, in the words of Frank Zappa, “You shouldn’t ought to buy”. And you can profit alongside the banks if you own their shares, whether in an index fund or directly.

    1. The Big 6 Banks are making so much money during this pandemic, it’s nuts. All off people who don’t realize that there are free/low-cost alternatives to nearly everything they do.

  5. This is one of my biggest peeves. That a person would spend a working life accumulating assets only to be totally disinterested in how to manage or even a basic understanding of investing, it’s totally beyond me. Accumulating into the $ix figures+ is a huge big deal !!

    I’ve got friends who have $100K+ in 401Ks/IRAs, and they’re all the same…they all end up offloading it to target funds that operates similarly to these all-in-one’s, or alternatively have a “financial advisor” manage it……a life savings is a hell of a thing to be intentionally ignorant about.

    It’s one thing to choose all-in-one investing, but at least do it from an educated and knowledgeable perspective.

    1. Hey, right back atcha. I had coworkers who were insanely smart, were super good at their job, always got the big bonuses and stock options, but then would forget which bank their money was in. I don’t get it.

  6. While you’re absolutely correct about the fees, and I personally agree with and follow your strategy, you’re neglecting the ever-present psychological component to investing.

    Yes, you and I know it’s not hard to build and maintain an ETF portfolio, but I would wager most people new to investing (including your readership) don’t understand that. The more complex and difficult people think investing is, the less likely they are to do it at all, which is of course far worse than losing an extra 0.3%/year. Many get caught in analysis paralysis deciding among mutual funds, roboadvisors, all-in-one ETFs, individual ETFs, and/or YOLOing on meme stonks, while missing out on market gains.

    When my friends and family ask about investing, I find it helpful to present their options as a tradeoff between effort and cost. Even when I explain how “more effort” could just mean 5-10 minutes each month to save hundreds each year and thousands over a lifetime, they still don’t want to do it! Therefore, I usually encourage them to just buy VGRO, etc.

    1. Sure, agreed. If you are super new to investing then an all-in-one fund or even a robo-advisor is infinitely better than doing nothing. But it’s not something that should be held long-term.

    1. Yes. Similar to a target date fund in the US, these allocation funds in Canada are funds that holds multiple indexes ETFs. X% US stock index, Y% Canadian stock index, Z% developed stock index, W% emerging stock index, F% bond index (if you opt for an all in one funds with bonds). I’m dual so familiar with both set ups.

    2. Very similar. The difference is that a TRF will shift their allocations over time to become more conservative as you get closer to your target retirement date. TRFs can also be replicated using this method, so I don’t recommend those either 🙂

  7. I agree wholeheartedly especially now with the Questrade + Passiv combo. It’s way too easy to create your desired portfolio on your own within minutes. However, for those who are new/intimidated with investing, the all in one funds do serve a purpose. It’s more for the psychology of just being able to invest simply. Don’t get me wrong, QT + Passiv is simple too but does require a few extra steps. Many new to investing remain on the sidelines for months/years thinking they are going to make a mistake (which is totally fine as we all likely do when new). The all in one funds are a bit of hand holding for those who want a super simple set up.

    As I’ve coached people and have gone through the various options (robo advisor, all in one ETFs, building a 2-5 fund portfolio yourself, or building a 2-5 funds via Passiv), the majority of my clients prefer to go the all in one route.

    1. Hi Court, just learned about Passiv and Questrade. Question, if I open the Questrade account with a small dollar amount, can I still use Passiv with my Merrill Lynch?

      I consolidated all my accounts with Merrill Lynch because the balances get me “Preferred Rewards” with BOA who still doesn’t give a crap about me but I get slightly better treatment.

      1. Hey FIRE Junky – based off the companies you’re referring to, Merrill Lynch and BOA, I assume you’re in the states? Questrade and Passiv platforms are available for Canadians, not Americans. For my US accounts, I use Vanguard. Other low fee options in the states are Schwab and Fidelity. Hope this helps!

  8. Is there a way to use Passiv without linking my brokerage accounts? I would rather enter the stocks on the Passiv site and let it advise me from there. I am very security conscious.

