Canadian Golden Butterfly portfolio

[sunshine]

Hi,

Anymore running a Canadian Golden Butterfly portfolio ?

What ETFs are you using ?

How does it backrest vs Canadian PP ?

Which would be preferred for retirees who have to draw a RIF payment every year ?

Many thx

[Smith1776]

I have spent a lot of time researching and thinking about how to implement a Canadian GB. In general terms, there are two ways to implement the portfolio in our country. There's a full implementation, and then there's a simplified method. You can always choose a gradation between the two.

The biggest issue with the Canadian GB is the lack of good products that get deep factor exposure. There are only a few here in Canada that get the job done. They are small, but that can actually be an advantage with factor funds as small size means you can get deeper exposure -- to the size factor in particular.

Full implementation:

10% physical gold bullion
10% Gold ETF (KILO.B)
20% Long Treasury Bonds (ZFL)
20% Short Treasury Bonds (ZFS)
20% Vanguard Total World Stock (VEQT)
4% Vanguard Global Value Factor Fund (VVL)
4% Manulife/DFA Canadian SCV+Quality Fund (MCSM)
4% Manulife/DFA U.S. SCV+Quality Fund (MUSC.B)
4% Manulife/DFA International Developed SCV+Quality Fund (MINT.B)
4% Manulife/DFA Emerging Markets SCV+Quality Fund (MEME.B)

Simplified implementation:

20% Gold ETF (KILO.B)
60% Vanguard Conservative Portfolio (VCNS)
20% Vanguard Global Value Factor Fund (VVL)

The simplified implementation above replaces the total stock, long bond, and cash portion of the portfolio with a simple stock/bond fund from Vanguard. The Manulife/DFA factor fund family is replaced with a Vanguard value fund. This value fund splits its market cap exposure evenly with 1/3 allocations to small, mid, and large cap stocks. You don't get full small cap exposure. Additionally, it doesn't screen for the quality factor. Giving up that additional factor exposure may be worth it in exchange for greater simplicity. You do get a very well executed value tilt with that fund though. Finally, the physical gold bullion is eschewed entirely in favour of Canada's lowest cost gold ETF which is KILO.B.

Hope this helps! Glad to see another Canadian on the board!