{"id":126261,"date":"2025-03-11T12:37:40","date_gmt":"2025-03-11T12:37:40","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/investing\/td-e-series-returns-for-2020\/"},"modified":"2025-03-11T12:37:40","modified_gmt":"2025-03-11T12:37:40","slug":"td-e-series-returns-for-2020","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=126261","title":{"rendered":"TD e-Series Returns for 2020"},"content":{"rendered":"


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The TD e-Series index mutual funds<\/a> remain a useful alternative to the asset allocation ETFs that take centre stage in my model portfolios<\/a>. Following on the heels of our detailed look at the performance of the Vanguard and iShares portfolios in 2020<\/a>, let\u2019s look at what the e-Series funds delivered last year.<\/p>\n

Here\u2019s how the four individual building blocks performed in 2020. Remember, as always, that published mutual fund returns are net of all fees, and assume all distributions are reinvested.<\/p>\n\n\n\n\n\n\n\n\n
Fund name<\/th>\nFund code<\/th>\n2020 return<\/th>\n<\/tr>\n<\/thead>\n
TD Canadian Index Fund – e<\/td>\nTDB900<\/td>\n5.77%<\/td>\n<\/tr>\n
TD U.S. Index Fund – e<\/td>\nTDB902<\/td>\n18.12%<\/td>\n<\/tr>\n
TD International Index Fund – e<\/td>\nTDB911<\/td>\n5.48%<\/td>\n<\/tr>\n
TD Canadian Bond Index Fund – e<\/td>\nTDB909<\/td>\n7.56%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Source: TD Asset Management<\/h5>\n

My model portfolios<\/a> suggest five possible allocations of these funds, ranging from conservative (70% bonds and 30% stocks) to aggressive (10% bonds and 90% stocks). Assuming your portfolio had the following asset mixes at the beginning of the year, and that you never rebalanced<\/a>, here\u2019s what your performance would have looked like in 2020:<\/p>\n\n\n\n\n\n\n\n\n\n
Asset allocation<\/th>\n2020 return<\/th>\n<\/tr>\n<\/thead>\n
70% bonds \/ 30% stocks<\/td>\n8.44%<\/td>\n<\/tr>\n
55% bonds \/ 45% stocks<\/td>\n8.73%<\/td>\n<\/tr>\n
40% bonds \/ 60% stocks<\/td>\n9.02%<\/td>\n<\/tr>\n
25% bonds \/ 75% stocks<\/td>\n9.31%<\/td>\n<\/tr>\n
10% bonds \/ 90% stocks<\/td>\n9.60%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Source: TD Asset Management, DFA Returns 2.0<\/h5>\n

A fairer comparison<\/h3>\n

In the past, I reported the model portfolio returns assuming you started the year with the target asset mix and then rebalanced at the start of the following calendar year. However, starting last year, when I adopted the Vanguard and iShares asset allocation ETFs<\/a> for my model portfolios, we changed the methodology for reporting historical returns in order to provide a better apples-to-apples comparison of the different options. All of the model portfolio returns now assume monthly rebalancing.<\/p>\n

Remember, in practice the Vanguard and iShares asset allocation ETFs are likely to stay close to their strategic asset allocations at all times. Although they will stray from their targets during a large swift move in the markets, they enjoy large and frequent cash flows<\/a> that allow them to rebalance almost continuously. So to make fairer comparisons, we\u2019ve assumed the other options in the model portfolios\u2014those using two ETFs, as well those built from e-Series funds\u2014are more frequently rebalanced, too.<\/p>\n

Over the long term, the differences in rebalancing strategies will not be dramatic: there\u2019s plenty of research showing that the specific interval is not that important<\/a>, so long as you do it with some regularity. The timing may not even make a significant difference during most calendar years.<\/p>\n

