The first quarter of 2020 has past us by, and the COVID-19 global pandemic has had a major impact on the global economies and stock markets. For those (like me) who are invested in passive index investment portfolios, it’s a true test of whether our perceived risk tolerance matches our real world risk tolerance. Let’s take a look at real world numbers of how COVID-19 has impacted my index investment portfolios, including TD e-Series, Questrade ETFs, a Wealthsimple robo advisor fund, and a Tangerine Balanced Growth index fund.
TD e-Series Portfolio in 2020
I have 2 separate portfolios of TD e-Series funds with different risk profiles. I have a moderately aggressive TFSA with the following targets:
- Canadian Index Fund (TD900) – 23%
- US Index Fund (TD902)– 23%
- International Index Fund (TD911) – 23%
- Canadian Bond Index Fund (TD909) – 31%
I also have an RRSP that I have set with a very aggressive target profile as follows:
- Canadian Index Fund (TD900) – 33.3%
- US Index Fund (TD902) – 33.3%
- International Index Fund (TD911) – 33.3%
Learn more about index portfolios through TD e-Series.
These two different profiles help us look at how a major market drop affects the different risk profiles. Let’s look at where I started with both portfolio’s on January 1, 2020:
TD e-Series Portfolios, Jan 1, 2020
| TFSA (Moderately Aggressive) | Shares Owned | Price | Value |
|---|---|---|---|
| TD Canadian Index Fund (23%) | 111.655 | $28.11 | $3,138.62 |
| TD US Index Fund (23%) | 42.676 | $73.06 | $3,117.91 |
| TD International Index Fund (23%) | 217.977 | $14.25 | $3,106.17 |
| TD Canadian Bond Index Fund (31%) | 350.049 | $11.73 | $4,106.07 |
| Total | $13,468.77 |
| RRSP (Aggressive) | Shares Owned | Price | Value |
|---|---|---|---|
| TD Canadian Index Fund (33.3%) | 70.435 | $28.11 | $1,979.93 |
| TD US Index Fund (33.3%) | 27.194 | $76.06 | $1,986.79 |
| TD International Index Fund (33.3%) | 138.899 | $14.25 | $1,979.31 |
| Total | $5,946.03 |
As you can see, both portfolios were fairly close to their target allocations. Now let’s take a look at where they are now, included dividends earned, and cash that I’ve added:
TD e-Series Portfolios, Mar 31, 2020
| TFSA (Moderately Aggressive) | Cash Added | Dividend Earned | Shares Owned | Price | Value |
|---|---|---|---|---|---|
| TD Canadian Index Fund (23%) | - | - | 111.655 | $22.17 | $2,475.39 |
| TD US Index Fund (23%) | - | - | 42.676 | $63.99 | $2,730.84 |
| TD International Index Fund (23%) | - | - | 217.977 | $11.82 | $2,576.49 |
| TD Canadian Bond Index Fund (31%) | - | $11.10 | 350.968 | $11.85 | $4,158.97 |
| Total | - | $11.10 | $11,941.69 |
| RRSP (Aggressive) | Cash Added | Dividend Earned | Shares Owned | Price | Value |
|---|---|---|---|---|---|
| TD Canadian Index Fund (33.3%) | $100 | $0 | 73.884 | $22.17 | $1,638.01 |
| TD US Index Fund (33.3%) | $0 | $0 | 27.194 | $63.99 | $1,740.14 |
| TD International Index Fund (33.3%) | $150 | $0 | 149.208 | $11.82 | $1,763.64 |
| Total | $250 | $0 | $5,141.79 |
As you can see, it’s a fairly significant drop. When excluding that cash that I added and dividends (excluded in the comparison as not all funds have had their dividend payout schedules hit), the changes for both portfolio’s look like this:
TD e-Series Portfolio, 2020 Change
| TFSA (Moderately Aggressive) | Value Change | Percentage Change |
|---|---|---|
| TD Canadian Index Fund (23%) | -$663.23 | -21.1% |
| TD US Index Fund (23%) | -$387.07 | -12.4% |
| TD International Index Fund (23%) | -$529.68 | -17.1% |
| TD Canadian Bond Index Fund (31%) | $52.90 | 1.3% |
| Total | -$1,527.08 | -11.3% |
| RRSP (Aggressive) | Value Change | Percentage Change |
|---|---|---|
| TD Canadian Index Fund (33.3%) | -$441.92 | -22.3% |
| TD US Index Fund (33.3%) | -$246.65 | -12.4% |
| TD International Index Fund (33.3%) | -$365.67 | -18.5% |
| Total | -$1,054.24 | -17.7% |
These changes are very accurate to what the writings about index investing will tell you. The more aggressive portfolio saw more significant losses, and as stocks were hit hard, bonds anchored the portfolio to minimize losses (unfortunately absent in the aggressive portfolio).
Questrade ETF Portfolio for 2020
I also have a Questrade portfolio that, much like my TD e-Series portfolio, follows the Canadian Couch Potato index investing strategy. This portfolio follows a slightly more aggressive approach than my TD e-Series TFSA portfolio described above. My Questrade target allocation is as follows:
- BMO Aggregate Bond Index ETF (ZAG) – 25%
- Vanguard FTSE Canada All Cap Index ETF (VCN) – 25%
- iShares Core MSCI All Country World ex Canada Index ETF (XAW) 50%
Learn more about ETF’s and passive index portfolios through Questrade.
