In this article:
Overview
The Dynamic Income portfolio is a managed investing solution built with a diversified set of Vanguard ETFs.
You can open a Dynamic Income portfolio to invest your money with a conservative mix of stocks and bonds. This managed portfolio targets a strategic allocation of 70–90% bonds and 10–30% stocks, positioning it as a low to medium risk level investment option.
Unsure if this portfolio is right for you? Compare the Dynamic Income portfolio with other Wealthsimple options in our comparison table.
Eligibility
You can invest in a Dynamic Income portfolio in the following account types:
- FHSA
- TFSA
- RRSP
- RRIF
- LIRA
- LIF
- Non-registered
How to open a Dynamic Income portfolio
Follow these steps to open a Dynamic Income portfolio:
- Log in to your Wealthsimple app
- From the Home tab, scroll down and tap Open or move account
- Tap Open a new account
- Choose the type of account you want to open
- Select Portfolios as what you'd like to invest in
- Choose Income from the available portfolio options
- Tap Invest in Income
- Follow the on-screen prompts to select your account type and fund your portfolio.
- Log in to your Wealthsimple profile
- Select + Add an account from the Home page
- Choose the type of account you want to open
- Select Income portfolios as what you'd like to invest in
- Select Next
- Choose the Dynamic Income portfolio
- Select Invest in this portfolio
- Follow the prompts to open your bond portfolio
Migrating from the Dynamic Bond portfolio
If you currently hold a Dynamic Bond portfolio, you don't need to take any action. We're migrating all existing Dynamic Bond portfolio clients to the Vanguard Dynamic Income portfolio automatically.
What you need to know about the migration:
- Tax impact: If you hold this portfolio in a non-registered account, the migration involves selling your current holdings, which creates a taxable event.
- Minimal gains: While capital gains are expected to be minimal because the Dynamic Bond portfolio is relatively new and distributes most gains as regular income, actual tax outcomes may vary based on individual circumstances.
- Automatic update: You'll see the update reflected in your account automatically.
Compare the Dynamic Income portfolios to other Wealthsimple options
Compare our Core Bond portfolio, Vanguard Dynamic Income portfolio, Money Market portfolio, chequing account, and Registered Savings Account options below:
| Core Bond portfolio | Dynamic Income portfolio | Money Market portfolio | Chequing account | Registered Savings Account | |
|---|---|---|---|---|---|
| What is it | Managed investment portfolio | Managed investment portfolio | Managed investment portfolio | Chequing and savings account | Registered savings account |
| Purpose | Short and medium-term goals | Short and medium-term goals | Short and medium-term goals | Everyday finances | Short and medium-term goals |
| Yield to maturity/return* | 3.3% for all client tiers | 4.6% for all client tiers | 2.50% for all client tiers | Core: 1.25% Premium: 1.75% Generation: 2.25% |
Core: 1.25% Premium: 1.75% Generation: 2.25% |
| Management fee | Core: 0.5% Premium: 0.4% Generation: 0.2-0.4% |
Core: 0.5% Premium: 0.4% Generation: 0.2-0.4% |
None | None | None |
| Transfer timelines | 1-2 business days | 1-2 business days | 1-2 business days | Instant | 1-2 business days |
Frequently asked questions
What fees are associated with the Dynamic Income portfolio?
The Dynamic Income portfolio has two types of fees. And as you might expect from us, they're pretty low.
The first is a management fee. It's what you pay us to take care of your investments. The amount you pay depends on your tier:
- Core: 0.50%
- Premium: 0.40%
- Generation: 0.20%–0.40%
The second is a Management Expense Ratio (also known as an MER). This goes towards the funds we use in your portfolio and is, on average, about 0.2%.
What are the risks associated with this portfolio?
Like all investments, this income portfolio isn't entirely risk-free. It is designed to be conservative but holds a mix of assets, each with its own type of risk.
- For the bond portion (70–90%): The main risks are interest rate changes and credit quality. If interest rates rise, the value of existing bonds may decline. There is also a small risk that a bond issuer could default on its payments and decrease the value of the bonds held in the portfolio, especially during a major market downturn.
- For the stock portion (10–30%): This part of the portfolio is subject to market risk, meaning the value of the stocks can rise and fall, sometimes significantly.
While adding stocks introduces a different type of risk, the portfolio has been carefully constructed to maintain a conservative risk profile overall. Our team works hard to manage these risks, but it's important to remember that returns are not guaranteed and losses may occur.
Is my return guaranteed?
No, the expected return is not guaranteed.
An "expected return" is a projection of the average annual performance we anticipate the portfolio will generate over the long term. It is an estimate based on our analysis of the assets in the portfolio and is not a promise of future results. The portfolio's actual performance will fluctuate due to several factors, including:
- Interest Rate Risk: This primarily affects the bond portion of the portfolio. If overall interest rates in the market rise, the value of existing bonds with lower rates can decrease.
- Credit Risk: The portfolio has exposure to credit-risky assets to generate income. If market conditions evolve such that borrowers are less able to pay back their debts, then the value of existing bonds may decrease
- Market Risk (from Equity Exposure): The 10–30% of the portfolio invested in stocks is subject to the general ups and downs of the stock market. The value of these holdings will fluctuate based on broad economic conditions and company performance.
Because of these and other market risks, the actual return in any given year could be higher or lower than the 4.6% current projection.
When are my funds invested in bonds after I make a deposit
Your funds will be invested the next business day after they're deposited
Can I transfer bond holdings to my Wealthsimple bond portfolio?
Unfortunately, no.
Can I choose to stay in the old Dynamic Bond portfolio?
No. The Dynamic Bond portfolio is being deprecated and will no longer be offered. If you do not want the new Vanguard portfolio, you can transfer your funds to a different option, such as the Core Bond portfolio or the Money Market portfolio.
Is the new portfolio riskier because it has stocks?
The new portfolio maintains a similar conservative risk profile of 2/10. While in general stocks are riskier than bonds, by adding them in a measured amount to a primarily bond portfolio, they introduce valuable diversification to manage the portfolio risk. The 10–30% allocation is carefully calibrated to increase your expected return without significantly increasing overall volatility.
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