New iShares Portfolio Builder Funds

[theoldtimer]

http://www.newswire.ca/en/releases/arch ... c9650.html

[Shakespeare]

XCR

The fund may also employ currency hedging. Currently, the fund hedges currency exposure linked to investments in TIP, HYG, and LQD.

Code: Select all

Shares CDN DEX Short Term      XSB      TORONTO      39.99%
iSHARES CDN S&P/TSX CAP COMP    XIC    TORONTO    9.82%
ISHARES LEHMAN TRES INF PR S    TIP    NYSE ARCA    9.78%
ISHARES CDN DEX ALL GOVERNME    XGB    TORONTO    7.38%
ISHARES S&P 500 INDEX FUND    IVV    NYSE ARCA    3.52%
ISHARES CDN S&P 500 HDG TO C    XSP    TORONTO    3.49%
ISHARES MSCI EAFE INDEX FUND    EFA    NYSE ARCA    3.49%
ISHARES 100% HEDGED TO CAD I    XIN    TORONTO    3.48%
ISHARES GSCI CMDTY INDX TRST    GSG    NYSE    3.24%
ISHARES MSCI EMERGING MKT IN    EEM    NYSE ARCA    2.61%
ISHARES IBOXX INV GR CORP BD    LQD    NYSE ARCA    2.61%
iSHARES CDN CORP BOND INDEX    XCB    TORONTO    2.60%
ISHARES CDN DEX REAL RETURN    XRB    TORONTO    2.59%
ISHARES S&P GLOBAL INFRASTR    IGF    NYSE ARCA    2.43%
ISHARES FTSE EPRA/NAREIT GLO    IFGL    NASDAQ    1.36%
iSHARES CDN S&P/TSX CAP REIT    XRE    TORONTO    1.11%


MER 0.6%.

Looks like ~65% bonds.

[Shakespeare]

XGR

Currently, the fund hedges currency exposure linked to investments in EMB, TIP, HYG, and LQD.

Code: Select all

Name
   
Ticker
   
Listing
   
Weight
iSHARES CDN S&P/TSX CAP COMP    XIC    TORONTO    15.77%
iShares CDN DEX Short Term    XSB    TORONTO    14.17%
iSHARES CDN LONG BND INDEX    XLB    TORONTO    9.87%
ISHARES LEHMAN TRES INF PR S    TIP    NYSE ARCA    7.70%
ISHARES S&P 500 INDEX FUND    IVV    NYSE ARCA    5.03%
ISHARES CDN S&P 500 HDG TO C    XSP    TORONTO    4.98%
ISHARES MSCI EAFE INDEX FUND    EFA    NYSE ARCA    4.98%
ISHARES 100% HEDGED TO CAD I    XIN    TORONTO    4.97%
ISHARES GSCI CMDTY INDX TRST    GSG    NYSE    4.97%
ISHARES S&P GLOBAL INFRASTR    IGF    NYSE ARCA    4.12%
ISHARES CDN DEX REAL RETURN    XRB    TORONTO    3.98%
ISHARES MSCI EMERGING MKT IN    EEM    NYSE ARCA    3.65%
ISHARES FTSE EPRA/NAREIT GLO    IFGL    NASDAQ    2.90%
iSHARES CDN S&P/TSX CAP REIT    XRE    TORONTO    2.38%
ISHARES JP MORGAN EM BOND FD    EMB    NYSE ARCA    2.24%
ISHARES IBOXX INV GR CORP BD    LQD    NYSE ARCA    2.18%
iSHARES CDN CORP BOND INDEX    XCB    TORONTO    2.17%
ISHARES CDN DEX ALL GOVERNME    XGB    TORONTO    1.04%
ISHARES IBOXX H/Y CORPORATE BOND    HYG    NYSE ARCA    0.91%
ISHARES MSCI EAFE SMALL CAP    SCZ    NYSE ARCA    0.75%
ISHARES RUSSELL 2000    IWM    NYSE ARCA    0.70%

~45% bonds. MER 0.6%.

[Shakespeare]

XAL

"Alternative asset classes" includes but is not limited to, commodities, real estate investment trusts, income trusts, real return bonds, emerging market equities, emerging market bonds, high yield bonds, specialty equities, infrastructure and private equity....

Currently, the fund hedges currency exposure linked to investments in EMB, HYG, and TIP.

Code: Select all

Name
   
Ticker
   
Listing
   
Weight
ISHARES LEHMAN TRES INF PR S    TIP    NYSE ARCA    19.89%
ISHARES S&P GLOBAL INFRASTR    IGF    NYSE ARCA    13.87%
ISHARES GSCI CMDTY INDX TRST    GSG    NYSE    12.85%
ISHARES IBOXX H/Y CORPORATE BOND    HYG    NYSE ARCA    9.45%
ISHARES JP MORGAN EM BOND FD    EMB    NYSE ARCA    8.71%
ISHARES MSCI EMERGING MKT IN    EEM    NYSE ARCA    7.89%
ISHARES FTSE EPRA/NAREIT GLO    IFGL    NASDAQ    7.72%
ISHARES COMEX GOLD TRUST    IAU    AMEX    6.66%
iSHARES CDN S&P/TSX CAP REIT    XRE    TORONTO    6.34%
ISHARES CDN DEX REAL RETURN    XRB    TORONTO    6.05%

MER 0.70%.

