“Couch Potato” Lazy Canadian ETF Portfolio Update – 6 Years Later

It’s about that time of the year when I take a look at the Lazy ETF portfolio aka the Couch Potato.

Brief recap:

  • Hypothetically invested $10,000
  • Chose to cash out the distributions (not re-invest)
  • Money was evenly split between 3 ETFs

In retrospect, and not even looking at the returns, which are abysmal, I see how stupid it was to buy both the S&P ETF and the TSX/S&P combo ETF. However, it actually illustrates the point very well. Someone who starts to independently build an ETF portfolio could easily make the same mistake, especially at the peak of the market. How can you not buy the winners, when it’s 2007 and the sky is blue? 🙂

Unfortunately Globefund is no longer available, so calculating distrubitions and precise returns is somewhat more difficult now. Here is a chart showing the value of the shares alone as of today.

20130311-ishares-lazy-portfolio

Value of all shares is $8,957.50 = 10.4% loss.

And here are the distributions. Without doing the exact calculations, you only need to look at the 5-year returns to realize that the 10.4% loss wasn’t offset by the distributions.

20130311-ishares-lazy-portfolio-distributions

And of course, you would’ve been taxed on the distributions, on top of all this.

Again, I admit, this is a terrible ETF selection, a bit of a horror story. If I were to do it again, I would diversify, A LOT.

4 Comments

  1. Hi Dirk,
    I think I’d do better with more specific sector ETFs.

    Maybe like this:
    2 ETFs – broad markets: 1 US, 1 developing
    4-5 ETFs – a mix of narrow-focused funds, REIT, transport, commodities…

    Also, I think it’s now more difficult to find ETFs that charge reasonable fees or at least have distributions that offset that. A lot of them jacked up their maintenance fees to safeguard against another market drop, so no matter what, they get their cut.

    This is just off the top of my head, as I haven’t researched anything specific lately.

    What’s in your long-term portfolio?

  2. Dirk

    I don’t have a long term portfolio 🙂
    If I would create one (for the next 30 years), I would go for :
    – Gold
    – Agriculture (DBA) : we’re going to be so many on this planet , and we all need food.
    – and drinking water : something that has to do with water technology. Another huge future challenge.

  3. Nice mix! agree with your list.
    But DBA? I’ve been watching it since oh… 2008 or so. So far it returned -9% over the last 5 years, and I believe they have carrying fees like a mutual fund. Hold on, going to check…

    Ok, so zero dividend. Options are not very interesting, cheap (I’m of course thinking about writing calls). Expense ratio is 0.93%.

    By the way, DBA holdings include mammal meat + GMO crops. I’m going to add that I’m opposed on that basis as well 🙂

    Wouldn’t be fair to diss your choice without offering alternatives:
    RJA – Jim Roger’s fund but too similar to DBA
    MOO – haven’t properly looked into it
    WEET – grains only
    DIRT – grains + others

    Will look into WEET more closely in a separate post, at first glance I like it.

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