Personal Portfolio Advice (Canadian)

I’m looking for some personal portfolio advice as a Canadian. We have few choices for currency hedged ETF’s and I’d like most of my portfolio to be invested in non-Canadian companies. I’m not looking at purchasing any non-corporate bond etf’s, mostly just high yield. I’d like my portfolio to be hedged as the strength of the USD right now would kill my returns in the future when converted back.I was thinking the other way to do this would be to borrow USD (short USD) and use proceeds to buy USD ETF’s (mostly vanguard). I haven’t done the math yet on whether currency hedged ETF’s (expense ratios are fairly high) are more cost effective than shorting the USD and buying the same index in USD. Maybe you guys could provide some insight. In terms of portfolio construction, right now I’m thinking of something like:

40% total market ETF 30% developed markets ETF 15% High yield bonds ETF 5% Oil equity ETF 10% Cash

Also, because of my job, I’m not able to actively manage my portfolio (can’t stock pick for compliance purposes), nor do I want to as it’s too time consuming. FWIW, I’m 27, have ~100k, no dependents, low monthly expenses, decently high paying job. I’m looking for advice mostly on the currency hedging and maybe some insight into portfolio construction/asset allocation.

Right now investing in both equity and bond are risky as both of these assets are relatively rich in absolute terms. If market crashes your portfolio assets’ correlation will most likely increase and go down at the same time. I’d suggest divest through different strategies versus naive diversification by asset class. I’d diversify your portfolio using different strategies such as combination of value, momentum, long/short, managed future, etc. Best of luck.

I agree here and I’ve been on the sidelines for 9 months already thinking this exactly. What I’ll do is dollar cost average over a 6+ month period to be fully invested. I agree that valuations are rich in equity markets but I don’t see a better place to invest and I’m investing for the long term. I don’t see touching anything I put into the portfolios for a long time. Regarding the strategies you listed, that requires too much active management and rebalancing and I don’t have the time or desire to do that.

There are many commodity etfs I believe that have broad exposure to commodities that rebalance (read this as it is an important driver of return). I’d do more research on cost efficient alternative ETFs in the market that have minimal investment requirements.

Also just because you have a long-term investment horizon doesn’t mean you should just invest at the top, buy and hold is a crock of you know what, it all depends on when you got in. Imagine if you got in at the top of the financial crisis or the tech bubble, you would’ve done ok but you would’ve done a whole lot better if you got in AFTER.

Market timing doesn’t work. I’m amazed that the professionals on here who so easily overlook the obvious basics and advocate for strategies that clearly don’t fit the desired advice. The OP says he doesn’t want to pick stocks because he doesn’t have the time, this obviously implies that he’s not looking to spend significant time watching the markets.

Wish I could help you on the fund specific suggestions but don’t have familiarity on this need for Canadians. As for your asset allocation, I’d recommend that you hold less cash unless it’s serving another purpose. Over the decades of investing that you have in front of you, you’ll perform better by putting that money to work. Perhaps move that to EM? Last suggestion, splitting hairs here…perhaps since you live in Canada you already have enough ‘invested’ in oil and maybe shouldn’t add more exposure? Not sure what your job is tied to or anything though.

*also…stay away from L/S equity, MF and other alts as klaudnine recommends. Fees are too high and at your age you shouldn’t be worried about risk adjusted returns.