Introduction:
Wealthsimple has become a familiar name in the Canadian financial scene, offering an effortless approach to investing through its Managed Investing service. This service is ideal for a range of investors, from beginners to those with busy lifestyles. Let’s delve into Wealthsimple Managed Investing, its features, fee structure, and the various portfolio options available.
What is Wealthsimple Managed Investing?
Wealthsimple Managed Investing is a robo-advisor service automating investment management. It uses algorithms to create and maintain a diversified portfolio based on your risk tolerance and investment goals. The service is designed for a “set it and forget it” investment strategy.
Key Features of Wealthsimple Managed Investing:
- Automated Portfolio Management: Ensures your portfolio is consistently rebalanced and adjusted.
- Diversified Investments: Spans across a range of asset classes, including stocks and bonds.
- Low Fees: Offers a competitive fee structure, enhancing long-term returns.
- User-Friendly Interface: Accessible through an intuitive app and website.
- Socially Responsible Options: Provides portfolios focused on socially responsible investing.
Fee Disclosure:
Wealthsimple’s investment management fees are tiered based on net deposits:
- Under $99,999: 0.50% fee on AUM.
- Above $100,000: Reduced fee of 0.40% on AUM.
Portfolio Types:
Classic portfolios
Wealthsimple’s Classic Portfolio stands out as a versatile investment option, catering to a wide range of investor preferences and objectives. This portfolio is characterized by its diversity and growth orientation, featuring a mix of investments with varied geographic exposures. A significant focus is placed on lower volatility stocks, which aim to provide stability. Additionally, the inclusion of riskier government bonds and gold is a strategic move, optimized to enhance performance during economic downturns.
Another notable aspect of this portfolio is its tax optimization. Wealthsimple employs an automatic selection of tax-efficient Exchange-Traded Funds (ETFs), designed to enhance returns at tax time. This feature can be particularly appealing to investors looking to maximize their after-tax returns. Moreover, the Classic Portfolio offers risk-appropriate options tailored to individual investor profiles.
These range from conservative choices, focusing on high-interest options, to more aggressive, high-growth strategies that are equity-heavy. Such versatility ensures that investors can find a fit that aligns with their risk tolerance and investment goals, making the Classic Portfolio a comprehensive choice for a broad spectrum of investors.
Socially Responsible Investing:
Socially Responsible Investing (SRI) is gaining traction among investors who are increasingly conscious of how their investments impact the world. Wealthsimple offers a portfolio that aligns with this ethos, adhering to certain standards and exclusions. Notably, the funds in this portfolio are in line with the International Energy Agency (IEA) Sustainable Development Scenario and the goals of the Paris Agreement, emphasizing a commitment to environmental sustainability.
Ethical exclusions are also a key feature of this portfolio; for instance, it excludes the top 25% of carbon emitters from each industry. Additionally, there’s an emphasis on corporate governance, with a requirement for companies to have a minimum of either 25% or three women on their boards. Wealthsimple has also developed proprietary Exchange-Traded Funds (ETFs) like WSRI and WSRD, focusing on environmental and social impacts. Balancing this, the Wealthsimple Green Bond ETF (WSGB) supports global green initiatives, providing investors with a diversified approach to SRI. This portfolio reflects a blend of ethical considerations and investment strategies, catering to those who wish to invest responsibly while seeking financial growth.
Faith-Based Investing (Hallal):
Wealthsimple’s Shariah-compliant fund, known as WSHR, offers a unique investment opportunity for those looking to adhere to Islamic financial principles. This fund is not only certified but also regularly audited to ensure its compliance with these principles. A key aspect of its adherence to Shariah law is the restriction on income sources. Companies included in the WSHR fund derive less than 5% of their income from sources considered prohibited under Islamic law.
This ensures that investments align with ethical and religious standards. To maintain this level of compliance, the fund undergoes rigorous and regular reviews. These include quarterly compliance reviews and biannual audits, which are essential for ensuring the fund’s ongoing adherence to Shariah law. This approach allows investors to participate in financial markets while staying true to their religious and ethical beliefs, offering a harmonious blend of faith and finance.
ETFs used by Wealthsimple’s Managed Investing
Wealthsimple crafts each of its portfolios with 8-10 selected ETFs, sourced from a variety of investment firms. The portfolios include a diverse range of ETFs, each holding a mix of stocks and bonds aligned with their specific investment goals. Below is an insight into some of the ETFs incorporated within Wealthsimple’s strategies:
Canadian Equities:
- Horizons S&P/TSX 60 Index ETF Class A (HXT)
- Vanguard FTSE Canada All Cap Index ETF (VCN)
- iShares Core S&P/TSX Capped Composite Index ETF (XIC)
- iShares S&P/TSX 60 Index ETF (XIU)
U.S. Equities:
- Vanguard S&P 500 Index ETF (VFV)
- Schwab U.S. Broad Market ETF (SCHB)
- iShares Russell 3000 ETF (IWV)
- Horizons S&P 500 Index ETF Units Class A (HXS)
Global & International Equities:
- iShares MSCI Global Min Vol Factor ETF (ACWV)
- Goldman Sachs ActiveBeta World Low Vol Plus Equity ETF (GLOV)
- Horizons International Developed Markets Equity Index ETF Class A (HXDM)
- iShares Core MSCI EAFE ETF (IEFA)
Emerging Markets:
- iShares MSCI Emerging Markets Min Vol Factor ETF (EEMV)
Government Bonds:
- BMO Long Federal Bond Index ETF (ZFL)
- Vanguard Canadian Long-Term Bond Index ETF (VLB)
Canadian Aggregate Bonds:
Gold ETFs:
- iShares Gold Bullion ETF (CGL.C)
- SPDR Gold Trust (GLD)
- Purpose Gold Bullion Fund
Wealthsimple offers tailored support to its users through various channels. Customers can reach out via live chat, telephone, or email to get assistance tailored to their needs. This level of customer service ensures that individuals can receive help in a manner that suits them best, whether they have queries about their portfolio or need guidance on navigating the platform.
Conclusion:
Wealthsimple’s Managed Investing in Canada offers a straightforward, low-maintenance path into investing, suitable for a range of investor profiles. It’s important to consider how it aligns with your financial goals, risk tolerance, and investment preferences. Remember, diversification and understanding your investment choices are key to a successful investment strategy.
Disclaimer: This post is for educational purposes only and should not be taken as financial advice. Always consult with a financial advisor before making investment decisions.