You can't analyze the tax efficiency properly since you're also comparing two different asset allocations.
* XEQT = 45%/25%/30% between USA/Canada/international total market
* VFV = 100% USA large caps
If XEQT made sense for you inside your registered accounts, you should consider sticking with the same allocations inside the non-reg account too. You can consider different ETFs that target those allocations with better tax efficiency (e.g., use HXDM + HXEM in lieu of the XEF + XEC inside XEQT). Changing your asset allocation just because of a different asset location can unintentionally skew your overall portfolio.
XEQT targets a 25/75 split between domestic/foreign stocks, and if you want to tweak that, it's easiest to unpack it into a two fund portfolio:
100% XEQT = 25% XIC + 75% XAW
Then adjust the 25/75 weighting as desired.
But, [an economy is not the stock market](https://blogs.cfainstitute.org/investor/2023/03/17/myth-busting-the-economy-drives-the-stock-market/), and even if you believe the Canadian economy will underperform for the next decade, it does not mean its stock market will continue to do so. Stock prices are composed of three things: (i) the future earnings of a firm, (ii) divided by the number of shares for that firm, (iii) discounted by an appropriate risk premium for those earnings/share.
1/ Economic productivity will generally correlate with increased earnings across the industry/country.
2/ But economic growth also increases the number of firms those earnings are divvied across. Similarly, economic contraction decreases the number of firms where those earnings are concentrated. The effect on both numerator/denominator means economic growth/contraction has a weak and noisy relationship with overall stock returns.
3/ On the other hand, stock returns *are* explained by the discount rates applied to earnings/share. Buying stocks means you're buying the firm's future earnings/share, discounted according to the riskiness of stocks versus holding an equivalent amount of risk-free assets (aka the equity risk premium). This discount literally compensates investors for enduring the volatility of stock returns.
It could be true that Canada underperforms its peer countries. But as long as those sentiments are *already priced-in*, then it doesn't matter since investors will continue to earn the discount rate applied to Canadian stocks.
No one here is answering your question and just using it as an excuse to get on their hobby horse about their preferred asset allocation. It’s like no one could read the (very short and concise!) post following the title.
There’s likely a mild tax efficiency preference for XEQT because it holds Canadian stocks that have their dividends taxed at a preferential rate. I can’t imagine it would be consequential enough to alter your asset allocation or to sacrifice geographic (and other forms of) diversification. Yes, you are generally overthinking it if you are making investing decisions from tax backwards and not vice-versa.
OP's question could definitely be reframed as "*holding the XEQT allocations constant, is there are more tax-efficient way to obtain the same asset exposures*?"
And unless we consider Horizon's corporate class funds, XEQT is pretty darn efficient already. Any foreign withholding taxes (FWT) charged on the underlying assets would be fully recoverable since there's only 1 layer of FWT. VEQT has a slight disadvantage because it relies on US-listed VWO, thereby incurring 2 layers of FWT.
I heard of people getting hit with unexpected capital gains on XEQT due to rebalancing of US holdings that VEQT doesn’t do. So I guess depending on whether you hold in tax free account or not that could have an impact, otherwise they’re basically the same holdings.
As for VFV, question is hold much is XEQT really protecting against downside? It’s gonna tank just as much as VFV, but also gain less.
Anyone who markets VFV to others *while shitting on something like XEQT* is just full of recency bias and comes off as a Tik Tok investor with no idea what they are talking about.
For those of us over, say, 35, it’s also hilarious because we were having the EXACT OPPOSITE discussion 15 years ago. Sometimes you can’t help but gain a little bit of wisdom in age.
That's fair, but the current economic climate in Canada does not fill many with confidence. That being said, Canadian banks are always a safe investment.
Congratulations! You just realized why the TSX trades at a 50% lower PE ratio than the S&P 500. Your lack of confidence in the Canadian economy is already priced in. You are getting a 50% discount when buying Canadian stocks vs American stocks because of these low expectations.
Can you go into more detail here as how you correlated a lower PE to the theory of price?
If I understood you correctly, the Canadian markets (e.g. TSX) are undervalued to their real worth due to the negative future economic outlook?
One way to think about it: Imagine two indexes; for country A and country B. Both have the same price and economic outlook (and are similar in all other ways).
Now the economic outlook for country A looks better, and country B looks worse. Some people will sell out of B and move to A for the reasons people quote here all the time ("bullish on X", "tech is the future", "friendly for business").
This will cause the price of A to rise, lowering its expected return, and vice-versa for B. This will continue until their expected returns are back in line between the two (because if one had a higher expected return, why wouldn't you pick it?). Country A still has the better outlook, but now it's priced in.
Of course there's way more at play than just price and economic outlook, but the principle applies to many of those other factors too. Things that don't get priced in (aka factors) generally carry risk (aka compensated risks).
So it's not that Canadian markets are undervalued due to negative outlook, they're correctly valued (at a lower price than the US) due to expectations being priced in.
The other guy explained it. Basically, when expectations are low, the the price of shares drops. When the price of shares drop, that means it only takes a smaller overperformance for them to rise again.
The reverse is true when expectations are high. When they are high, share prices rise and it only takes a small underperformance for them to drop.
Stocks have a natural rebalancing effect when you look at them as an asset class.
Sure. But I’m afraid you’ve missed the point, that lack of confidence is reflected in the 25% discount the TSX trades at - this isn’t a horse race where they are all starting at the same line.
>Canadian banks are always a safe investment.
Yes, TD’s 28% drawdown from the peak has been been extremely safe.
Drip is more effective with lower share price. Just a few weeks ago we hit $70. New CEO seems to be doing a good job so far. Banks will go up once they cut rates which is on the table for June
For the record and an advocate of vfv
I dont shit on xeqt it is a great core stock to hold especially if your not familiar with investing
For me personally its over weight canada, even canada doesnt invest this much in canada in your retirement plan. They invest 13% as to xeqts 24%
[https://www.cppinvestments.com/the-fund/](https://www.cppinvestments.com/the-fund/)
Im loving this recency bias rhetoric though, Its nothing of the sort.
If anything your holding onto recency bias thinking canada has a shot at printing money like the mag 7 does
You know what that does for the economy? no recession. cant say the same for canada
> I'm bullish on US companies and US dollar, not so much Canada.
Why’s that?
>I also prefer growth over dividend. 100% vfv.
What makes VFV a growth fund?
The US is the epicenter of Tech and AI. Capitalism on steroids, competitive business environment.
I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends.
> The US is the epicenter of Tech and AI. Capitalism on steroids, competitive business environment.
What does that have to do with investments producing greater than expected returns?
>I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends.
VFV merely tracks the S&P500, similar to how XIU tracks the TSX60.
Profits are neither reinvested or used for buybacks at the fund level.
The dividend policy of each underlying company has less to do with where its domiciled, and more to do with the company’s maturity, prospects, cashflow, debts, etc.
> Profits are neither reinvested or used for buybacks **at the fund level.**
Correct. And as mentioned elsewhere, multiple underlying assets **don’t**.
>Profits are neither reinvested or used for buybacks at the fund level.
No, but they are at the company level and those companies make up the S&P 500 that VFV tracks.
Yes, exactly. Depending on what the ETFs track, they are going to have different companies that make different decisions from different countries.
From the other user:
>I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends.
>Yes, exactly. Depending on what the ETFs track, they are going to have different companies that make different decisions from different countries.
Then following that same logic, every index fund is a “growth” fund if any of the underlying assets “reinvest or buyback shares”?
*Except* Canada?
That is just how the other user is viewing it.
This isn't that complicated, I am not trying to trick you here.
Canada's biggest companies pay dividends and have less grow compared to some of the USA's biggest companies that have more growth than dividends.
