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If you can handle stock market downturns and have 10-plus years until you need your money, then there’s a type of ETF you should definitely take a look at.

The growth version of balanced exchange-traded funds, also known as asset-allocation ETFs, typically hold 80 per cent of their assets in stocks and 20 per cent in bonds. If you’re in your 20s or 30s, it might just be what you’re looking for. Same goes if you’re older but have a proven ability to keep your hands off the sell button when stock markets tank like they did earlier this year.

A reader who describes herself as entering retirement age is also interested in the growth version of the balanced ETF. Her concern: Are these ETFs, with their 20-per-cent bond weighting, too tame?

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She’s looking specifically at the Vanguard Growth ETF Portfolio (VGRO-T) and comparing it with the Vanguard All-Equity ETF Portfolio (VEQT-T), a related product that has no bonds and instead offers balance through a blend of different stock indexes. “Isn’t VEQT an even better vehicle to pursue aggressive growth over 10-15-20 years?” she asked.

I think not.

In a Q&A I did in the summer with Kurt Reiman, chief investment strategist for BlackRock Canada, he noted that a 60-40 portfolio over the past 20 years outperformed the S&P 500. You lost a bit of the upside with a portfolio like this, but it excelled in down stock markets by limiting the damage. Looking ahead, low bond yields raise questions about whether a 70-30 or 80-20 portfolio mix might make more sense. All stocks might theoretically make even more sense than that, given how little bonds are expected to add to returns for diversified portfolios.

A Gen Z investor could afford to be an all-stocks test pilot. Someone approaching retirement is much less of a candidate. Even for someone looking at a longer time horizon, like this reader, the urgency of stock market declines is more pronounced for people close to or in retirement. This means heightened risk of succumbing to the temptation to sell in a downturn to preserve a fast-shrinking portfolio.

Holding some bonds in a portfolio, 20 per cent or even more, would take the edge off a stock market crash. For that reason, VEQT seems a risk level too far for someone entering retirement age.

-- Rob Carrick, personal finance columnist

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Stocks to ponder

Fronsac Real Estate Investment Trust (FRO-UN-X) This security may be of interest to investors seeking reliable income. It has an attractive business model, cash flow and distribution growth and a conservative payout ratio. The REIT has four buy recommendations with an anticipated one-year price return of 18 per cent (22 per cent including the yield). Jennifer Dowty has this profile. (for subscribers)

The Rundown

Why it’s a good bet to stick with rallying copper stocks

Copper producers have enjoyed a spectacular rebound in the stock market over the past eight months, no doubt raising questions among investors about how long the good times will last. The argument for staying put is persuasive, though: Global demand for copper should rise with the post-pandemic global economic recovery and surging interest in copper-consuming renewable energy projects, according to analysts, underpinning a rally that has already lifted some stocks to their highest levels in several years. David Berman tells us more. (for subscribers)

Berkshire’s bet a bright spot in gloomy year for Big Pharma stocks

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Berkshire Hathaway Inc’s new bet on the U.S. pharmaceutical industry signals hope for shares of large drug companies, which have lagged a broad market rally amid concern about efforts to rein in prescription drug prices. Still, many market followers are reluctant to sound an all-clear on the industry, which is trading close to its biggest-ever valuation gap against the S&P 500 based on forward price-to-earnings ratios, according to Refinitiv Datastream. Lewis Krauskopf of Reuters reports. (for everyone)

Also see: Warren Buffett’s Berkshire Hathaway cuts stake in Barrick

Value stocks are finally getting their revenge. Here’s why their outperformance will continue

If you believe value is dead, and in the secular underperformance of value stocks, you are dead wrong, argues Dr. George Athanassakos. Thanks to Pfizer Inc., the cycle has started to turn for value stocks. The professor of finance explains why this trend will continue as the pandemic nears its end. (for everyone)

Also see: Investors in ‘full bull’ mode as vaccine hopes run high: BofA survey

Tax-loss selling in a COVID-impacted year: Potential selling opportunities for TSX stocks that are expected to recover

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The Canaccord Genuity research team has identified specific Canadian stocks and provided ideas on how to navigate any tax-motivated movements, be it through taking advantage of further pressure in the coming months or trimming positions altogether in favour of better opportunities. Globe subscribers can read the full research report here.

Also see, from Globe Advisor: Bargains to be found in COVID-19 tax-loss selling season

Low on stock: Pandemic-era IPO boom may not reverse equity shortage

Stock market bulls rejoicing at promising news on the COVID-19 vaccine and the prospect of a more predictable U.S. presidency may have another reason to celebrate: an anticipated surge in the net global supply of shares shows no sign of materializing. Sujata Rao of Reuters reports. (for everyone)

Looking for stability and good yields? This ETF may unlock a largely ignored market

The U.S. preferred share market is much larger, more liquid, and more stable than the Canadian market. But most Canadian investors have little or no experience with it and it is generally ignored by analysts in this country. Given that backdrop, Gordon Pape suggests the easiest way to take a position is by investing in an exchange-traded fund managed by a team that specializes in these securities. Here’s one he recommends. (for subscribers)

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Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Tuesday’s analyst upgrades and downgrades

Wednesday’s Insider Report: Company leaders sell shares of these three dividend stocks

Tuesday’s Insider Report: CEO cashes out over $7-million from this large-cap dividend stock

Number Cruncher: Eight top-tier ESG companies with sustainable dividends

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Number Cruncher: The eight largest telecom stocks on the TSX ranked by market capitalization

Canada Pension Plan slashes stake in Shopify, adds shares in Netflix, as investment returns grow

Others (for everyone)

Bitcoin hits nearly three-year peak, homes in on record

What’s up in the days ahead

Scott Barlow looks at technology stocks that have the most at risk from the violent rotation we’ve seen this month into value stocks.

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

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You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

Compiled by Globe Investor Staff

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