However, 2020 was anything but typical: it included the fastest bear market in history, followed by a remarkably swift recovery. Last year, if you rebalanced monthly\u2014selling bonds and buying stocks in the spring, and then doing the opposite later in the year\u2014you would have enjoyed a significant bump in returns, compared with an investor who simply stayed the course for the full 12 months.<\/p>\n

Here\u2019s what the e-Series portfolio returns would have looked like with monthly rebalancing. These are the numbers you will see in the just-posted edition of the historical model portfolio returns:<\/p>\n\n\n\n\n\n\n\n\n\n
Asset allocation<\/th>\n2020 return (monthly rebalancing)<\/th>\nDifference vs. annual rebalance<\/th>\n<\/tr>\n<\/thead>\n
70% bonds \/ 30% stocks<\/td>\n8.82%<\/td>\n+0.38%<\/td>\n<\/tr>\n
55% bonds \/ 45% stocks<\/td>\n9.19%<\/td>\n+0.46%<\/td>\n<\/tr>\n
40% bonds \/ 60% stocks<\/td>\n9.48%<\/td>\n+0.46%<\/td>\n<\/tr>\n
25% bonds \/ 75% stocks<\/td>\n9.68%<\/td>\n+0.37%<\/td>\n<\/tr>\n
10% bonds \/ 90% stocks<\/td>\n9.81%<\/td>\n+0.21%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
Source: TD Asset Management, DFA Returns 2.0<\/h5>\n

More isn\u2019t better<\/h3>\n

Be careful before you infer anything from these short-term results. There\u2019s no reason to expect more frequent rebalancing to improve your results<\/a>. This is especially true when you consider transaction costs and taxes, which are assumed to be zero in the model portfolios.<\/p>\n

Indeed, it\u2019s a common misunderstanding that rebalancing is a reliable way of boosting returns: it\u2019s not. On the contrary, because the expected return on stocks is significantly higher than that of bonds, most of the time rebalancing will consist of selling equities and buying more fixed income. Over the long term, you should expect that to lower<\/em> returns, not increase them.<\/p>\n

Rebalancing is primarily a risk-management tool: it\u2019s designed to make sure your equity allocation never strays too far from what you\u2019ve deemed appropriate for your time horizon and temperament. It\u2019s also a way of enforcing discipline in portfolio management: any time you add new money you can consistently top up whatever asset classes are furthest below the target, rather than relying on guesswork\u2014or worse, simply chasing whatever asset class has been the hottest.<\/p>\n

There is no optimal rebalancing strategy, so it\u2019s not something you need to obsess about. You can rebalance at regular intervals (once a year is fine), by thresholds (for example, whenever an asset class drifts off target by five percentage points), or using cash flows (any time you add or withdraw funds). Most people will probably use some combination of all three<\/a>.<\/p>\n

So don\u2019t conclude from 2020 that tweaking your portfolio every month will reliably juice your returns if you\u2019re using the e-Series funds. You could have only known that with the benefit of hindsight. It\u2019s far more important to add new money with discipline, rebalance when the opportunities present themselves, and keep your focus on the long term.<\/p>\n<\/p><\/div>\n

Comments are closed.<\/p>\n\n","protected":false},"excerpt":{"rendered":"

The TD e-Series index mutual funds remain a useful alternative to the asset allocation ETFs that take centre stage in my model portfolios. Following on the heels of our detailed look at the performance of the Vanguard and iShares portfolios in 2020, let\u2019s look at what the e-Series funds delivered last year. Here\u2019s how the […]<\/p>\n","protected":false},"author":1,"featured_media":113978,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[96],"tags":[23457,10970],"dealstore":[],"offerexpiration":[],"class_list":["post-126261","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-eseries","tag-returns"],"yoast_head":"\nTD e-Series Returns for 2020 - Som2ny Network<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fivemor.com\/?p=126261\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TD e-Series Returns for 2020 - Som2ny Network\" \/>\n<meta property=\"og:description\" content=\"The TD e-Series index mutual funds remain a useful alternative to the asset allocation ETFs that take centre stage in my model portfolios. 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