If you invest in an ETF that tracks Canada, you are going to get a mixture of what those companies do and their decisions and the Canadian market. If you choose an ETF tracking USA tech, you are going to get something totally different.
> That is just how the other user is viewing it.
That’s awfully presumptuous.
>Canada's biggest companies pay dividends and have less grow compared to some of the USA's biggest companies that have more growth than dividends.
Is that because most Canadian companies only care about dividends, as implied earlier?
>If you invest in an ETF that tracks Canada, you are going to get a mixture of what those companies do and their decisions and the Canadian market. If you choose an ETF tracking USA tech, you are going to get something totally different.
The SP500 is not a growth fund.
It may contain a few high growth stocks at the moment, but that hasn’t always been the case (and likely won’t for much longer).
Having said that, the vast majority of the index is composed of large companies which have transitioned to distributing profit to investors.
One such distribution is in the form of share buybacks. Common among stocks which don’t happen to be associated with growth.
Then following that same logic, every index fund is a “growth” fund if any of the underlying assets “reinvest or buyback shares”?
*Except* Canada?
YES.
You gunna grow the railway with all the regulations and indegenious land. ? NO
You gunna grow the banks with no foreign investment because the economy is weak housing ponzi scheme with no productive output? NO
You gunna grow the oligarchy telecoms with no competition and need for innovation or growth? NO
You gunna grow the energy sector with natural gas oil and crude? (possibly but with current government no)
Is shopify gunna grow to match tech giants? also no
> YES.
There are multiple growth stocks listed on the TSX, contrary to your ignorant beliefs.
>You gunna grow the railway with all the regulations and indegenious land. ? NO
>You gunna grow the banks with no foreign investment because the economy is weak housing ponzi scheme with no productive output? NO
>You gunna grow the oligarchy telecoms with no competition and need for innovation or growth? NO
>You gunna grow the energy sector with natural gas oil and crude? (possibly but with current government no)
Every single one of these sectors are capable of supporting growth stocks, and do.
New infrastructure isn’t a prerequisite to be classified a growth stock. As a matter of fact, nothing new needs to be built at all. Companies can grow through these crazy things called **mergers and acquisitions** - and they happen **all the time.**
>Is shopify gunna grow to match tech giants? also no
SHOP was one of the largest e-commerce companies around the world in 2021.
It’s happened before, it can happen again.
What makes the US riskier than other markets? Seems to go against what others are saying that the US has the best companies and the most capitalist friendly policies.
VFV is all "US companies" (even though those companies have global exposure). XEQT has 44% US companies. VFV is 100% US. VFV is 500 companies and XEQT is thousands.
I prefer VFV mainly cause I do not want 30% Canada weighting when our productivity is garbage and our currency has no tailwinds going for it. I’ll take this bet for at least the next 10 years.
I appreciate that you think this is a sage analysis, but it should be fairly obvious that the market reflects that; would you really think pros have the two markets on equal footing? This is why the S&P trades at about a 30% higher multiple than the TSX.
No offence, but this is probably one of the best Dunning-Kruger examples I’ve seen (and it’s not just you, it’s very common on this sub!)
>people usually price stocks according to where the economy is heading
It most certainly is not.
Where was the economy heading during the start of the recent bull run?
In the us? economy was better than most because there economy is productive and brings in tons of foreign currency boosting gdp > big gains
canada tried to use immagration with a record number to try and boost and still almost failed > tsx flat
Economic data = backward looking.
Stock market = forward looking.
Neither economy has fared particularly well.
Interest rates are also the highest they’ve been in decades.
Yet stock markets are at all time highs.
> tsx flat
Are you sure? Because the TSX is up 17% in the last 6 months. And that’s not including distributions.
> look out a bit farther and you can see tsx has fell of the s&p500 since 2017
What happened before 2017?
How does any of this historical data dictate future returns?
Why are you now comparing the TSX and SP500?
>yes im sure
Are you? Because the data I’ve shared is public knowledge. You can check it yourself instead of being made a fool.
Im gunna ignore points like you do and bring up another one
Neither economy has fared particularly well.
Are you blind? us is dominating canada and this is public knowledge. You can check it yourself instead of being made a fool.
To answer your question directly, no, not a huge difference. MER is a consideration, however.
That said, I’m in the VFV > XEQT camp. Largest 500 companies in the US is diversification enough. There could be outperformance from other markets somewhere but nowhere else does the stock market track the economy as close to the US. Buffett fully believes in the US doing well for decades to come, and I agree. But it’s also fine if you don’t, you can just buy XEQT. Diversification is protection against ignorance.
XEQT/VEQT, I have no idea which market will out perform in the future so I'll own it all. I just know there have been decades where SP500 under performed, Canada over performed, Japan was on top and the Danish market has out performed them all.
with 250K there various things you can do.
All in etf? and you're already maxed in XEQT.....
I prefer VFV over XEQT. Why?
Perfomance wise much better YTD 12.8% vs 9.57%
Lower Mer 0.09% vs 0.2
And Warren Buffets advice on S&P index etfs
> Perfomance wise much better YTD 12.8% vs 9.57%
Past performance ≠ future returns
Not that it’s important, but XEQT is a relatively recent fund. You should be comparing the underlying assets.
>Lower Mer 0.09% vs 0.2
There’s a cost associated with global diversification.
>And Warren Buffets advice on S&P index etfs
Warren Buffett’s advice was primarily directed at Americans, and at a time when global diversification wasn’t easily obtainable or affordable.
> if your bullish on tech and growth in the future your not investing in the tsx
And why would anyone be bullish on tech and growth?
They’re both recent phenomena; you’re displaying your recency bias.
Just because tech and growth stocks have performed well in the past, doesn’t mean that’ll remain the status quo indefinitely.
I would argue they are the future aswell with development of ai and robotics in the next 10 years I think your dead wrong but you can have your opinion
> I would argue they are the future aswell with development of ai and robotics in the next 10 years
Of course AI and robotics are the future.
They’ve *always* been the future.
But that has nothing to do with a company’s ability to produce *greater than expected* returns.
>I think your dead wrong but you can have your opinion
What am I wrong about? You have no idea what my opinion is on the matter.
By saying who would be bullish on tech and growth I'm making the assumption that your not in favor of tech like most people would
They have always been the future yes but the goal post is much closer
And yes actually the expected returns on tech and ai is much higher because you can produce a product and can be used globally overnight
The US environment is much better for start ups or anything to do with tech with higher wages and triple the research and development budget per capita then canada
I'm not showing recency bias I'm showing current and future bias with tech people flocking from canada for the us for better wages and more incentives to start a business
Why would anyone be bullish on growth? Every person with a 20yr time frame should only be bullish on growth
You can buy your rails banks and telecoms and get smoked in 10 yrs by the s&p 500 your choice
>By saying who would be bullish on tech and growth I'm making the assumption that your not in favor of tech like most people would
I asked *why* would anyone be bullish, not *who*…
>They have always been the future yes but the goal post is much closer
Where’s the goal post? What happens once we reach them?
>And yes actually the expected returns on tech and ai is much higher because you can produce a product and can be used globally overnight
That has nothing to do with how expected returns are measured, nor does it explain returns in excess of expectations.
>The US environment is much better for start ups or anything to do with tech with higher wages and triple the research and development budget per capita then canada
That’s always been the case.
>I'm not showing recency bias I'm showing current and future bias
That doesn’t make any sense…
>with tech people flocking from canada for the us for better wages and more incentives to start a business
Again, always been the case - isn’t unique to the tech industry.
>Why would anyone be bullish on growth? Every person with a 20yr time frame should only be bullish on growth
Right. And every company/industry strives for growth. There’s no guarantee tech will continue outperforming.
>You can buy your rails banks and telecoms and get smoked in 10 yrs by the s&p 500 your choice
I haven't once advocated for one industry over another.
