Special Feature

Rethinking Retirement

Longer lives are transforming financial advice. This special feature from the Mid-November 2015 issue of Investment Executive examines such topics as helping single retirees, using insurance-based income products, helping clients manage debt in retirement, planning for longevity and much more.

With the rising flexibility of exchanged-traded funds (ETFs), it now is possible to build portfolios for retired clients using only ETFs. Two experts show how to create yield and control risk with ETFs that deliver asset allocation and regional diversity

By Jade Hemeon | Mid-November 2015

INVESTMENT EXECUTIVE ASKED TWO exchange-traded funds (ETFs) portfolio strategists - Daniel Straus, director of ETF research and strategy, structured products and derivatives, with Toronto-based National Bank Financial Inc.; and Tyler Mordy, president and chief investment officer with Toronto-based Forstrong Global Asset Management Inc. - to put together a hypothetical $1-million retirement investment portfolio made up entirely of ETFs.

The guidelines: the portfolios could hold up to 10 ETFs; should be globally diversified, as well as balanced between stocks and fixed-income exposure; and generate an average annual yield of 4%.

Although both strategists include stocks- and bonds-based ETFs, the tilts were different. Straus' portfolio asset mix allocates 52.5% to stocks; Mordy's, 36% to stocks. However, both portfolios have significant real estate exposure (which could be considered equity): Straus recommends 10% exposure; Mordy, 11%. On the fixed-income side, Mordy recommends 51% in bonds, while Straus recommends 36%.

Mordy made his picks from ETFs that trade both in Canada and internationally, with variety on the fixed-income side. For example, he included emerging-market government bonds and even some China-related offshore bonds that trade in the "dim sum" market, as well as a global opportunities ETF with the freedom to include a wide range of asset exposures.

Straus stuck to Canada-listed ETFs, but still was able to achieve international strategic fixed-income exposure with an ETF offering global diversification and exposure to alternative asset classes such as convertible bonds.

"Adequately diversifying a portfolio - especially a retirement portfolio," Mordy says, "is of paramount importance."

Daniel Straus' picks

Tyler Mordy's picks

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