My Questrade portfolio looked like this at the beginning of the year:
Questrade ETF Portfolio, Jan 1, 2020
| Questrade ETFs (Moderately Aggressive) | Shares Owned | Price | Value |
|---|---|---|---|
| Canadian Index VCN (25%) | 40 | $34.40 | $1,376.00 |
| US and International Index XAW (50%) | 101 | $27.82 | $2,809.82 |
| Canadian Bond Index ZAG (25%) | 83 | $15.86 | $1,316.38 |
| Total | $5,502.20 |
As of the end of March, as expected, this portfolio saw some serious declines:
Questrade ETF Portfolio, Mar 31, 2020
| Questrade ETFs (Moderately Aggressive) | Dividend Earned | Cash Added | Shares Owned | Price | Value |
|---|---|---|---|---|---|
| Canadian Index VCN (25%) | $9.96 | $0 | 40 | $26.89 | $1,075.60 |
| US and International Index XAW (50%) | $29.73 | $0 | 101 | $23.40 | $2,363.40 |
| Canadian Bond Index ZAG (25%) | $9.96 | $0 | 83 | $15.65 | $1,298.95 |
| Total | $49.65 | $4,737.95 |
I’ve included dividends earned, but since dividends are on different payout schedules between different assets in different portfolios, I’m not calculating them as gains as it’s an unfair comparison if other assets have not hit their dividend payout schedule yet.
Questrade ETF Portfolio, 2020 Change
| Questrade ETFs (Moderately Aggressive) | Value Change | Percentage Change |
|---|---|---|
| Canadian Index VCN (25%) | -$17.43 | -1.3% |
| US and International Index XAW (50%) | -$300.40 | -21.8% |
| Canadian Bond Index ZAG (25%) | -$446.42 | -15.9% |
| Total | -$764.25 | -13.9% |
As you can see, the Canadian bond index fund in this portfolio couldn’t quite keep it’s head above water, losing 1.3%, in comparison to the TD e-Series Canadian bond index, which was able to stay in the positives.
Wealthsimple Aggressive Portfolio in 2020
I also contribute $50 a month to a Wealthsimple robo advisor portfolio. I have set the options for this portfolio to be aggressive, with 90% of assets in equities, and 10% in bonds.
Learn more about Wealthsimple robo advisor funds
This is where I started with my Wealthsimple portfolio on January 1, 2020:
Wealthsimple Robo Portfolio, Jan 1, 2020
| Wealthsimple (Aggressive) | Value |
|---|---|
| Wealthsimple aggressive portfolio | $744.49 |
As Wealthsimple is a robo advior with portfolios made of various funds that are often changing, we’ll just look at the value of my fund, and not the price, because there isn’t one.
After adding $50 a month each month, my Wealthsimple portfolio looked like the following as of March 31, 2020:
Wealthsimple Robo Portfolio, Mar 31, 2020
| Wealthsimple (Aggressive) | Dividend Earned | Cash Added | Value |
|---|---|---|---|
| Wealthsimple aggressive portfolio | $2.74 | $150 | $789.04 |
As the fund is quite aggressive, I again saw some serious losses in this account:
Wealthsimple Robo Portfolio, 2020 Change
| Wealthsimple (Aggressive) | Value Change | Percentage Change |
|---|---|---|
| Wealthsimple aggressive portfolio | -$108.19 | -14.5% |
Tangerine Investment Funds
And finally, let’s look at the very small of investments I have with Tangerine Investment Funds. I mainly keep a small amount of money in this investment purely for the reasons of tracking the fund and seeing it’s affects on real numbers. I have had $100 invested in a Tangerine Balanced Growth index fund for a year or so, and have just left it to fend on it’s own. The Tangerine Balanced Growth fund is again moderately aggressive, with 25% of holdings in bonds, and 75% in stocks/equities.
Learn more about Tangerine Investment Funds
Here is where my Tangerine Investment Funds started on January 1, 2020:
Tangerine Investment Fund Portfolio, Jan 1, 2020
| Tangerine Investment Fund (Moderately Aggressive) | Shares Owned | Price | Value |
|---|---|---|---|
| Tangerine Balanced Growth | 6.6855 | $16.23 | $108.51 |
And here is where my Tangerine Investment Funds stand as of March 31, 2020:
Tangerine Investment Fund Portfolio, Mar 31, 2020
| Tangerine Investment Fund (Moderately Aggressive) | Dividend Earned | Cash Added | Shares Owned | Price | Value |
|---|---|---|---|---|---|
| Tangerine Balanced Growth | $0 | $0 | 6.6855 | $14.42 | $96.40 |
Again, a fairly significant loss for this index investment:
Tangerine Investment Fund Portfolio, 2020 Change
| Tangerine Investment Fund (Moderately Aggressive) | Value Change | Percentage Change |
|---|---|---|
| Tangerine Balanced Growth | -$12.11 | -11.2% |
Comparing losses across TD e-Series, Questrade, Wealthsimple and Tangerine Investment Funds in 2020
As you can see, each of my portfolios saw losses greater than 10%, with the most aggressive portfolio’s losing the most, and the more moderately aggressive portfolios losing a little less. How do they stack up over the first quarter of 2020?
| Index Investment Portfolio | Percentage Change |
|---|---|
| TD e-Series Very Aggressive | -17.7% |
| Questrade ETFs Moderately Aggressive | -13.9% |
| Wealthsimple Aggressive | -14.5% |
| TD e-Series Moderately Aggressive | -11.3% |
| Tangerine Investment Fund Moderately Aggressive | -11.2% |
How does this measure against your risk profile?
As a person with a very high risk tolerance, I had always told myself that I was prepared, should we see a major decline of global markets. Now that I’ve started to experience it, it feel’s inline with my expectations – the losses hurt, but I’m prepared to wait it out, even if it takes years to see my gains again.
These are important things to take into account when assessing your own risk profile. You may think you have a high tolerance, but when you see actual losses from 10% – 20%, and bracing yourself for more in the months to come, how does it actually sit with you?
Always make sure you invest within your own comfort zone, and always make sure that you have an emergency fund sitting in some sort of high interest savings account!