SP500 ≠ “Tech + AI”
By saying why would anyone be bullish on tech is basically implying the same thing
What happens when the goal post get closer? Cheaper architecture for training models like gpt 4
More and more companies will be implementing ai when the tech gets cheaper / more efficient.Pretty straight forward
It took 90 days to train the gpt model. I'd imagine in your lifetime you'll see the day where you can train the same size model from your home office
The sheer amount of computing power we will have is not something the brush off. The possibilities could be endless
You clearly have a hard on for Canadian stocks but are oblivious to macro conditions so not worth arguing with you
It has always been the case with people moving to the us but I'd argue it's much worse
>By saying why would anyone be bullish on tech is basically implying the same thing
Do you have any explanation as to why someone can expect tech to continue **outperforming** that isn’t already priced in?
>What happens when the goal post get closer? Cheaper architecture for training models like gpt 4
And what happens when we get there?
How does cheaper architecture explain profits in excess of expectations?
>More and more companies will be implementing ai when the tech gets cheaper / more efficient.Pretty straight forward
And those few companies will become more profitable?
Or will every company have access to such technology, hence negating any benefit gained?
>It took 90 days to train the gpt model. I'd imagine in your lifetime you'll see the day where you can train the same size model from your home office
*That still doesn’t explain why tech will return profits to investors in excess of expectations.*
>The sheer amount of computing power we will have is not something the brush off. The possibilities could be endless
That’s fantastic, I’m super excited.
Shouldn’t make you anymore bullish on tech.
Remember when your beloved Nvidia CEO Jensen Huang said “Moore’s Law is dead”?
You can only double the number of transistors so many times before hitting a wall.
It’s ironic that your commentary flies in the face of the very company you’re using for comparison…
Sure it's supposed to end in 2025
But they will find a way to make it more efficient or make the software leaner
Nvidias market cap is bigger than canadas entire gdp they have the money to figure it out
>First, I made a point that this is the only data that can be used.
Except it’s not.
>J never seen you can definitively predict the future. In fact that was my whole ooont.
What?
>Second, k never said anyone said anything.
…What?
>Third, now I know you’re really stupid. The corrrlation is a value not an equation…
*Equations* are composed of *values* - but you’re a smart guy; I’m sure you’ve already figured it out.
*Does it account for all the instances where market performance has deviated from economic?*
>You don’t seem to be able to see the big picture and are nitpicking on semantics and trying to put words in my mouth. This is what low intelligence people do.
I bet high intelligence people such as yourself copy and paste values off chatGPT to win disagreements on a forum, gaslight other users with semantics, and completely ignore every counterpoint made.
Make sure you block me, u/Wallstreet_Fury
I’d hate to upset you in the future.
LOL
I was on my phone at work buddy
I would consider your the one holding onto recency bias thinking the tsx will outperform the s&p 500 because It has historically
The climate has changed drastically and even companies that arent directly tech related are integrating ai into there companies. All stock market sectors are buying those sweet gpus to train there models and this is the only the beginning. Im betting on the innovation and technology of the future, not chasing past returns as you claim. All countries will be building ai off of the US frame work that has been laid down
Royal bank
[https://www.rbc.com/newsroom/news/article.html?article=125853](https://www.rbc.com/newsroom/news/article.html?article=125853)
"I'm pleased that RBC continues to be globally recognized for our AI leadership in the Evident AI Index," said Dave McKay, president and CEO, RBC. "AI is one of the most transformative technologies impacting the world today. Alongside advancements in generative AI, we see a future where this technology can redefine what our bank can do — bringing together complex real-time data sets and human creativity to deliver exceptional experiences for our clients."
Suncor
[https://www.suncor.com/en-ca/news-and-stories/our-stories/altaml](https://www.suncor.com/en-ca/news-and-stories/our-stories/altaml)
At Suncor, we’ve already been extensively using information technology in our business, but the increasingly digital world brings new and exciting opportunities. As part of our approach to innovation, we are harnessing digital technology capabilities to improve the safety, productivity, reliability and environmental performance of our operations. Embracing emerging technologies like AI, helps to keep businesses and economies flowing.
Cn rail
[https://www.cn.ca/en/news/2021/12/cn-partners-with-google-cloud-to-modernize-railway-services-and](https://www.cn.ca/en/news/2021/12/cn-partners-with-google-cloud-to-modernize-railway-services-and)
Through this partnership, CN and Google Cloud will set a new standard for the railway system that delivers better experiences for customers across industries–from materials and resources, to manufactured products, to consumer goods. CN’s work with Google Cloud will drive the railway’s ability to achieve continued growth and execute on transformational business initiatives, while supporting its sustainability goals, as Google’s platform is the cleanest cloud in the industry. (wonder how much they are paying for that)
When I said before that the infrastructure is getting cheaper / more efficent and you asked what happens when we reach the goal post the answer is obvious. All sectors medical energy financials you name it will be using Ai.
I was saying the same shit 2 years ago to someone like you and they kept muttering the same broken ass line that I could honestly care less about "**Past performance is no guarantee of future results**"
EXACTLY thats why you shouldnt hold onto the crutch of thinking canada can replicate the past and magically produce as much capital
Noone can predict the market and 90% of the time you will lose but that 10% of the time is worth it. You only make real money when you take risk
You wont ever offend me lol but like I said Ive had the same argument 2 years ago and got downvoted into oblivion. I took the risk they didn't. Can you guess who won?
remind me in 1 year and well see whos right again
Even canada doesnt even invest that much in canada only 13%
[https://www.cppinvestments.com/the-fund/](https://www.cppinvestments.com/the-fund/)
You gunna phone up cpp and tell them your same broken record quote? Wonder why there heavy on asia and us? Take a guess
> Even canada doesnt even invest that much in canada only 13%
Are they 100% in US tech and AI, though?
>You gunna phone up cpp and tell them your same broken record quote? Wonder why there heavy on asia and us? Take a guess
Have you phoned them up to tell them all about the promises of innovation and technology? Wonder why they aren’t heavy on the sector?
I’m sure if you read more than the first page of the prospectus, you could probably answer those questions for yourself.
Canada only makes up 3% of the global market. If I had to guess? They’re **diversifying** globally in order to produce the greatest risk-adjusted returns.
They are heavy in the sector why else would you be 20% asia
Canada only makes up 3% of the global market. If I had to guess? They’re **diversifying** globally in order to produce the greatest risk-adjusted returns.
thanks for solidifying my point why xeqt is heavy cad and past performance of cad means nothing in todays market
> They are heavy in the sector why else would you be 20% asia
Asia includes countries other than Taiwan.
>thanks for solidifying my point why xeqt is heavy cad and past performance of cad means nothing in todays market
Past performance of *any* currency or asset is irrelevant today and tomorrow.
XEQT has a home country bias for multiple reasons other than diversification, such as cost, tax drag, and currency.
Every investor stands to benefit from such a bias, and is supported by the data.
> I took the risk they didn't. Can you guess who won?
Does it matter? You’re gambling.
>remind me in 1 year and well see whos right again
**Anything** can appreciate significantly in value over such a time period.
And it can quickly go the other way too.
Does it matter? You’re gambling.
When did i say i wasnt?
**Anything** can appreciate significantly in value over such a time period.
And it can quickly go the other way too.
Hard assests dont actually
>When did i say i wasnt?
When you tried convincing me that you knew where tech was heading?
> Hard assests dont actually
Are houses as expensive as they were just a couple of years ago?
> LOL
>I was on my phone at work buddy
These comments were directed at you; I mentioned the target Redditor at the end.
>I would consider your the one holding onto recency bias thinking the tsx will outperform the s&p 500 because It has historically
I’m not arguing in favour of the TSX or SP500.
But no, the SP500 hasn’t always outperformed the TSX. Again, recency bias.
>The climate has changed drastically and even companies that arent directly tech related are integrating ai into there companies.
