Adding Diversification to the Portfolio

XAW ETF

Hey investors I made another addition to my portfolio. When I wrote My Financial Goals For 2020 I stated I wanted to add some diversification to my portfolio because at the beginning of the year 66% of my portfolio was invested in the Canadian market. The Canadian stock market only makes up 4% of the world’s market so it’s important to diversify. On Monday January 20th I added the iShares Core MSCI All Country ex Canada Index ETF (ticker: XAW) to my portfolio making it the second ETF I hold.

XAW gives investors access to stocks all over the world in fact the six ETFs that are inside of XAW hold a combined 10,238 companies giving me instant diversification.

Geographic Breakdown

  • United States 57.21%
  • Asia 17.79%
  • Europe 14.46%

I do hold some individual US stocks but with this new holding I now have access to Amazon, Alphabet and many other high growth stocks. Also I now have more access to Asia which I definitely need.

Distributions

XAW Distributions

XAW pays a semi-annual distribution from it’s recent history the payments are in June and December. The distribution varies as you can see from payment to payment.

The Purchase

On January 20th I purchased one share (that’s right one share) of XAW for $28.78 per share. The one share is not a typo. By looking at the last two distributions this one share should get me around $0.55 in income.

My Plan

To purchase this ETF I opened a new RRSP account with a new trading platform, I decided to try out Wealthsimple Trade. I did this because Weathsimple Trade is offering zero fees and commissions so I can buy and sell for nothing. If I stayed at RBC where I do my main investors each trade would cost me $10. I know Questrade offers free ETF purchases but I heard you need a $1,000 account minimum so that is another reason I chose Wealthsimple.

So my plan is to invest at least $100 per month into this account. I won’t get rich or diversified quickly with this approach but over time it will start to add up. By looking at the share price and the amount I plan on investing per month, it’s looking like I will be able to purchase 3 shares per month. Since these will be small purchases I won’t write a post for each buy I will just add what I buy on my monthly dividend income posts.

Thanks for reading everyone! Do you own XAW or thinking about it?

Thanks

Matthew

 

 

11 thoughts on “Adding Diversification to the Portfolio

  1. Hey Matthew,

    That’s a great addition to any portfolio for instant diversification. Although I don’t hold XAW, I hold individual ETFs that make up those geographic regions via Vanguard.

    Yes you’re correct with the $1000 minimum requirement to open up a new account at Questrade.

    Let me know what your experience is like with Wealthsimple.

    -DGX Capital

    Liked by 1 person

  2. I have been thinking about XAW ever since fellow blogger Passive Canadian Income bought it a little while back.. I have about a $12000 RRSP savings account with Tangerine which pays like 1.1% or there about. That interest is so low!! I use to hold mutual funds with Tangerine but sold a couple of years back.

    Liked by 1 person

  3. XAW pays just under 2% in dividends yearly. I can get the same percentage of return on a GIC. Why not consider something like ZWP (European high div covered call) , HHL (health care high div) or HBF (Harvest brand leaders income etf)? I have those and similar ones in my RRSP for diversity. All pay 5% or more yearly. 5% is the minimum amount I look for, along with healthy companies, when buying an ETF or an individual stock.

    I am new here, I clicked the link at My Own Advisor so maybe I am not familiar enough with your strategy from just reading one post to comment but I will be back.

    Liked by 1 person

    1. Hi Beth thanks for reading the post and leaving a comment. I chose XAW for the diversification and not really for the yield. I will take a look at the three options you mentioned.

      Like

      1. I believe there can be diversity and yield. My current RRSP holdings are:

        HHL
        ZWU
        ZHY
        ZWP
        HBF

        I am a dividend focused investor but I want the companies that are held in the ETFs to be strong. The diversity comes from the different sector ETFs I hold. Everyone does it differently though. Lots of people are very against chasing dividend yield. I believe chasing dividends is fine as long as the companies are solid.

        Liked by 1 person

      2. You have a good strategy! Since I invest about 95% in individual stocks I don’t know much about the ETFs you hold. I will check them out, I try now not to chase dividend yield, when I first got started out I chased the yield and got burned by it. The company ended up having too much debt and was eventually sold for peanuts. I look for solid companies to invest in that aren’t in danger of going bankrupt or cutting their dividend. I feel I can receive higher dividends this way instead of the ETF route. Sorta trying to create my own pension for future me 🙂

        Like

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