1) The performance of the US markets seems to be much better than TSX in the longer term. Should an average investor consider focusing mostly on US holdings instead of Canadian stocks?
2) I would like to get your opinion on HBGD in terms of potential returns, how risky is this ETF and what role could it play in an average investor's portfolio within a 7-8-year timeframe before when decumulation begins.
Note this is for an RRSP account.
Thank you in advance for any insight. Cheers.
1) Asset, sector and geographic allocation needs to be based on an investors' own needs, goals, and timeframe. But we are finding lots of solid investment ideas in the US, and the US economy is significantly stronger than Canada's right now. Currency risk needs to be considered, and we would not suggest an 'all-in' approach for any Canadian that has Canadian dollar expenses. But many sectors in the US do look better, such as tech and healthcare, for example. The Canadian healthcare market in particular is particularly thin. We would be fine with more than 50% of assets in the US certainly (note 5i staff cannot buy Canadian stocks, only ETFs or funds). HBGD is a very small ($14M) ETF focusing on big data and hardware. Fees are 0.55%. It is down 14% this year, kind of surprising considering the sector. Still, its annualized 5-year return is an impressive 30.8%. But overall, we would consider it too small for a strong endorsement. We would note that ETFs can be shut down anytime by their managers, with no vote from unitholders (money is returned).