    1. Passiv links to your accounts using APIs so you don’t have to share your password, and you can grant/deny specific privileges. For example, you can grant Passiv read-only access to your accounts so it can advise, but not trade on your behalf.

  9. Don’t the all-in-one funds also rebalance themselves once per year? Is there not any benefit to that?
    I prefer to do my own individual index fund ETF purchases like you as well, but for those who are intimidated by finances or just want the simplest/easiest options, the all-in-one funds present a much better option than going to actively managed mutual funds imo, and I will continue to recommend them to friends and family. Once they’re familiar with the process, they can then decide to optimize for the extra ~0.5% if they so choose.

  10. I completely disagree with the entire article. You are ignoring the behavioural aspects of investing, which is the most important part of investing. The all in one funds do the rebalancing for you which is their primary advantage. They are almost the simplest option which is a huge benefit. “Simplicity is the master key to financial success” Jack Bogle.

    You are also wrong about the double layer of fees. There is none. You are not charged for the underlying ETFs.

    Asset location is also of very questionable, if any, value. Recent research shows the apparent advantage is uncertain and minimal. You are better off having the same asset allocation in each account – perfect for the all in one ETFs.

    The all in one ETFs are the best option for the vast majority of investors. If I were setting up my portfolio today, there is no question I’d put them in every account. Then in retirement you can simply sell of a sliver of them for retirement income, and rebalancing is also looked after for you. You can’t get it easier than that.

    https://www.pwlcapital.com/wp-content/uploads/2018/06/2017-12_Ben-Felix_WP_Asset-Location-Uncertainty.pdf

    1. Hi Grant, you know for me personally I like the handful of ETFs approach because I like the control. At first that put me squarely in Wanderers camp.

      But you are making some great points here and I need to do further reading. I was questioning my asset location strategy for one.

      One group of people for which I believe all in one funds are a slam dunk are people paying 1% to financial managers. My friend Chip, for example, is 70 years old. He seems interested in my ETF approach and I’ve used portfolio modeling to show him he would have out performed using it. However he is older, not very willing to learn a whole new approach, and the financial manager is a woobie blanket. All in one funds would be cheaper and better for him under the circumstances I believe.

    2. The behavioural aspect of investing is based on the belief that DIY investing is complicated. It’s not, that’s what this whole site is about.

      As for the double layer of fees, most all-in-one funds are set up to double-charge. As another commenter pointed out, Vanguard doesn’t, but it’s still an expense that’s unnecessary with 5 minutes of work.

  11. I think maybe this is more relevant in Canada than the U.S. I think the U.S. seems to have significantly cheaper mutual funds and ETFs than Canada. Vanguard doesn’t charge much extra for Vanguard Balanced Index. (Admiral Shares are .07% for a 60% stock / 40% bond portfolio (no international). It’s not perfect, but it’s kind of the classic balanced portfolio that has stood the test of time. Vanguard’s Target Date funds are pretty cheap, too, most of them are about .15%, which includes international stocks as well.

    As another poster said, I think this is a case of the perfect being the enemy of the good.

  12. Why are landlords called greedy for profit maximizing while investors are called smart for nickel and diming fees and … well, profit maximizing?

    End of the day, everyone is the same in their self interest

    1. That’s actually a really good point. The real reason is that when a landlord maximizes their profits, it hurts an individual who can go to the media and complain to gain sympathy. When investors do it, it hurts a spreadsheet somewhere that I will never see.

      That’s actually why I vastly prefer being an investor over being a landlord. Nobody complains when I optimize my investments.

