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Generally speaking, I believe a tax-free savings account should be invested more aggressively than a registered retirement savings plan.

The latter is really a personal pension plan and should be managed accordingly. That means keeping risk to a minimum, the more so as you approach retirement age.

There are many ways to use a TFSA, but the ultimate goal is to avoid paying taxes on the investment income it earns. To do that effectively, you need to maximize your profits, which means taking on more risk.

I created this Aggressive TFSA Portfolio in March 2012. It invests exclusively in stock-based ETFs and is designed for readers whose goal is to maximize tax savings in their TFSAs and who are willing to accept a higher degree of risk and volatility. This is not a model to use if you are saving for retirement, a child's future education, or a major purchase to be made within five years.

Here's a look at the ETFs in the portfolio with some comments on how they have fared since my last review in March. Results are as of the afternoon of Sept. 22.

iShares Core S&P/TSX Capped Composite Index ETF (XIC-T). This ETF tracks the performance of the S&P/TSX Composite Index. It hit its lowest point in three years in January but has since rallied strongly and we are up by $2.10 per unit from the last review. We received three distributions totalling 49.46 cents.

iShares S&P/TSX Small Cap Index ETF (XCS-T). Canadian small cap stocks were in a deep slump for a long time but they rebounded strongly in the latest period. The units are up $3.45 since the March update plus we received quarterly distributions totalling 23.03 cents per unit. The net result is a gain of 28.2 per cent since March. This ETF is finally showing a small profit since inception.

iShares U.S. Small Cap Index ETF (CAD-Hedged) (XSU-T). U.S. small-cap stocks also did well during the latest period. The unit value gained $3.86 and we received a distribution of 11.96 cents. The result was a gain of 17.2 per cent over the period.

iShares Core S&P 500 Index ETF (CAD-Hedged) (XSP-T). This ETF tracks the performance of the S&P 500 Index, hedged back to Canadian dollars. It wasn't a top performer over the summer but the $1.70 increase in the unit price was very acceptable. We received a semi-annual distribution in June of just under 22 cents per share.

BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ-T). Tech stocks have had a good year and this ETF reflects that. The fund provides exposure to the top 100 stocks on the Nasdaq exchange. It was up $3.95 per unit in the latest period for a gain of 11.7 per cent over the six months. This ETF continues to be the number one performer in the portfolio.

iShares MSCI EAFE Index ETF (CAD-Hedged) (XIN-T). This fund invests in large-cap companies from developed countries in Europe, Asia, and Australasia, hedged back to Canadian dollars. It's really a Canadian replica of EFA, which trades in New York and which should be your choice if you don't want the hedging feature. XIN gained 91 cents per share in the latest period. Plus, we received a mid-year distribution of 34.07 cents.

iShares MSCI Frontier 100 ETF (FM-N). After a long decline, Frontier Markets staged a modest rally in the latest period. This ETF, which tracks major companies in Third World countries from Nigeria to Vietnam, gained a little ground, adding $1.09. We received a mid-year distribution of 50.87 cents (U.S.) per unit. All that is encouraging but this remains one of only two losers in the portfolio.

iShares MSCI Emerging Markets ETF (EEM-N). We added 25 shares of this emerging markets fund in April 2014 when it was trading at US$41.57. The shares did well for a few months, topping US$45 in June but then went into a long decline as investor concerns grew over the prospects for emerging markets. That downward trend continued until January of this year but since then the units have turned around. They gained $4.93 since March, which almost brings us back to breakeven. We received a mid-year distribution of 26.59 cents (U.S.) per unit.

We received $1.16 in interest from the cash balance in a high-interest savings account.

Here's a look at how the portfolio stood on the afternoon of Sept. 22. The Canadian and U.S. dollars are treated at par and commissions are not taken into account. The percentage in the Gain/Loss column represents the cumulative return since the portfolio was launched or since the security was added. The initial book value was $20,002.30.

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Comments: The total portfolio gained $3,071.19 (including distributions) in the latest six-month period. That's a gain of 12.4 per cent during that time. The result was to boost the overall advance since inception to 39.1 per cent. That works out to an average annual compound rate of return of 7.61 per cent. That's much better than the 5.5 per cent at the time of the March review but well below my target of 10 per cent to 12 per cent annually.

This portfolio provides exposure to all world markets and includes North American small cap stocks, emerging markets, and frontier markets. But it is entirely invested in ETFs, which will never outperform their target indexes. There are no bond holdings so this portfolio is very exposed to stock market risk. That's why I again stress it is only for aggressive investors.

Changes: I will not make any changes to the basic structure of the portfolio at this time. We don't have enough retained income to make any meaningful new purchases so we will let everything stand for now. We have total cash of $526.49, which we will invest in an account with EQ Bank that currently pays 2 per cent annually.

I will review the portfolio again in March, on its fifth anniversary.

Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters. For more information and details on how to subscribe, go to