Page 14 - Robo Advisors and Growing Your Wealth

How do you choose the ETFs you use?
We select what we believe are the best ETFs available in each asset class, making sure they work well together. We look for ETFs that are low cost, liquid, and have a low tracking error to their underlying index. Low management expense ratios (MERs) mean you pay less in fees so you keep more of your
returns (more wealth for you!). High liquidity means your portfolio is easier to rebalance and your money is readily accessible when you need it. Finally, a lower tracking error just means the ETF is more ef cient at its job of mimicking an index.
ETFs We Currently Use
Vanguard Canadian Short-
Term Bond Index ETF (VSB)
Tracks Canadian government short term bonds. Bonds with shorter durations are less volatile and less sensitive to changes in interest rates, and therefore have a lower return. Their primary purpose is capital preservation.
Asset Class: Short Term Bonds Expense Ratio: 0.11%
iShares MSCI EAFE ETF (IEFA)
Provides broad exposure to developed equity markets in Europe, Australia, and the Far East by covering large, mid, and small companies across all sectors. International equities provide an opportunity for growth and greater diversi cation.
Asset Class: Global Equity Expense Ratio: 0.08%
BMO Aggregate Bond
Index ETF (ZAG)
Tracks Canadian government medium term bonds. Medium term bonds are more volatile than short term bonds and therefore tend to pay a higher interest rate.
Asset Class: Medium Term Bonds Expense Ratio: 0.09%
Vanguard REIT ETF (VNQ)
Real estate investment trusts (REITs)
own a selection of of ce buildings, hotels, and apartment buildings. They are typically more volatile than bonds but less volatile than equities. They provide an opportunity for high income and moderate growth.
Asset Class: Real Estate Expense Ratio: 0.12%
iShares Canadian Real Return
Bond Index ETF (XRB)
Tracks Canadian government real return bonds. They provide a hedge against in ation as their rate of return is adjusted for in ation.
Asset Class: Real Return Bond Expense Ratio: 0.39%
iShares Core S&P/TSX Capped
Composite Index ETF (XIC)
Provides broad exposure to the Canadian
equity market by covering large, mid, and small companies across all sectors. Equities are more volatile than bonds and can provide a higher rate of return. Their primary purpose is capital growth and income from dividends.
Asset Class: Canadian Equities Expense Ratio: 0.05%
iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP)
Tracks the 500 largest publicly listed companies in the United States. Diversifying outside of Canada can provide higher returns and reduce the portfolio’s overall risk.
Asset Class: US Equities Expense Ratio: 0.10%
ROBO ADVISORS AND GROWING YOUR WEALTH
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