      1. Exactly. The difference is political but fundamentally the same in its motivations.

        It’s one thing to take advantage of the difference in perception as we all should, but the moral impugning of landlords for doing the same thing we would do in similar circumstances is in my opinion inconsistent or even hypocritical when aware of it

  13. I see both sides of the coin… you and your readership do have a valid point.

    The LOGIC behind this is super simple so while I agree with you that a DIY ETFs would be the “optimize” thing to do for various reasons as you pointed out, the real challenge here for people is making a CHANGE in mindset. I think that is the difficult part of this transition for people. Essentially, it is the “subjective” matter that is purely difficult to perform NOT the “objective” portion of the decision itself. I can relate to this so called difficulty seeing I have contemplated it myself numerous times having gone from your full blown “actively-managed” mutual funds with those ridiculously high MER structure fees of a financial advisor to considering simple baby steps with either a robo-advisor or the all-in-one funds to ease the transition phase.

    This is now where I believe it truly comes down to your “individual level” as to what is their ultimate motivation, end-goal and objectives. It is that passion, willingness and dedication to develop their overall “financial literacy” that will influence them to make the proper fundamental decisions needed to manage their personal affairs. I can also relate to this seeing I truly WANTED to learn the proper way and take advantage of the benefits other people within the FIRE community have realized and maximized. That said, it does takes time, effort, hard work and initiative so for some people, it is easy connecting these dots but for others, it’s looking like the maze from the movie “The Shining”.

    Personally, and looking back at my experience, the journey to learning all of these concepts from your blog and book has been an amazing transformation. I have literally no regrets going cold-turkey from “actively-managed” directly to a “DIY ETF” investor. It is pretty much a cake-walk now right up to taxation even. It’s all about having the right mindset and for me, I am simply determined to have a “different’ result.

    As they say, the “extraordinary” belongs to those individual who creates them!

    ImmigrantOnFIRE

  14. Sorry if I am off topic, but I am curious if, related to tax optimization, did you consider the impact US estate tax for non residents when you choose your ETF allocation? Are your ETFs US domiciliated?

    1. If your estate is more than $22,000,000 a couple, yes, you need it consider it. Otherwise Canadian domiciled ETFs are easier to manage.

      1. As a nonresident and non us citzen, the exemption is only $60.000. Beyond that, estate taxes can go up 40%.

        1. Nope. At $60k your estate have to file a US tax return, but there is an exemption so that no taxes are paid up to an estate value of $11 million per couple.

  15. Complete newbie just want to learn but getting ever confused! As an example Vanguard VGRO has a MER of 0.25%.

    Stolen All-in-One Fund:
    SITU(Equity) = 0.05%
    ZAG(Bond) = 0.09%
    SITI(Equity) = 0.15%
    XEF(Equity) = 0.22%
    VCN(Equity) = 0.05%

    Total(MER) = 0.56%

    This is more than double in fees.
    What am I missing ?

    1. You can’t just add the fees up – you need to take a weighted average, like this:
      0.05% * 40% = 0.02%
      0.09% * 25% = 0.0225%
      0.15% * 22% = 0.033%
      0.22% * 11% = 0.0242%
      0.05% * 2% = 0.001%
      Now add them, and you get 0.10% fee. So it is less than VGRO (0.25%) and XGRO (0.20%)… but not significantly so. And when rebalancing, if you have to sell anything and thus pay Questrade’s selling fees, and you might break even or be a bit worse.

      1. Thank you for the explanation!

        Maybe another all rounded post looking at the points you raised is in order.

      2. EfficiencyNerd, great explanation of how the fees are calculated.

        So, with a $500,000 portfolio, that extra 0.1% will cost the investor $500 a year, every year, forever! $500 would get you about 100 ETF sells and 100 ETF buys on Questrade. These days, with our four-ETF portfolio model (spread across 11 accounts), we do around 20 sells and 50 buys (but they are pennies each). So our costs are no more than $100 a year. However, it does consume some brain time that could be spent on other things. For people jumping into investing for the first time, with little money, I do suggest they consider the all-in-one ETFs while they learn and build their fund.

  16. This whole post reads like a big advertisement for Passiv.

    You present all of the upsides with none of the downsides, and you don’t fully explain what is meant by “all-in-one” funds.

    There are two kinds of “all-in-one” funds – Mutual Funds, which will buy ETFs and where you would get charged twice (the fund fee plus the ETF fees), and “all-in-one” ETFs, where you are still charged very low fees and are not double-charged. The fact that you completely fail to mention all-in-one ETFs seems like a massive (intentional?) oversight.

