The Anti-Debasement ETF Portfolio (Canadian Investor Edition)

The goal of investing, at least in my view, is not just to grow wealth but to preserve its real value. One day, the objective is to live off portfolio income without working for a wage.

In Canada, however, the challenge goes beyond generating returns. It is about keeping ahead of debasement—the slow erosion of purchasing power through inflation, deficits, and monetary expansion.

The numbers tell the story. Since 2000, the Canadian dollar has lost over 40% of its purchasing power. Home prices have surged far faster than wages. Meanwhile, the federal debt has tripled, and deficit spending remains entrenched even during periods of economic strength.

It’s no wonder younger Canadians feel priced out of stability and are turning to speculation or high leverage in search of a way forward.

There is an alternative. By combining four asset classes—real estate, energy infrastructure, gold, and Bitcoin—you can build a satellite portfolio designed to resist debasement from both inflation and currency decline.

These ETFs don’t replace a traditional stock and bond portfolio but can sit alongside it as a durable hedge against monetary excess.

25% in Infrastructure ETFs

Listed infrastructure plays a role as a hard-asset income producer. The BMO Global Infrastructure Index ETF (ZGI) fits this category well.

It tracks the Dow Jones Brookfield Global Infrastructure North American Listed Index, which includes companies with at least $500 million in market cap and a minimum three-month average trading volume of $1 million. At least 70% of a company’s cash flow must come from developing, owning, leasing, or managing infrastructure assets.

The ETF’s roughly 50 holdings span oil and gas storage and transportation, multi-utilities, electric utilities, telecom tower REITs, gas utilities, water utilities, airport services, and marine ports.

While the 0.61% MER is higher than most index funds, it’s typical for the infrastructure space in Canada. The 2.6% distribution yield is reasonable for access to stable, income-producing assets tied to real economic activity.

25% in Gold ETFs

Gold remains one of the most time-tested hedges against debasement. Instead of physical storage, a gold ETF provides secure exposure without logistics, spreads, or storage fees.

The Purpose Gold Bullion Fund (KILO) is one of the best options for Canadians, charging a 0.28% MER. Each unit is backed by fully allocated, segregated gold bars stored at the Royal Canadian Mint. “Allocated” means each investor owns specific bars identified by serial number, and “segregated” ensures they aren’t pooled with other investors’ holdings.

Auditors visit the Mint annually to verify holdings, and for investors seeking tangibility, redemptions of one kilogram or more can even be fulfilled in-kind. It’s about as close as you can get to physical gold ownership while keeping your portfolio on a brokerage platform.

25% in Real Estate ETFs

To capture real asset exposure within Canada, the iShares S&P/TSX Capped REIT Index ETF (XRE) offers pure-play access to the largest publicly traded Canadian REITs.

The ETF yields 5.24% after fees and charges a 0.6% MER. Its holdings are dominated by CAPREIT (residential, 12.3%) and RioCan (retail, 11.46%), alongside industrial landlords like Granite REIT and a smaller allocation to office properties through Allied Properties.

XRE’s distributions are primarily ordinary income, making it more tax-efficient to hold inside a registered account such as a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).

25% in Bitcoin ETFs

Bitcoin remains a unique hedge against both inflation and currency devaluation, thanks to its fixed supply of 21 million coins and predictable halving cycles.

For Canadian investors, the CI Galaxy Bitcoin ETF (BTCX.B) is a straightforward, exchange-listed vehicle that avoids the complexities of crypto wallets and self-custody. It was among the first spot Bitcoin ETFs launched in Canada and carries a 0.68% MER.

The fund is unhedged to the Canadian dollar, meaning returns fluctuate with both Bitcoin’s price and USD/CAD movements. Given Bitcoin’s high volatility, currency effects are minor by comparison.

Putting It Together

Using the ETFs listed above, this portfolio was backtested over the past three years against the CAD-hedged S&P 500 index and a global 60/40 benchmark.

As shown in the chart, the Canadian Anti-Debasement Portfolio significantly outperformed both traditional allocations, returning nearly 18% annualized versus 9.9% for the S&P 500 (CAD-hedged) and 6.9% for the 60/40.

Most of this outperformance is driven by Bitcoin’s strong rebound in 2023–2025, which makes up 25% of the allocation. The volatility is high, with a maximum drawdown of over 23%, so quarterly rebalancing is essential to maintain target weights. Gold provides a non-correlated hedge, while REITs and infrastructure deliver real-asset income tied to inflation trends.

Given the higher risk profile and concentration in alternative assets, this is best used as a satellite portfolio alongside your core holdings. Each component addresses a different source of debasement—whether it’s inflation, currency decline, or financial repression—without overlapping much with traditional stocks or bonds.