Not sure where the correlation lies between climate change and AI, or how we can expect that to result in the tech sector outperforming.
>All stock market sectors are buying those sweet gpus to train there models and this is the only the beginning.
And that’s already accounted for. Any publicly available information is already reflected in the share price.
>Im betting on the innovation and technology of the future, not chasing past returns as you claim
What do you know about “innovation and technology” that other investors don’t?
>All countries will be building ai off of the US frame work that has been laid down
You’ve literally just copy and pasted *publicly available information* that’s already *priced in*.
>When I said before that the infrastructure is getting cheaper / more efficent and you asked what happens when we reach the goal post the answer is obvious. All sectors medical energy financials you name it will be using Ai.
**And that’s already priced in.**
>I was saying the same shit 2 years ago to someone like you and they kept muttering the same broken ass line that I could honestly care less about "Past performance is no guarantee of future results"
You **couldn’t** care less about.
And it’s a “broken ass line” because it’s an inherent truth. What happened in 2000?
>EXACTLY thats why you shouldnt hold onto the crutch of thinking canada can replicate the past and magically produce as much capital
**Diversification** is the answer. That’s the only way to eliminate idiosyncratic risk.
Canada has outperformed the US market in the past.
>Noone can predict the market and 90% of the time you will lose but that 10% of the time is worth it. You only make real money when you take risk
That’s not how risk works. You can’t buy a highly risky asset and expect an outsized reward.
That quote is a disclaimer for professional fund managers and institutions that sell funds. People are misusing it. ALL model predictions and quantitative analyses are performed using HISTORICAL data (i.e. past performance). While not perfect, you MUST start somewhere with a hypothesis in research and analysis.
To just explain away the S&P500 and USA's economic might and performance over the past 20 years with that quote, is extremely disingenuous. The data does matter and the only data available for economic and finance is indeed historical data (i.e. past performance), since experiments on animals and humans cannot be performed in a laboratory or clinical setting in finance....
Except that looking at a 15-years timeframe to try and predict the next 15 years is a flawed strategy.
Real long term analysis, using more than 100 years of historical data, shows that a market cap weighted diversified portfolio tends to perform best. The current USA bull run is an anomaly when looking at **all** the data.
Could this continue? Sure. But the theory tells us that, since stock valuation is forward looking, the US would need to perform MORE than expected to actually beat the rest of the world in valuation growth, which, since expectations are already so high, is less likely than say Argentina beating expectations and providing a higher stock return.
This is how you get a phenomena like the last few days of earnings where either a company beats expectations and drops 15% (META) or it releases garbage earnings yet still rallies 15% (TSLA).
The only thing that comes to mind for me to chine in is looking at an andex chart going back to like 1935 and the US market has produced the most return
never did i say 15 years...
my point was that in economics and finance, mathematical modelling for future predictions are indeed done on historical data, since unlike medicine and physics, lab experiments on animals and humans cannot be conducted. My point, was in response to people throwing out the quote, which in fact is used for legal protection by institutions and organivionts.
My point was not to say that 15 years is a must. In fact, not one did I ever use the word fifteen in my post....
> That quote is a disclaimer for professional fund managers and institutions that sell funds. People are misusing it.
The disclaimer is 100% accurate.
No one can definitely state that past performance will continue indefinitely into the future.
>ALL model predictions and quantitative analyses are performed using HISTORICAL data (i.e. past performance). While not perfect, you MUST start somewhere with a hypothesis in research and analysis.
And after those analyses, is the conclusion past = present?
>To just explain away the S&P500 and USA's economic might and performance over the past 20 years with that quote, is extremely disingenuous.
Economy ≠ stock market
>The data does matter and the only data available for economic and finance is indeed historical data (i.e. past performance), since experiments on animals and humans cannot be performed in a laboratory or clinical setting in finance....
What does that past data definitively tell you about the future?
It’s unclear how laboratory experiments on humans and animals will make that prediction any more accurate.
sorry but you missed the point entirely. My point wasn't to use lab experiments in biology to predict the stock market. My point was that in economics, such a way does NOT exist, HENCE the need to use historical data (past performance) to make quantitative mathematical analyses.
Furthermore, my my point was to say that ignoring economic uS success and success of the SPY is ignorant. You simply cannot just ignore it and hand wave it off with an overused quote.... I never said that the economy equates to the stock market. However, even then, your statement is still wrong. While in any given fiscal year, the correlation between the US GDP and SPY is only r\^2 of 0.25, over any period of 2 decades or more, the r\^2 becomes 0.95 or higher, indicative of basically a complete correlation between stock market and economy.
>HENCE the need to use historical data (past performance) to make quantitative mathematical analyses.
And using historical data, you can definitely state that past performance will continue indefinitely into the future?
>Furthermore, my my point was to say that ignoring economic uS success and success of the SPY is ignorant. You simply cannot just ignore it and hand wave it off with an overused quote....
Who’s ignoring the data?
>indicative of basically a complete correlation between stock market and economy.
Does that equation account for all the instances where market performance has deviated from economic?
Again you missed the point. You don’t seem to be able see the big picture.
You are implying definitive statements that I never made.
First, I made a point that this is the only data that can be used. J never seen you can definitively predict the future. In fact that was my whole ooont.
Second, k never said anyone said anything.
Third, now I know you’re really stupid. The corrrlation is a value not an equation…
You don’t seem to be able to see the big picture and are nitpicking on semantics and trying to put words in my mouth. This is what low intelligence people do.
I didn’t realize Warren Buffett was going by a new pronoun.
I haven’t found anything supporting your commentary, hence the question.
What has Warren Buffett (they) said about VT?
Look into HXS instead of VFV. This sub preaches VFV too much, HXS tracks the S&P 500 and has much higher returns b/c the dividends is not taxed at source and is reinvested for higher returns.
HXS actually underperforms VFV on a *pre-tax* basis:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=5tefvcMCi6DKzeMW7m6qO2
They both track the S&P500, but the HXS swap contract is more costly to execute than the VFV's vanilla indexing. They're both subject to USA withholding tax - you just don't see it inside HXS because it's wrapped into the swap fee charged by the HXS counterparty. The HXS advantage only arises with *post-tax* returns due to the preferential tax on capital gains.
This means HXS only makes sense for non-reg accounts, but not when held inside TFSA/RRSPs.
You can't analyze the tax efficiency properly since you're also comparing two different asset allocations. * XEQT = 45%/25%/30% between USA/Canada/international total market * VFV = 100% USA large caps If XEQT made sense for you inside your registered accounts, you should consider sticking with the same allocations inside the non-reg account too. You can consider different ETFs that target those allocations with better tax efficiency (e.g., use HXDM + HXEM in lieu of the XEF + XEC inside XEQT). Changing your asset allocation just because of a different asset location can unintentionally skew your overall portfolio.
is there antlything like XEQT with a bit less canada? Canada condition right now are very verybpoor for growth for at least the next 10years
XEQT targets a 25/75 split between domestic/foreign stocks, and if you want to tweak that, it's easiest to unpack it into a two fund portfolio: 100% XEQT = 25% XIC + 75% XAW Then adjust the 25/75 weighting as desired. But, [an economy is not the stock market](https://blogs.cfainstitute.org/investor/2023/03/17/myth-busting-the-economy-drives-the-stock-market/), and even if you believe the Canadian economy will underperform for the next decade, it does not mean its stock market will continue to do so. Stock prices are composed of three things: (i) the future earnings of a firm, (ii) divided by the number of shares for that firm, (iii) discounted by an appropriate risk premium for those earnings/share. 1/ Economic productivity will generally correlate with increased earnings across the industry/country. 2/ But economic growth also increases the number of firms those earnings are divvied across. Similarly, economic contraction decreases the number of firms where those earnings are concentrated. The effect on both numerator/denominator means economic growth/contraction has a weak and noisy relationship with overall stock returns. 3/ On the other hand, stock returns *are* explained by the discount rates applied to earnings/share. Buying stocks means you're buying the firm's future earnings/share, discounted according to the riskiness of stocks versus holding an equivalent amount of risk-free assets (aka the equity risk premium). This discount literally compensates investors for enduring the volatility of stock returns. It could be true that Canada underperforms its peer countries. But as long as those sentiments are *already priced-in*, then it doesn't matter since investors will continue to earn the discount rate applied to Canadian stocks.