    You also completely fail to mention any downsides of Passiv, such as that it only works with Questrade. You also ignore the fact that at some point in your rebalancing, you will (eventually) need to sell something, at which point you start being charged trading fees from Questrade which will then eat into those ever-so-slim advantages of picking multiple ETFs vs using and all-in-one ETF. You might be able to get away with only buying ETFs (free with Questrade) to rebalance for a while, while you’re adding money and while your account balances are small. But eventually you will need to sell things to fully rebalance.

    Personally, I use Wealthsimple Trade and buy straight XGRO in all my accounts. If I ever want to sell some and buy something else, I can do that too, completely free and without selling fees eating into my returns. I understand that it is theoretically possible I’m potentially missing out on some slim incremental improvements in my investing strategy if I were to perfectly execute rebalancing. But I also think that over my investing career those slim improvements are likely to be way less than the random noise of the general stock market.

    Don’t get me wrong, Passiv is a cool product, and while I’ve had some annoying experiences with Questrade I know many people like them. But I think you’re over-selling how great Passiv is. It’s a nice product, and can give you better returns in a simple way, depending on how you use it (ie never need to sell anything) and what your portfolio looks like. But for me, I’m lazy – I’ll just buy XGRO and be done with it. And I’m willing to bet I get to FI at pretty much the same time.

    1. Some (not many) all-in-one funds are structured so that they avoid the double fees, but they’re still going to charge you more than owning the underlying funds themselves.

      And you’re right, I am a big fan of Passiv these days, and I use it myself, but so what? I promote lots of products I use/like.

      1. I’m under the impression that all of the all-in-one ETFs available in Canada (again, “funds” seems ambiguous – mutual funds vs proper ETFs) do not charge you the underlying ETF fees… is that not true? Granted, there are only a few all-in-one ETFs vs hundreds if not thousands of mutual funds, so yes, you statement holds – not many funds avoid the double fees.

        Sorry if I came off as standoffish… yes, you absolutely can and should promote products you like and use, it’s your blog after all. 🙂 I guess as someone also familiar with Passiv I was just surprised that you didn’t mention any downsides.

        If you don’t mind my asking, Wanderer – has Passiv ever recommended you should sell shares to properly rebalance? (I’m aware there’s a setting to enable/disable this). At what point for you is it worth it to sell shares (and pay the minimum $4.95 fee) to get a proper rebalance, even if it eats into your returns? Or do you only ever buy more shares in order to rebalance? I guess depending on how often you rebalance and how big one’s portfolio is, making a couple “sell” trades wouldn’t add up to that much in added fees, and thus you’d still be better off buying individual ETFs vs buying an ETF that contains all of them.

        I’m an engineer, a nerd, and (as you said) as math-lete, but I’m also damn lazy. If I can buy/sell a single ETF that rebalances for me, and it gets me 95% of the way from mutual fund fees to ultra-low-cost ETFs, I’ll choose that. It’s also more “passive”, in a way, because I’m not picking/timing when to rebalance.

        Cheers!

        1. interesting take, i am neither a nerd nor a math-lete.

          this is the blog motivated me into investing 5 fund (VAB/VCN/VUN/XEC/XEF) portfolio at 80:20 ratio. I almost reached 500k and getting ready to hit 1M portfolio after selling my condo soon.

          I am still debating myself to buy again the same 5 ETF’s are go with all-in-one like XGRO or VGRO
          After comparing the MER of the above 5 fund (0.13%) vs XGRO (0.20%)

          But, i have observed lately that my Non-Registered account already getting hit with big tax bill. for 2020 though i received 3k dividends but T3 showing as 7k income which added to my current earnings..

          This may be due to buying all the 5 funds across all the accounts instead of segregating specific ETF towards specific account type.

          Would love to take some perspective from the invester gurus.