[Shakespeare]

XGC

exposure to foreign fixed income securities, foreign equity securities and to one or more alternative asset classes....

Currently, the fund hedges currency exposure linked to investments in EMB, TIP, HYG, and LQD.

Code: Select all

ISHARES LEHMAN TRES INF PR S      TIP      NYSE ARCA      13.97%
ISHARES S&P GLOBAL INFRASTR    IGF    NYSE ARCA    9.80%
ISHARES GSCI CMDTY INDX TRST    GSG    NYSE    7.72%
ISHARES S&P 500 INDEX FUND    IVV    NYSE ARCA    7.26%
ISHARES CDN S&P 500 HDG TO C    XSP    TORONTO    7.19%
ISHARES MSCI EAFE INDEX FUND    EFA    NYSE ARCA    7.19%
ISHARES 100% HEDGED TO CAD I    XIN    TORONTO    7.18%
ISHARES JP MORGAN EM BOND FD    EMB    NYSE ARCA    6.16%
ISHARES MSCI EMERGING MKT IN    EEM    NYSE ARCA    5.61%
ISHARES FTSE EPRA/NAREIT GLO    IFGL    NASDAQ    5.22%
iSHARES CDN S&P/TSX CAP REIT    XRE    TORONTO    4.29%
ISHARES CDN DEX REAL RETURN    XRB    TORONTO    4.23%
ISHARES IBOXX INV GR CORP BD    LQD    NYSE ARCA    3.82%
iSHARES CDN CORP BOND INDEX    XCB    TORONTO    3.81%
ISHARES MSCI EAFE SMALL CAP    SCZ    NYSE ARCA    1.71%
ISHARES COMEX GOLD TRUST    IAU    AMEX    1.69%
ISHARES RUSSELL 2000    IWM    NYSE ARCA    1.60%
ISHARES IBOXX H/Y CORPORATE BOND    HYG    NYSE ARCA    1.02%

MER 0.70%.

[queerasmoi]

Okay, getting interesting now... does this mean they are the cheapest balanced funds denominated in Canadian?

Currency exposure is "half-hedged" for US and International.

Will there be enough liquidity to be able to buy this fund near NAV?

[squash500]

Will there be enough liquidity to be able to buy this fund near NAV?

I doubt it . I can't see these new etfs doing that well volume wise


IMHO, what Barclay's should have done would have been to create some etfs that "short" the market. Similar to HBP etfs but with only 1-1.5x leverage as an alternative to the 2x leverage that hbp etfs employs. Just my opinion .

[Bylo Selhi]

One thing that investors and advisors are recognizing in this market is that complexity is not always a good thing - simplicity, when applied intelligently, is - and that means knowing what you own. Not only do these funds give Canadians the access to unparalleled institutional money management insight, they also have the benefits inherent in all iShares ETFs - transparency; cost and tax efficiencies; intra-day trading; and access to hard-to-reach markets,

If simplicity is the goal then I could understand 4 to 8 funds per portfolio, but 21 -- several with <1% weighting?

[Shakespeare]

but 21 -- several with <1% weighting?

Yes, the ING funds are simpler - but at a 1% MER vs 0.6% for XCR/XGR, the latter may be more reasonable, depending on transaction frequency and costs.

[Bylo Selhi]

the latter may be more reasonable, depending on transaction frequency and costs.

And don't forget that transaction frequency and costs applies not only to the purchase and sale of the PB ETFs but also to all of the securities buried in those 21 ETFs that it owns. Those costs are not included in the underlying ETF's MERs, nor of course in the PB ETFs, so they could amount to a substantial drag on top of the official 60bp (plus brokerage fees.)

It will be interesting [for early-adopters, not me] to see if the added diversification improves returns enough to overcome that drag.

Anyway my point, as I see Gus also made on another thread, is that this is nothing but marketing hype. They may as well be selling [s]snake oil[/s]toothpaste.

[DanH]

Remember to verify the MER. With ETFs, they need not flow through the fees on underlying ETFs. But from what I can recall, Barclays (+ perhaps others) voluntarily provide this disclosure so that it's more comparable to funds. Just a head's up, though, to make sure this has been accounted for.

Assuming it's all counted, fees of 0.7% are, probably not coincidentally, about the same as that charged by Claymore for its fund of ETFs.

[squash500]

IMHO, it's all a "cash-grab" on behalf of Barclays to get more advisors to get their clients into ishares. I read an article somewhere that only 11% of canadians know about etfs .