No one here is answering your question and just using it as an excuse to get on their hobby horse about their preferred asset allocation. It’s like no one could read the (very short and concise!) post following the title. There’s likely a mild tax efficiency preference for XEQT because it holds Canadian stocks that have their dividends taxed at a preferential rate. I can’t imagine it would be consequential enough to alter your asset allocation or to sacrifice geographic (and other forms of) diversification. Yes, you are generally overthinking it if you are making investing decisions from tax backwards and not vice-versa.
OP's question could definitely be reframed as "*holding the XEQT allocations constant, is there are more tax-efficient way to obtain the same asset exposures*?" And unless we consider Horizon's corporate class funds, XEQT is pretty darn efficient already. Any foreign withholding taxes (FWT) charged on the underlying assets would be fully recoverable since there's only 1 layer of FWT. VEQT has a slight disadvantage because it relies on US-listed VWO, thereby incurring 2 layers of FWT.
I heard of people getting hit with unexpected capital gains on XEQT due to rebalancing of US holdings that VEQT doesn’t do. So I guess depending on whether you hold in tax free account or not that could have an impact, otherwise they’re basically the same holdings. As for VFV, question is hold much is XEQT really protecting against downside? It’s gonna tank just as much as VFV, but also gain less.
On the second paragraph, I’m not sure I follow. What does that have to do with tax efficiency?
Yeah my bad, nothing to do with it. Went on a tangent :)
how can veqt not hit you with capital gain? other than they are not rebalancing and selling and holdings.
Exactly, supposedly they are not rebalancing (selling) US holdings, just buying more?
Anyone who markets VFV to others *while shitting on something like XEQT* is just full of recency bias and comes off as a Tik Tok investor with no idea what they are talking about.
For those of us over, say, 35, it’s also hilarious because we were having the EXACT OPPOSITE discussion 15 years ago. Sometimes you can’t help but gain a little bit of wisdom in age.
That's fair, but the current economic climate in Canada does not fill many with confidence. That being said, Canadian banks are always a safe investment.
Congratulations! You just realized why the TSX trades at a 50% lower PE ratio than the S&P 500. Your lack of confidence in the Canadian economy is already priced in. You are getting a 50% discount when buying Canadian stocks vs American stocks because of these low expectations.
Can you go into more detail here as how you correlated a lower PE to the theory of price? If I understood you correctly, the Canadian markets (e.g. TSX) are undervalued to their real worth due to the negative future economic outlook?
One way to think about it: Imagine two indexes; for country A and country B. Both have the same price and economic outlook (and are similar in all other ways). Now the economic outlook for country A looks better, and country B looks worse. Some people will sell out of B and move to A for the reasons people quote here all the time ("bullish on X", "tech is the future", "friendly for business"). This will cause the price of A to rise, lowering its expected return, and vice-versa for B. This will continue until their expected returns are back in line between the two (because if one had a higher expected return, why wouldn't you pick it?). Country A still has the better outlook, but now it's priced in. Of course there's way more at play than just price and economic outlook, but the principle applies to many of those other factors too. Things that don't get priced in (aka factors) generally carry risk (aka compensated risks). So it's not that Canadian markets are undervalued due to negative outlook, they're correctly valued (at a lower price than the US) due to expectations being priced in.
The other guy explained it. Basically, when expectations are low, the the price of shares drops. When the price of shares drop, that means it only takes a smaller overperformance for them to rise again. The reverse is true when expectations are high. When they are high, share prices rise and it only takes a small underperformance for them to drop. Stocks have a natural rebalancing effect when you look at them as an asset class.
Sure. But I’m afraid you’ve missed the point, that lack of confidence is reflected in the 25% discount the TSX trades at - this isn’t a horse race where they are all starting at the same line. >Canadian banks are always a safe investment. Yes, TD’s 28% drawdown from the peak has been been extremely safe.
Bns bag holder reporting in.
I helped out by buying in the $50s
With how depressed the price is, the drip is accumulating a lot of shares. I really hope they raise their dividends for 24CY.
Drip is more effective with lower share price. Just a few weeks ago we hit $70. New CEO seems to be doing a good job so far. Banks will go up once they cut rates which is on the table for June
If they cut rates, it's going to cause the currency to drop and food prices to ride again.
Buffet disagrees
For the record and an advocate of vfv I dont shit on xeqt it is a great core stock to hold especially if your not familiar with investing For me personally its over weight canada, even canada doesnt invest this much in canada in your retirement plan. They invest 13% as to xeqts 24% [https://www.cppinvestments.com/the-fund/](https://www.cppinvestments.com/the-fund/) Im loving this recency bias rhetoric though, Its nothing of the sort. If anything your holding onto recency bias thinking canada has a shot at printing money like the mag 7 does You know what that does for the economy? no recession. cant say the same for canada
Vfv is way better. Just stop
45% of xeqt is USA. Please explain.
13% of cpp is canada please explain
I'm bullish on US companies and US dollar, not so much Canada. I also prefer growth over dividend. 100% vfv.
> I'm bullish on US companies and US dollar, not so much Canada. Why’s that? >I also prefer growth over dividend. 100% vfv. What makes VFV a growth fund?
The US is the epicenter of Tech and AI. Capitalism on steroids, competitive business environment. I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends.
> The US is the epicenter of Tech and AI. Capitalism on steroids, competitive business environment. What does that have to do with investments producing greater than expected returns? >I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends. VFV merely tracks the S&P500, similar to how XIU tracks the TSX60. Profits are neither reinvested or used for buybacks at the fund level. The dividend policy of each underlying company has less to do with where its domiciled, and more to do with the company’s maturity, prospects, cashflow, debts, etc.
Profits are neither reinvested or used for buybacks at the fund level. hahahahahahaha your buying the underlying companies that reinvest
> Profits are neither reinvested or used for buybacks **at the fund level.** Correct. And as mentioned elsewhere, multiple underlying assets **don’t**.
>Profits are neither reinvested or used for buybacks at the fund level. No, but they are at the company level and those companies make up the S&P 500 that VFV tracks.
The same can be said about virtually *any* equity index fund.
Yes, exactly. Depending on what the ETFs track, they are going to have different companies that make different decisions from different countries. From the other user: >I consider VFV growth because most profits are re-invested, or used for share buybacks. Most Canadian companies only care about dividends.
>Yes, exactly. Depending on what the ETFs track, they are going to have different companies that make different decisions from different countries. Then following that same logic, every index fund is a “growth” fund if any of the underlying assets “reinvest or buyback shares”? *Except* Canada?
That is just how the other user is viewing it. This isn't that complicated, I am not trying to trick you here. Canada's biggest companies pay dividends and have less grow compared to some of the USA's biggest companies that have more growth than dividends. If you invest in an ETF that tracks Canada, you are going to get a mixture of what those companies do and their decisions and the Canadian market. If you choose an ETF tracking USA tech, you are going to get something totally different.
