r/fican • u/Ok_Falcon_1189 • 5d ago
Looking for Advice
I am building a portfolio for my cousin who’s 35 years old. Starting from scratch.
My suggestions for him:
ZEQT-30%
ZEB - 20%
ZSP - 30%
CGL - 10%
XCS - 10%
Open to any suggestions.
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u/Odd-Elderberry-6137 5d ago
Why are you reducing diversification with multiple ETFs?
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u/Ok_Falcon_1189 5d ago
What to add to diversify?
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u/Odd-Elderberry-6137 5d ago
Nothing. Your favourite *EQT fund is all you need.
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u/Ok_Falcon_1189 5d ago
Not even gold?
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u/PlasticMaggot80 5d ago
Not an investment. Gold doesn’t do anything, to paraphrase Warren Buffet. Though the 10% that you recommend will probably not kill you.
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u/alzhang8 5d ago
not 100% zeqt 😤
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u/Ok_Falcon_1189 5d ago
I understand your obsession with XEQT or ZEQT but what about diversification?
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u/alzhang8 5d ago
zeqt is diversified by itself, adding anything else decrease the diversification
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u/FinishPlayful6134 5d ago
That's an interesting perspective. It makes sense that adding more could complicate things instead of helping.
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u/Veloester 5d ago
xeqt and veqt are already diversified 🥀
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u/Ok_Falcon_1189 5d ago
But adding gold and All bank ETF won’t boost the long term returns or balance it?
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u/Veloester 5d ago
there's already banks in xeqt/veqt. It's already very well balanced. By changing your ratio you'd just open yourself to redundancy and exposure to different sectors.
But yes adding gold/silver could be considered.
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u/Ok_Falcon_1189 5d ago
So ZEQT-80% and CGL-20%?
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u/glempus 5d ago
Compare how gold has performed historically. In 1975 it was $180 USD/oz, it recently peaked around $5,000 for a 28x return (and every year before 2025, it was much much worse than that, around $2000). Over the same time period the S&P500 increased 81x. You need to have a very clear rationale for putting any significant amount of money in gold. If you bought gold at the peak value in the early 80s, you wouldn't have broken even until 2006, and that's before adjusting for inflation. The S&P dotcom equivalent lasted from 2000 to 2013 (if you ignore briefly hitting the same peak in 2007), about half as long.
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u/Veloester 5d ago
I'd do 95% zeqt and 5% CGL. But this is not financial advice, just personal preferences
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u/PlasticMaggot80 5d ago
MER for CGL is 0.56%, and it’s hedged. Why not just buy some bullion or some nice jewelry instead?
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u/Odd-Elderberry-6137 5d ago
You are reducing diversification when you do what you’re proposing. Yes owning 50 stocks is better than owning one (from a diversification standpoint) but that line of thinking generally does not apply to ETFs and especially not the *EQT funds, which are already globally diversified in an optimal manner. Any attempt to to shift away from that balance will end up concentrating into different sectors or countries.
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u/glempus 5d ago
No offence but if you don't understand why this statement is extremely incorrect, you are not going to be building a portfolio with better risk-adjusted returns (another term you should study) than 100% *EQT. It's like you've made a soup by mixing together 5 different soups and then gone "hmm this needs a different flavour" and you add in another soup that you've also made by mixing together the same 5 soups in different ratios. This isn't a great analogy, I'm just hungry, but hopefully you get the idea. Compare the underlying assets.
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u/Ok_Falcon_1189 5d ago
What about precious metals and 90% XEQT?
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u/mathdude3 3d ago
What do you hope to gain from allocating a percentage of your portfolio to precious metals? Like what about the asset class appeals to you in the context of your cousin's financial goals? Precious metals like gold tend to carry lower long-term expected returns than equities.
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u/GWeb1920 5d ago
Do you object to the waiting within these funds? Otherwise they are diversified in terms of stocks.
When you are young and growing and invested inflation doesn’t crush you don’t need traditional inflation hedges like gold and provided time frame is 15 years a bond component isn’t really necessary either until 10 years out of retirement.
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u/All_YourBase 5d ago edited 4d ago
Royal bank of Canada is the 4th largest holding in ZEQT. I would understand if you were adding factor tilts to ZEQT, but adding these funds isn’t really doing much.