          PS: i am also thinking of buying these all in one ETF (XGRO) on my son’s name when he turns 18yrs to avoid transferring the portfolio after we pass which might attract capital gain taxes etc.,

  17. One thing to consider is whether Passiv will always be free? I’m not familiar with their business model but this has happened with other businesses where they launch with a free tier, then later start charging OR go out of business. I wouldn’t like to have the success of my investing strategy depend entirely on one company. Also I believe you need to grant Passiv a token to access your Questrade account. This increases the surface area of security leaks, attacks, identity theft, etc.

    1. Passiv has some kind of deal with Questrade where Questrade pays Passiv their subscription fee. If the deal ever goes away, then yes, Passiv would no longer be free. And at that point, I would probably figure out an alternative on this blog.

      Relax! We gotcha covered!

  18. Any suggestions/thoughts on comparing the impact of paying onetime capital gains tax while selling the all-in-one ETF vs 0.5 extra MER paid on all-in-one ETF? I think some of the variables that might have to be considered are a) Current portfolio size (does size matter? :)) b) Number of years remaining before fire c) Expected life expectancy after FIRE d) The withdrawal rate. Did I miss anything?

    1. Correction to my question. The “extra” MER” paid on all-in-one etf is not even that high (0.5 %), it is merely 0.09 % (source – https://passiv.com/blog/vbal-self-balancing-etf-review/). I did the back of the napkin calculation (assuming the portfolio size remains the same or decreases once the FIRE starts.

      Assuming a 100K current portfolio with 30K in Capital gains and 30 % marginal tax rate as of now and 50 % inclusion rate for capital gains in Canada.
      The one time cost of switching will be (30,000/2)*0.3 = 4,500 $.
      Saving of 0.09 % on 100K = 90 $ / Year, over 30 years of fire it will be 2700 $ and over 50 year, it will be 4500 $.

      It looks like switching doesn’t make sense.

      I will appreciate if anyone can provide their feedback.

  19. Wanderer, I’m curious why you focused only on Canadian related securities? Target allocation funds may be something that FIRE’ers may want to consider if their FIRE plans include becoming an expat somewhere overseas for a period of time. There a a lot of rules and hoops to follow for someone (possibly like yourself) that a US/Canadian Tax filer who owns securities from brokerage providers outside of the US/Canada. Vanguard.com (and as I have found, a lot of other brokerage providers) has very strict rules about foreign account holders and US expats trading securities on Vanguard.com platform. For some FIRE individuals, there may be some added benefits to placing their “old man money” in a target allocation fund (I don’t support target date) and have a “set it and forget” mindset until they are ready to access their IRA/Roth IRA (or Canadian equivalent) retirement accounts when the time rules allow and have re-established residency. I would hate to be apart of Vanguard.com or another US brokerage provider and that provider finds out of your expat status and locks you out of your accounts. Vanguards.com policy, I believe, will only allow for movement to other brokerage providers, or distribution and sales of their securities if you are a non- US resident or US expat. Vanguard.com will not allow for US expat or non-US residents to purchase securities i.e. the need to rebalance your portfolio.

    Just something to keep in mind depending on your specific FIRE plans.

  20. Reading this post my first thought was that the double charging of fees was something I never heard before, I am thinking wait is that really true?? As others have said at least in the case of Vanguard no – wrong. And I agree that automatic rebalancing, simplicity and protection from behavioral bias are all good points too.

    Wanderer is not a dumb guy though, how could he miss the fees point and all the other issues? This looks to me like a blogger throwing out an easy post with lack of research to promote and sell a product and collect the referral fees and just keep content flowing.

    1. Yeah, you’re right. Vanguard doesn’t double-charge fees, but most all-in-one funds do and that makes them bad value. Even Vanguard’s funds, I would argue, are still bad value since they’re more expensive than the underlying ETFs and you can replicated them in 5 minutes.

    1. In the USA, there’s something called Personal Capital, which I believe is similar to Passiv. But there are fees involved when you hit a certain level, so it’s not something I’d pay for.

      I use Passiv to manage my IBKR (US-based) investment account, though, too, so it’s not just for Questrade or Canadian accounts.

      Gotta love that Passiv is based in New Brunswick, though! 🙂

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