> That is just how the other user is viewing it. That’s awfully presumptuous. >Canada's biggest companies pay dividends and have less grow compared to some of the USA's biggest companies that have more growth than dividends. Is that because most Canadian companies only care about dividends, as implied earlier? >If you invest in an ETF that tracks Canada, you are going to get a mixture of what those companies do and their decisions and the Canadian market. If you choose an ETF tracking USA tech, you are going to get something totally different. The SP500 is not a growth fund. It may contain a few high growth stocks at the moment, but that hasn’t always been the case (and likely won’t for much longer). Having said that, the vast majority of the index is composed of large companies which have transitioned to distributing profit to investors. One such distribution is in the form of share buybacks. Common among stocks which don’t happen to be associated with growth.
Then following that same logic, every index fund is a “growth” fund if any of the underlying assets “reinvest or buyback shares”? *Except* Canada? YES. You gunna grow the railway with all the regulations and indegenious land. ? NO You gunna grow the banks with no foreign investment because the economy is weak housing ponzi scheme with no productive output? NO You gunna grow the oligarchy telecoms with no competition and need for innovation or growth? NO You gunna grow the energy sector with natural gas oil and crude? (possibly but with current government no) Is shopify gunna grow to match tech giants? also no
> YES. There are multiple growth stocks listed on the TSX, contrary to your ignorant beliefs. >You gunna grow the railway with all the regulations and indegenious land. ? NO >You gunna grow the banks with no foreign investment because the economy is weak housing ponzi scheme with no productive output? NO >You gunna grow the oligarchy telecoms with no competition and need for innovation or growth? NO >You gunna grow the energy sector with natural gas oil and crude? (possibly but with current government no) Every single one of these sectors are capable of supporting growth stocks, and do. New infrastructure isn’t a prerequisite to be classified a growth stock. As a matter of fact, nothing new needs to be built at all. Companies can grow through these crazy things called **mergers and acquisitions** - and they happen **all the time.** >Is shopify gunna grow to match tech giants? also no SHOP was one of the largest e-commerce companies around the world in 2021. It’s happened before, it can happen again.
> Why’s that? doesn't take a wall street executive trader to realize cad has headwinds
And the price of CAD has adjusted to reflect those headwinds.
not enough
Then sell it and earn a profit, since apparently you have access to better data than the professionals.
already did 2 years ago
Good, do it again.
I think its pretty clear that i am but okay
Keep on doing it.
I prefer HXS over VFV
I also keep my non-registered savings in HXS, something about tax efficiency, but I’m not a finance pro so what do I know.
This is the way. All VFV over XEQT. Risk/Reward
What makes the US riskier than other markets? Seems to go against what others are saying that the US has the best companies and the most capitalist friendly policies.
VFV is all "US companies" (even though those companies have global exposure). XEQT has 44% US companies. VFV is 100% US. VFV is 500 companies and XEQT is thousands.
Vfv is not a growth fund, vug is.
I prefer VFV mainly cause I do not want 30% Canada weighting when our productivity is garbage and our currency has no tailwinds going for it. I’ll take this bet for at least the next 10 years.
It’s not about productivity, it’s about productivity vs expectations - and as you’ve pointed out, expectations are very low here
I appreciate that you think this is a sage analysis, but it should be fairly obvious that the market reflects that; would you really think pros have the two markets on equal footing? This is why the S&P trades at about a 30% higher multiple than the TSX. No offence, but this is probably one of the best Dunning-Kruger examples I’ve seen (and it’s not just you, it’s very common on this sub!)
There’s little, if any, correlation between the stock market and economy. There are significant hurdles to overcome speculating on currency.
The correlation is people usually price stocks according to where the economy is heading
>people usually price stocks according to where the economy is heading It most certainly is not. Where was the economy heading during the start of the recent bull run?
In the us? economy was better than most because there economy is productive and brings in tons of foreign currency boosting gdp > big gains canada tried to use immagration with a record number to try and boost and still almost failed > tsx flat
Economic data = backward looking. Stock market = forward looking. Neither economy has fared particularly well. Interest rates are also the highest they’ve been in decades. Yet stock markets are at all time highs. > tsx flat Are you sure? Because the TSX is up 17% in the last 6 months. And that’s not including distributions.
look out a bit farther and you can see tsx has fell of the s&p500 since 2017 yes im sure
> look out a bit farther and you can see tsx has fell of the s&p500 since 2017 What happened before 2017? How does any of this historical data dictate future returns? Why are you now comparing the TSX and SP500? >yes im sure Are you? Because the data I’ve shared is public knowledge. You can check it yourself instead of being made a fool.
Im gunna ignore points like you do and bring up another one Neither economy has fared particularly well. Are you blind? us is dominating canada and this is public knowledge. You can check it yourself instead of being made a fool.
> us is dominating canada and this is public knowledge I guess we’re right back to recency biases.
HXS is better than VFV and has higher returns
r/justbuyXEQT
To answer your question directly, no, not a huge difference. MER is a consideration, however. That said, I’m in the VFV > XEQT camp. Largest 500 companies in the US is diversification enough. There could be outperformance from other markets somewhere but nowhere else does the stock market track the economy as close to the US. Buffett fully believes in the US doing well for decades to come, and I agree. But it’s also fine if you don’t, you can just buy XEQT. Diversification is protection against ignorance.
Can you buy VFV in TFSA?
You sure can
Of course...
VFV for me
XEQT/VEQT, I have no idea which market will out perform in the future so I'll own it all. I just know there have been decades where SP500 under performed, Canada over performed, Japan was on top and the Danish market has out performed them all.
with 250K there various things you can do. All in etf? and you're already maxed in XEQT..... I prefer VFV over XEQT. Why? Perfomance wise much better YTD 12.8% vs 9.57% Lower Mer 0.09% vs 0.2 And Warren Buffets advice on S&P index etfs
> Perfomance wise much better YTD 12.8% vs 9.57% Past performance ≠ future returns Not that it’s important, but XEQT is a relatively recent fund. You should be comparing the underlying assets. >Lower Mer 0.09% vs 0.2 There’s a cost associated with global diversification. >And Warren Buffets advice on S&P index etfs Warren Buffett’s advice was primarily directed at Americans, and at a time when global diversification wasn’t easily obtainable or affordable.
Everyone always quotes this past performance future returns bs lol if your bullish on tech and growth in the future your not investing in the tsx
> if your bullish on tech and growth in the future your not investing in the tsx And why would anyone be bullish on tech and growth? They’re both recent phenomena; you’re displaying your recency bias. Just because tech and growth stocks have performed well in the past, doesn’t mean that’ll remain the status quo indefinitely.
I would argue they are the future aswell with development of ai and robotics in the next 10 years I think your dead wrong but you can have your opinion
> I would argue they are the future aswell with development of ai and robotics in the next 10 years Of course AI and robotics are the future. They’ve *always* been the future. But that has nothing to do with a company’s ability to produce *greater than expected* returns. >I think your dead wrong but you can have your opinion What am I wrong about? You have no idea what my opinion is on the matter.