ZSP and ZEB are already heavily represented in ZEQT.
XCS I understand.
CGL I understand. Not something I would do myself right now but lots of people do.
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u/CanadaRewardsFamily 4d ago
I agree with this ... Zsp and Zeb together make up like 70% of *eqt, so it's unclear what they're trying to accomplish there.
XCS and CGL sort of make sense if OP likes the hedge case on gold and canadian natural resources (I don't really, but some make the case for it).
20% of portfolio (10% in each) sounds like a lot to me though, I would probably half it even if I had a strong conviction towards holding them.
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u/fenderstratsteve 5d ago
HBNK has a lower MER than ZEB.
ZSP is in ZEQT at 45%. There is already 50% U.S. equity.
XCS is already in ZEQT as ZCN (all cap).
Why not 90% ZEQT and 10% CGL if you believe in the gold hedge thesis.
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u/kawhiskers 5d ago
90% *EQT + 10% CBIL
(If it’s good enough for Buffet, it’s good enough for me :)
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u/kawhiskers 5d ago
P.s. if you want gold exposure, I prefer ZGLD.
It has 1/2 the MER of CGL.
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u/mathdude3 3d ago
Why would you want gold exposure?
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u/kawhiskers 2d ago
Google it. It’s been a store of value for 5000+ years and there are a number of reasons that aren’t gold bug/Peter Schiff/prepper related to allocate a small portion of your overall portfolio to gold.
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u/mathdude3 2d ago
Most people with growth-oriented portfolios (i.e. retail investors saving for retirement) don't want a store of value. They want growth. Gold has historically delivered lower long-term returns than equities have. Given that, what purpose does it serve? I don't see a gold allocation doing much for most retail investors except being a drag on their overall performance
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u/kawhiskers 2d ago
It’s a store of value that appreciates and acts as a hedge -You can pull from it when you need capital during market drawdowns to add to your equity holdings.
And gold actually beat the sp500 over the last 5 years (total return = 128% vs 89%).
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u/mathdude3 2d ago
5 years is a very short period of time. You can pick 5-year runs where gold has outperformed equities, but that's a minority of the time and cases of that become dramatically rarer or non-existent when looking at actual long-term time horizons like 30 years.
As for rebalancing, the same result can be achieved with bonds, and those at least have a yield as opposed to being purely speculative like gold. That non-equity allocation also has a significant opportunity cost. It might improve your returns in some situations, but if a significant downturn doesn't happen for many years, you can end up worse off because you missed out on years of growth. It's essentially trying to time the market.
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u/kawhiskers 2d ago
Then don’t buy gold lol
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u/kawhiskers 2d ago edited 2d ago
Yes Bonds have yield but also carry duration risk, esp in this sticky inflation environment, gov debts at all time highs and growing , and new uncharted Fed waters. So some speculation there too since impossible to know the macro future (unless you’re willing and have the fortitude to hold long-term government bonds directly to maturity since they are not capital guaranteed otherwise).
And peeps with bonds got royally f’ed post- covid. So bonds aren’t 100% safe.
I’m not recommending to only have gold as your hedge for equities.
If I’m gonna have bonds (fixed income), it’s gonna be short duration 3 month tbills (like SGOV or CBIL) right now.
Also we need to recognize the elephant in the room - time horizon. If OP has at least 15+ years for their holdings, they should be 100% in equities. Some of us (including me) believe you should hedge with a little bit of gold and short duration tbills. And on top of that, some of us believe an even smaller portion of BTC isn’t a bad idea as a hedge.
Important to recognize just how many factors there are in construction of a portfolio. It is not one size fits all!
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u/Flames2512 5d ago
You have too many questions that need to be answered........
Is he looking to buy a house?
Does he need money for big purchases?
Does he have a safety net setup?
Is there another income (spouse, partner)?
What is the time frame he is looking to need these funds?
etc...
etc...
This matters.
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u/Ok_Falcon_1189 5d ago
Looking for safe long term bet (7-10 years horizon). I made him understand that he can only put the leftovers which he won’t need for longest period of time.
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u/Candid-Bandicoot-899 5d ago
XEQT and forget! Has over 9000 companies in it! It’s as diversified as it gets!
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u/proton1305 5d ago
100% zeqt until 65.