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We have a bull market for ambivalence about bonds.

Stock markets have soared in the past 18 months and will at some point give back some gains. Bonds will cushion that decline when it happens. Meantime, bonds are falling in price as investors brace for the higher interest rates that are inevitable when economic conditions improve.

You want bonds, but maybe not a full helping. Would a portfolio weighted 75 per cent to stocks and 25 per cent to bonds be of interest?

You’ll find this aggressive portfolio mix in the Tangerine Balanced Growth ETF Portfolio, a mutual fund product from the online bank Tangerine that offers a high level of simplicity as well as a few potentially deal-breaking drawbacks.

Tangerine has three ETF Portfolio funds, which package low-cost index-tracking exchange-traded funds into a mutual fund that can be bought and sold at no cost. The management expense ratio for all three is 0.77 per cent, which is quite a bit more expensive than buying the component ETFs on their own. It’s also much cheaper to use asset-allocation ETFs, which replicate what Tangerine’s ETF portfolios do in ETF form. Buy an asset-allocation ETF through any broker or stock-trading app and you get an instantly diversified portfolio with various mixes of stocks and bonds.

The 75-25 mix is unusual, though. Most balanced ETF portfolios have a 60-40 mix, which up until recently was the no-brainer default mix for middle-of-the-road portfolios. An exception is the Horizons Balanced TRI ETF Portfolio (HBAL-T) at 70-30, but it’s a total-return product that doesn’t pay dividends or bond interest. Instead, the unit price reflects a blended return of share price changes plus income.

There are also 80-20 asset-allocation ETFs that target growth investors, but they may push the aggressiveness level too high for some investors. Going with a 75-25 mix seems a bit less edgy.

Beyond fees, the other potentially deal-breaking aspect of the Tangerine Balanced Growth ETF Portfolio is the surprisingly small weighting to Canadian stocks. As of Aug. 31, the fund had a 45-per-cent weighting in U.S. stocks, a 19-per-cent weighting in international developed market stocks, a 9-per-cent weighting in emerging market stocks and a 2-per-cent weighting in Canadian large-capitalization stocks. The rest is in bonds or cash.

Two final points on this Tangerine product that may account for why it has attracted $340-million in assets: There are no fees of any type beyond the hefty MER, other than a $125 charge for transferring a registered account to another financial company, and the minimum investment is just $25. Small investors are welcome.

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