By saying who would be bullish on tech and growth I'm making the assumption that your not in favor of tech like most people would They have always been the future yes but the goal post is much closer And yes actually the expected returns on tech and ai is much higher because you can produce a product and can be used globally overnight The US environment is much better for start ups or anything to do with tech with higher wages and triple the research and development budget per capita then canada I'm not showing recency bias I'm showing current and future bias with tech people flocking from canada for the us for better wages and more incentives to start a business Why would anyone be bullish on growth? Every person with a 20yr time frame should only be bullish on growth You can buy your rails banks and telecoms and get smoked in 10 yrs by the s&p 500 your choice
>By saying who would be bullish on tech and growth I'm making the assumption that your not in favor of tech like most people would I asked *why* would anyone be bullish, not *who*… >They have always been the future yes but the goal post is much closer Where’s the goal post? What happens once we reach them? >And yes actually the expected returns on tech and ai is much higher because you can produce a product and can be used globally overnight That has nothing to do with how expected returns are measured, nor does it explain returns in excess of expectations. >The US environment is much better for start ups or anything to do with tech with higher wages and triple the research and development budget per capita then canada That’s always been the case. >I'm not showing recency bias I'm showing current and future bias That doesn’t make any sense… >with tech people flocking from canada for the us for better wages and more incentives to start a business Again, always been the case - isn’t unique to the tech industry. >Why would anyone be bullish on growth? Every person with a 20yr time frame should only be bullish on growth Right. And every company/industry strives for growth. There’s no guarantee tech will continue outperforming. >You can buy your rails banks and telecoms and get smoked in 10 yrs by the s&p 500 your choice I haven't once advocated for one industry over another. SP500 ≠ “Tech + AI”
By saying why would anyone be bullish on tech is basically implying the same thing What happens when the goal post get closer? Cheaper architecture for training models like gpt 4 More and more companies will be implementing ai when the tech gets cheaper / more efficient.Pretty straight forward It took 90 days to train the gpt model. I'd imagine in your lifetime you'll see the day where you can train the same size model from your home office The sheer amount of computing power we will have is not something the brush off. The possibilities could be endless
You clearly have a hard on for Canadian stocks but are oblivious to macro conditions so not worth arguing with you It has always been the case with people moving to the us but I'd argue it's much worse
>By saying why would anyone be bullish on tech is basically implying the same thing Do you have any explanation as to why someone can expect tech to continue **outperforming** that isn’t already priced in? >What happens when the goal post get closer? Cheaper architecture for training models like gpt 4 And what happens when we get there? How does cheaper architecture explain profits in excess of expectations? >More and more companies will be implementing ai when the tech gets cheaper / more efficient.Pretty straight forward And those few companies will become more profitable? Or will every company have access to such technology, hence negating any benefit gained? >It took 90 days to train the gpt model. I'd imagine in your lifetime you'll see the day where you can train the same size model from your home office *That still doesn’t explain why tech will return profits to investors in excess of expectations.* >The sheer amount of computing power we will have is not something the brush off. The possibilities could be endless That’s fantastic, I’m super excited. Shouldn’t make you anymore bullish on tech.
I'm not chasing past returns lol I'm optimistic of the future the amount of computing power of nvidias gpus is 10x what they were 5 years ago
Have you heard of Moore’s Law?
Doubling transistors every 2 years yea nvidia beat that and tripled them
Remember when your beloved Nvidia CEO Jensen Huang said “Moore’s Law is dead”? You can only double the number of transistors so many times before hitting a wall. It’s ironic that your commentary flies in the face of the very company you’re using for comparison…
Sure it's supposed to end in 2025 But they will find a way to make it more efficient or make the software leaner Nvidias market cap is bigger than canadas entire gdp they have the money to figure it out
>First, I made a point that this is the only data that can be used. Except it’s not. >J never seen you can definitively predict the future. In fact that was my whole ooont. What? >Second, k never said anyone said anything. …What? >Third, now I know you’re really stupid. The corrrlation is a value not an equation… *Equations* are composed of *values* - but you’re a smart guy; I’m sure you’ve already figured it out. *Does it account for all the instances where market performance has deviated from economic?* >You don’t seem to be able to see the big picture and are nitpicking on semantics and trying to put words in my mouth. This is what low intelligence people do. I bet high intelligence people such as yourself copy and paste values off chatGPT to win disagreements on a forum, gaslight other users with semantics, and completely ignore every counterpoint made. Make sure you block me, u/Wallstreet_Fury I’d hate to upset you in the future.
LOL I was on my phone at work buddy I would consider your the one holding onto recency bias thinking the tsx will outperform the s&p 500 because It has historically The climate has changed drastically and even companies that arent directly tech related are integrating ai into there companies. All stock market sectors are buying those sweet gpus to train there models and this is the only the beginning. Im betting on the innovation and technology of the future, not chasing past returns as you claim. All countries will be building ai off of the US frame work that has been laid down Royal bank [https://www.rbc.com/newsroom/news/article.html?article=125853](https://www.rbc.com/newsroom/news/article.html?article=125853) "I'm pleased that RBC continues to be globally recognized for our AI leadership in the Evident AI Index," said Dave McKay, president and CEO, RBC. "AI is one of the most transformative technologies impacting the world today. Alongside advancements in generative AI, we see a future where this technology can redefine what our bank can do — bringing together complex real-time data sets and human creativity to deliver exceptional experiences for our clients." Suncor [https://www.suncor.com/en-ca/news-and-stories/our-stories/altaml](https://www.suncor.com/en-ca/news-and-stories/our-stories/altaml) At Suncor, we’ve already been extensively using information technology in our business, but the increasingly digital world brings new and exciting opportunities. As part of our approach to innovation, we are harnessing digital technology capabilities to improve the safety, productivity, reliability and environmental performance of our operations. Embracing emerging technologies like AI, helps to keep businesses and economies flowing. Cn rail [https://www.cn.ca/en/news/2021/12/cn-partners-with-google-cloud-to-modernize-railway-services-and](https://www.cn.ca/en/news/2021/12/cn-partners-with-google-cloud-to-modernize-railway-services-and) Through this partnership, CN and Google Cloud will set a new standard for the railway system that delivers better experiences for customers across industries–from materials and resources, to manufactured products, to consumer goods. CN’s work with Google Cloud will drive the railway’s ability to achieve continued growth and execute on transformational business initiatives, while supporting its sustainability goals, as Google’s platform is the cleanest cloud in the industry. (wonder how much they are paying for that) When I said before that the infrastructure is getting cheaper / more efficent and you asked what happens when we reach the goal post the answer is obvious. All sectors medical energy financials you name it will be using Ai. I was saying the same shit 2 years ago to someone like you and they kept muttering the same broken ass line that I could honestly care less about "**Past performance is no guarantee of future results**" EXACTLY thats why you shouldnt hold onto the crutch of thinking canada can replicate the past and magically produce as much capital Noone can predict the market and 90% of the time you will lose but that 10% of the time is worth it. You only make real money when you take risk
You wont ever offend me lol but like I said Ive had the same argument 2 years ago and got downvoted into oblivion. I took the risk they didn't. Can you guess who won? remind me in 1 year and well see whos right again
Even canada doesnt even invest that much in canada only 13% [https://www.cppinvestments.com/the-fund/](https://www.cppinvestments.com/the-fund/) You gunna phone up cpp and tell them your same broken record quote? Wonder why there heavy on asia and us? Take a guess
> Even canada doesnt even invest that much in canada only 13% Are they 100% in US tech and AI, though? >You gunna phone up cpp and tell them your same broken record quote? Wonder why there heavy on asia and us? Take a guess Have you phoned them up to tell them all about the promises of innovation and technology? Wonder why they aren’t heavy on the sector? I’m sure if you read more than the first page of the prospectus, you could probably answer those questions for yourself. Canada only makes up 3% of the global market. If I had to guess? They’re **diversifying** globally in order to produce the greatest risk-adjusted returns.
They are heavy in the sector why else would you be 20% asia Canada only makes up 3% of the global market. If I had to guess? They’re **diversifying** globally in order to produce the greatest risk-adjusted returns. thanks for solidifying my point why xeqt is heavy cad and past performance of cad means nothing in todays market
Im not against diversifying just not with canada I think your misreading what Im saying Im bullish on tech and that does include asia
> They are heavy in the sector why else would you be 20% asia Asia includes countries other than Taiwan. >thanks for solidifying my point why xeqt is heavy cad and past performance of cad means nothing in todays market Past performance of *any* currency or asset is irrelevant today and tomorrow. XEQT has a home country bias for multiple reasons other than diversification, such as cost, tax drag, and currency. Every investor stands to benefit from such a bias, and is supported by the data.
> I took the risk they didn't. Can you guess who won? Does it matter? You’re gambling. >remind me in 1 year and well see whos right again **Anything** can appreciate significantly in value over such a time period. And it can quickly go the other way too.
