Personalized Portfolios

Your financial future and goals are specifically yours. That’s why we create a personalized portfolio for each and every investor.

Section 1

Our Investment Approach

Nobody should gamble with their future, so we invest your money across many markets, properly diversified amongst asset classes, for the long term and based on the best empirical research available.

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David Swensen, the head of the Yale Endowment Fund, is one of the most recognized professionals in the investment industry. In his book, Unconventional Success, he suggests the following:

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The investor should maintain a portfolio allocated to 6 core asset classes and be diversified.

The asset classes include: domestic equities, emerging market equities, international equities, government fixed income, real-return bonds and real estate.

See The Asset Classes That Make Up Your Diversified Portfolio

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The investor should rebalance the portfolio on a regular basis.

See How Nest Wealth Rebalances Your Portfolio

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The investor should, in the absence of a confident market-beating strategy, invest in low-cost index funds and ETFs.

View Our Low Cost ETFs

We build and manage your portfolio based on Swensen’s three rules.

Using leading edge technology and industry-tested investment rules, Nest Wealth creates a low-cost, customized global portfolio built specifically for your life goals. Once you’re invested, we take care of monitoring and rebalancing your portfolio so you can get on with enjoying your life.

We build your investment portfolio from seven different ETFs that represent seven different asset classes. You’ll own a different proportion of each of these ETFs based on your risk score, which takes into account what you’re saving for, when you’ll need the money, and how reactive you are to market ups and downs.

Section 2

ETFs

ETFs are a low cost and efficient way to build a diversified investment portfolio. They allow you to gain exposure to a variety of asset classes like bonds, equities, and real estate.

What’s an ETF?

An exchange-traded fund (ETF) is an investment fund that’s traded on a stock exchange, like a stock, but holds a basket of investments, like a mutual fund. Most ETFs track broad, well-established indices like the S&P 500 or TSX. They tend to have much lower fees than traditional mutual funds.

How do you choose the ETFs you use?

We select what we believe are the best ETFs available in each asset class, making sure they work well together. We look for ETFs that are low cost, liquid, and have a low tracking error to their underlying index.

Low management expense ratios (MERs) mean you pay less in fees so you keep more of your returns (more wealth for you!). High liquidity means your portfolio is easier to rebalance and your money is readily accessible when you need it. Finally, a lower tracking error just means the ETF is more efficient at its job of mimicking an index.

What ETFs Do You Use?

Name & SymbolProduct SummaryETF Facts
Vanguard Canadian Short-Term Bond Index ETF (VSB)Tracks Canadian government short term bonds. Bonds with shorter durations are less volatile and less sensitive to changes in interest rates, and therefore have a lower return. Their primary purpose is capital preservation.Asset Class: Short Term Bonds Expense Ratio: 0.11%
BMO Aggregate Bond Index ETF (ZAG)Tracks Canadian government medium term bonds. Medium term bonds are more volatile than short term bonds and therefore tend to pay a higher interest rate.Asset Class: Medium Term Bonds Expense Ratio: 0.09%
iShares Canadian Real Return Bond Index ETF (XRB)Tracks Canadian government real return bonds. They provide a hedge against inflation as their rate of return is adjusted for inflation.Asset Class: Real Return Bonds Expense Ratio: 0.39%
iShares Core S&P/TSX Capped Composite Index ETF (XIC)Provides broad exposure to the Canadian equity market by covering large, mid, and small companies across all sectors. Equities are more volatile than bonds and can provide a higher rate of return. Their primary purpose is capital growth and income from dividends.Asset Class: Canadian Equities Expense Ratio: 0.05%
iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP)Tracks the 500 largest publicly listed companies in the United States. Diversifying outside of Canada can provide higher returns and reduce the portfolio’s overall risk.Asset Class: U.S. Equities Expense Ratio: 0.10%
iShares MSCI EAFE ETF (IEFA)Provides broad exposure to developed equity markets in Europe, Australia, and the Far East by covering large, mid, and small companies across all sectors. International equities provide an opportunity for growth and greater diversification.Asset Class: Global Equities Expense Ratio: 0.08%
Vanguard REIT ETF (VNQ)Real estate investment trusts (REITs) own a selection of office buildings, hotels, and apartment buildings. They are typically more volatile than bonds but less volatile than equities. They provide an opportunity for high income and moderate growth.Asset Class: Real Estate Expense Ratio: 0.12%

Section 3

Asset Classes

Asset classes are the fundamental building blocks of a portfolio. What you should hold will be based on your risk tolerance with three possible goals in mind: capital growth; income generating; or protection of capital.

Most people have portfolios that aren't properly diversified or have strayed from their desired risk tolerance.

Staying on top of this can improve returns while also reducing the riskiness of your portfolio. At Nest Wealth, we create portfolios that are globally diversified, across industry sectors and investment types and rebalanced to their proper mix when they start to drift.

Your portfolio is also created using Nobel-prize winning research to maximize efficiency of returns, while minimizing risk.

Our clients currently hold

• Domestic Equities
• US Equities
• Emerging Market Equities
• International Equities
• Government Fixed Income
• Real-Return Bonds
• Real Estate and Cash

What you hold is based on your risk tolerance with three possible goals in mind:

Capital growth; income generating; or protection of capital

Section 4

Automated Rebalancing

Creating your customized portfolio is only the starting point of a successful investment strategy. Every step of the way Nest Wealth will help make sure you are working towards your financial goals.

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Step 1

Nest Wealth develops your customized ideal asset allocation based on your personal risk tolerance, your objectives and your current financial situation.

Step 2

As the market moves up and down, it is possible that your portfolio’s asset allocation will drift away from your suggested ideal mix.

Step 3

If an asset class rises too much, Nest Wealth will sell some. The proceeds will be used to buy other assets and restore your ideal asset allocation.

Enjoy the peace of mind that professional wealth management brings.

Get started today

Section 5

Active vs. Passive Investing

Overwhelming research suggests that passive investing outperforms those that are trying to beat the stock market. Using this as our own foundation, we build your portfolio to ‘be the market’, rather than try to ‘beat the market’.

The best investors in the world, including Burt Malkiel, Jack Bogle and David Swensen, are in it for the long term.

To increase their chance of success, they focus on proper diversification, systematic rebalancing, appropriate risk and reducing fees. This means that not only are you getting a better constructed portfolio at a lower cost than a traditional fund, but you are also likely to outperform most mutual funds over the long run.

Passive Investing: “Being The Market”

Passively managed funds are referred to as “index funds” because they’re tied to an index that represents a particular market. The thing with indexes is that you can’t actually directly invest in one of them.

That’s why passively managed index funds exist. They track and mimic the movement in the index by investing in all or some of the securities held in that index. With passive investing, your money is used to buy shares in a category of companies and that category is called an index. If that category of companies collectively performs well, so will the index and you will see the direct benefits of that in your account.

Active Investing: “Beating The Market”

The idea of active investing comes from the belief that buying and selling more frequently will “Beat The Market” and generate better returns. Active investing relies on skills and experience. You would essentially give your money to a manager whose main goal is to outperform (or beat) a certain index. But that doesn’t always happen. Depending on the manager’s success, they may provide more (or less) return than a relative index. Because the market may not always go—or behave—according to the manager’s plan, there’s more room for human error. Since active managers are really hands-on, this type of investing approach tends to be a lot more costly by comparison.

The Probability an All-Actively Managed Fund Portfolio Will Beat an All-Index Fund Portfolio.5 Years10 Years20+ Years
Three Fund Portfolio17%9%3%
Five Fund Portfolio14%8%2%
Ten Fund Portfolio9%6%1%