I'm not sure if these new etfs offer an advisor a "small" trailer similar to the Claymore etfs . On second thought, I doubt it . Barclays made it clear right from the start that they didn't believe in paying advisors a "trailer"

[parvus]

Assuming it's all counted, fees of 0.7% are, probably not coincidentally, about the same as that charged by Claymore for its fund of ETFs.

Claymore reduced its fees yesterday to 25 bps.

It will be interesting [for early-adopters, not me] to see if the added diversification improves returns enough to overcome that drag.

Yes, with XAL and/or perhaps XGC, since they offer risk exposures (which Shakespeare has kindly enumerated upthread) that typically have not been available in the Canadian space.

Certainly, the availability of different types of risk exposure adds a little bit more complexity to the DIY decision, but I recollect an article from Businessweek, circa 2002, suggesting 25% exposure to alternatives, meaning real estate and hard assets. Both, of course, are now falling off many a cliff, but it will be interesting to watch the risk reduction potential in the future.

[Bylo Selhi]

Claymore reduced its fees yesterday to 25 bps.

Yabbut, "Accordingly, Claymore will no longer rebate back the fees of underlying Claymore ETFs held within the CorePortfolio(TM) ETFs."

[squash500]

Claymore reduced its fees yesterday to 25 bps.

IMHO, Claymore is getting very desperate for market share . I still don't understand how Claymore makes a go of it Their etf share volumes are miniscule at best.

These four new Barclay etfs are certainly not on my buying list any time soon .

I thought the purpose of buying etfs was to get away from these dreaded balanced wrap account type products? The xiu traded over 58 million shares today .

IMHO, the xiu is simple yet effective. why can't Barclays try to duplicate another "winning" etf such as xiu in terms of AUM instead of wasting their time with this wrap nonsense .

[queerasmoi]

Speaking of dreaded wrap products, let me quote to you from the Qtrade website:

Asset Allocation Tool and Managed Portfolio Solutions! Our Managed Portfolio Solutions invest primarily in ETFs - and are monitored and rebalanced to ensure your risk level is maintained.

I looked them up - they're managed solutions that charge you 2% annually so they can invest in ETFs cause you're too lazy

[adrian2]

IMHO, the xiu is simple yet effective. why can't Barclays try to duplicate another "winning" etf such as xiu in terms of AUM

Barclays didn't build the assets under management in XIU, they took over TIPs and HIPs (the first North American ETF's, launched before SPY).

[Bylo Selhi]

TIPs and HIPs (the first North American ETF's, launched before SPY).

TIPS35 came out in March 1990 and were originally sponsored by the TSE itself. Because they were a marketing vehicle for the TSE the MER in those days was subsidized down to a beep or two. Notice the trading volume even back then was ~150,000 per day.

[MathGuy]

I'm really suprised at the lack of enthusiasm for this product (and XGR). I've been dogging this market for the last 18 months doing research, trying to find the best strategies and vehicles and compared to the crap that most Canadians are investing in, these two beat the snot out of anything available. For those of us who have a life, and want our money managed competently and affordably with minimum baby-sitying, I'd like to hear one better alternative to either of these? One glance at these tells you that what we have here is cutting edge "couch potato" strategies - something that one could feel comfortable contributing to on, say, a quarterly basis, for years. One could, for example, employ the two in differing proportions depending on one's age, for example graduating from 100% XGR in our twenties to 100% XCR in our seventies. All this talk of spreads and hidden MERS is the kind of crap that was spouted by investment nerds and advisors when ETFs first appeared on the scene in Canada. Once these two catch-on, those concerns will dissipate, just like they did for all the other iShares issues.

[Shakespeare]

I would be more enthusiastic about these if they were simpler. They aren't bad for one-stop shopping, but I think they went overboard with the diversification. Remember that correlations go to 1 in a crash.

[MathGuy]

So you believe that Barclays created these funds without consideration of the theories of Markowitzian portfolio optimization, Shakespeare? One can easily see that their blend has all sorts of traditionally uncorrelated assets. In fact I feel quite confident that their method of weightings is based on a set of calculations and historical covariance matrices that are well beyond the average investor's reach.

[Shakespeare]

Trouble is covariances aren't stable.

[BRIAN5000]

How often do they rebalance and will that mean lots of distributions. can't find the dang Prospectus.

[MathGuy]

Yes covariances aren't stable but, yes, they know that. You haven't proposed an alternative. Perhaps you are more on-top of covariance drifts?

Rebalances will be done quarterly or more frequently as market conditions dictate - sounds yummy.

[Shakespeare]

My alternatives would be based on the FPX portfolios for the XCR and XGR, perhaps with a couple of extra components. More than 6-8 ETFs is likely unnecessary, with minimum weights in the 5% range.

Too much playing with an MVO is mathematical masturbation.

The ING Streetwise funds have four components and could be done by BGI quite simply (although they could half-hedge by using XSP and XIN as well as the unhedged versions, taking it up to 6 components).