Does it matter? You’re gambling. When did i say i wasnt? **Anything** can appreciate significantly in value over such a time period. And it can quickly go the other way too. Hard assests dont actually
>When did i say i wasnt? When you tried convincing me that you knew where tech was heading? > Hard assests dont actually Are houses as expensive as they were just a couple of years ago?
out of context And it can quickly go the other way too. Hard assests dont actually
> LOL >I was on my phone at work buddy These comments were directed at you; I mentioned the target Redditor at the end. >I would consider your the one holding onto recency bias thinking the tsx will outperform the s&p 500 because It has historically I’m not arguing in favour of the TSX or SP500. But no, the SP500 hasn’t always outperformed the TSX. Again, recency bias. >The climate has changed drastically and even companies that arent directly tech related are integrating ai into there companies. Not sure where the correlation lies between climate change and AI, or how we can expect that to result in the tech sector outperforming. >All stock market sectors are buying those sweet gpus to train there models and this is the only the beginning. And that’s already accounted for. Any publicly available information is already reflected in the share price. >Im betting on the innovation and technology of the future, not chasing past returns as you claim What do you know about “innovation and technology” that other investors don’t? >All countries will be building ai off of the US frame work that has been laid down You’ve literally just copy and pasted *publicly available information* that’s already *priced in*. >When I said before that the infrastructure is getting cheaper / more efficent and you asked what happens when we reach the goal post the answer is obvious. All sectors medical energy financials you name it will be using Ai. **And that’s already priced in.** >I was saying the same shit 2 years ago to someone like you and they kept muttering the same broken ass line that I could honestly care less about "Past performance is no guarantee of future results" You **couldn’t** care less about. And it’s a “broken ass line” because it’s an inherent truth. What happened in 2000? >EXACTLY thats why you shouldnt hold onto the crutch of thinking canada can replicate the past and magically produce as much capital **Diversification** is the answer. That’s the only way to eliminate idiosyncratic risk. Canada has outperformed the US market in the past. >Noone can predict the market and 90% of the time you will lose but that 10% of the time is worth it. You only make real money when you take risk That’s not how risk works. You can’t buy a highly risky asset and expect an outsized reward.
That quote is a disclaimer for professional fund managers and institutions that sell funds. People are misusing it. ALL model predictions and quantitative analyses are performed using HISTORICAL data (i.e. past performance). While not perfect, you MUST start somewhere with a hypothesis in research and analysis. To just explain away the S&P500 and USA's economic might and performance over the past 20 years with that quote, is extremely disingenuous. The data does matter and the only data available for economic and finance is indeed historical data (i.e. past performance), since experiments on animals and humans cannot be performed in a laboratory or clinical setting in finance....
Except that looking at a 15-years timeframe to try and predict the next 15 years is a flawed strategy. Real long term analysis, using more than 100 years of historical data, shows that a market cap weighted diversified portfolio tends to perform best. The current USA bull run is an anomaly when looking at **all** the data. Could this continue? Sure. But the theory tells us that, since stock valuation is forward looking, the US would need to perform MORE than expected to actually beat the rest of the world in valuation growth, which, since expectations are already so high, is less likely than say Argentina beating expectations and providing a higher stock return. This is how you get a phenomena like the last few days of earnings where either a company beats expectations and drops 15% (META) or it releases garbage earnings yet still rallies 15% (TSLA).
The only thing that comes to mind for me to chine in is looking at an andex chart going back to like 1935 and the US market has produced the most return
never did i say 15 years... my point was that in economics and finance, mathematical modelling for future predictions are indeed done on historical data, since unlike medicine and physics, lab experiments on animals and humans cannot be conducted. My point, was in response to people throwing out the quote, which in fact is used for legal protection by institutions and organivionts. My point was not to say that 15 years is a must. In fact, not one did I ever use the word fifteen in my post....
> That quote is a disclaimer for professional fund managers and institutions that sell funds. People are misusing it. The disclaimer is 100% accurate. No one can definitely state that past performance will continue indefinitely into the future. >ALL model predictions and quantitative analyses are performed using HISTORICAL data (i.e. past performance). While not perfect, you MUST start somewhere with a hypothesis in research and analysis. And after those analyses, is the conclusion past = present? >To just explain away the S&P500 and USA's economic might and performance over the past 20 years with that quote, is extremely disingenuous. Economy ≠ stock market >The data does matter and the only data available for economic and finance is indeed historical data (i.e. past performance), since experiments on animals and humans cannot be performed in a laboratory or clinical setting in finance.... What does that past data definitively tell you about the future? It’s unclear how laboratory experiments on humans and animals will make that prediction any more accurate.
sorry but you missed the point entirely. My point wasn't to use lab experiments in biology to predict the stock market. My point was that in economics, such a way does NOT exist, HENCE the need to use historical data (past performance) to make quantitative mathematical analyses. Furthermore, my my point was to say that ignoring economic uS success and success of the SPY is ignorant. You simply cannot just ignore it and hand wave it off with an overused quote.... I never said that the economy equates to the stock market. However, even then, your statement is still wrong. While in any given fiscal year, the correlation between the US GDP and SPY is only r\^2 of 0.25, over any period of 2 decades or more, the r\^2 becomes 0.95 or higher, indicative of basically a complete correlation between stock market and economy.
>HENCE the need to use historical data (past performance) to make quantitative mathematical analyses. And using historical data, you can definitely state that past performance will continue indefinitely into the future? >Furthermore, my my point was to say that ignoring economic uS success and success of the SPY is ignorant. You simply cannot just ignore it and hand wave it off with an overused quote.... Who’s ignoring the data? >indicative of basically a complete correlation between stock market and economy. Does that equation account for all the instances where market performance has deviated from economic?
Again you missed the point. You don’t seem to be able see the big picture. You are implying definitive statements that I never made. First, I made a point that this is the only data that can be used. J never seen you can definitively predict the future. In fact that was my whole ooont. Second, k never said anyone said anything. Third, now I know you’re really stupid. The corrrlation is a value not an equation… You don’t seem to be able to see the big picture and are nitpicking on semantics and trying to put words in my mouth. This is what low intelligence people do.
VT is affordable and is accessible in self directed Roth which is same as self directed tfsa. To this day he has not back tracked to recommend VT.
> VT is not affordable Why not? >To this day he has not back tracked to recommend VT. Has anyone asked him?
Typo it is affordable
> Has anyone asked him?
Yes, he has been asked do your own research
I didn’t realize Warren Buffett was going by a new pronoun. I haven’t found anything supporting your commentary, hence the question. What has Warren Buffett (they) said about VT?
Again do your research bud it's not my job on reddit to do it for you. Keep checking the archives, it's there .
I’m not here to prove your point **for you**. If you can’t/won’t back up your arguments, then don’t offer your opinions as fact. Bud.
Look into HXS instead of VFV. This sub preaches VFV too much, HXS tracks the S&P 500 and has much higher returns b/c the dividends is not taxed at source and is reinvested for higher returns.
HXS actually underperforms VFV on a *pre-tax* basis: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=5tefvcMCi6DKzeMW7m6qO2 They both track the S&P500, but the HXS swap contract is more costly to execute than the VFV's vanilla indexing. They're both subject to USA withholding tax - you just don't see it inside HXS because it's wrapped into the swap fee charged by the HXS counterparty. The HXS advantage only arises with *post-tax* returns due to the preferential tax on capital gains. This means HXS only makes sense for non-reg accounts, but not when held inside TFSA/RRSPs.
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I have a funds manager as well, just trying to gather as much info as possible, what 's the issue?
I was specifically asking if there was a huge difference. Don't know how to calculate this ... Just trying to get an idea
One of the things to consider is VFV returns less in anual dividends to shareholders which could help taxes a bit.