What are the best Canadian All-in-One ETFs?
If you're an investor, you probably know that choosing the right investments can quickly become overwhelming once you start doing your research.
With a wide variety of stocks, bonds, and stocks trading on the market today, it's hard to know where to start!
Fortunately, investing today is extremely easy for many investors doing it on their own. In fact, it's so simple that a single ETF can form an entire investment portfolio.
Especially recent years have led to its appearance.all in one ETF(also know asAsset Allocation ETFs), which allows an investor to build a diversified investment portfolio adjusted for risk tolerance by purchasing a single exchange-traded fund.
All-in-one ETFs consist of a mix of underlying ETFs that combine to provide global diversification benefits, as well as an allocation to fixed income and bonds that can be determined based on an investor's individual circumstances.
Since Vanguard pioneered the concept in 2018 with its original all-in-one ETFs, the number of issuers offering individual fund investment solutions has grown. They offer an ideal combination of simplicity, low cost, and broad diversification, making them a great choice for the passive index investor.
With that being said, what is the best all-in-one ETF currently available in Canada?
The best all-in-one ETFs will depend on an investor's individual risk tolerance and asset allocation preferences.
Here is a current list of the best all-in-one ETFs to buy in Canada in 2023:
| Cartera ETFs | Tictac | asset allocation | MER | Number of ETF holdings |
|---|---|---|---|---|
| Vanguard All-Equity | VEQT | 100% shares | 0,24 | 7 |
| innovative development | VGRO | 80% shares 20% fixed income | 0,24 | 7 |
| Balanced Vanguard | Vbal | 60% shares 40% fixed income | 0,24 | 7 |
| conservative pioneer | VCN | 40% shares 60% fixed income | 0,24 | 7 |
| Pioneer Conservative Income | VCIP | 20% shares 80% fixed income | 0,24 | 7 |
| iShares Top Stocks | XEQT | 100% shares | 0,2 | 4 |
| iShares Core Development | XGRO | 80% shares 20% fixed income | 0,2 | 8 |
| core of iShares | XBAL | 60% shares 40% fixed income | 0,2 | 8 |
| iShares Central Conservator Balanced | XCNS | 40% shares 60% fixed income | 0,2 | 8 |
| iShares Kerninkomen Balanced | XINC | 20% shares 80% fixed income | 0,2 | 8 |
| BMO development | GROUND | 80% shares 20% fixed income | 0,2 | 10 |
| balanced BMO | balon | 60% shares 40% fixed income | 0,2 | 10 |
| BMO conservator | ZCON | 40% shares 60% fixed income | 0,2 | 10 |
| Development of horizons TRI | HGRO | 100% shares | 0,17 | 6 |
| horizons in balance TRI | HBAL | 70% shares 30% fixed income | 0,16 | 8 |
| conservative horizon TRI | HCON | 50% shares 50% fixed income | 0,15 | 8 |
How to Buy All in One ETF in Canada
To buy all-in-one ETFs and other stocks, you need an online brokerage account.
Today there are many solid online brokerage options available to Canadians. Below are some of the most popular options to choose from, all of which are suitable for buying all-in-one ETFs, as they all offer a certain amount of free ETF purchases. This means that your profits will not be affected by trading costs, especially if you enter the market at dollar cost average.
QUESTRADA
$0.01/share ($4.95 minimum, $9.95 maximum)
Free ETF Shopping
$50 in free trades
TO REGISTER
INVEST QTRADE DIRECT
$8.75 per transaction
easy to use platform
Full refund of $2000 + Bonus of $50
TO REGISTER
RICH SIMPLE
Commission-free trading of stocks and ETFs
simple user interface
Fractional Stock Option
TO REGISTER
How to decide which all-in-one ETF to buy
By default, you only need to choose one of these all-in-one ETFs for your investment portfolio. However, as there are more and more all-in-one ETFs available, it can be difficult to decide exactly which ETF to have in your portfolio.
For the most part, you can't go wrong with any of these things, but here are the main considerations to keep in mind when choosing the best option for you:
- Risk versus return:What is your risk tolerance and investment horizon? (determines percentage of stocks vs. fixed income)
- Activamix:Do you prefer a higher proportion of exposure in Canada, US or international exposure? (choose between Vanguard vs BlackRock vs BMO vs Horizons)
- Management Expense Ratios (MER):Each all-in-one ETF has different management fees that affect its annual returns. This seemingly small cost difference can add up in the long run.
risk versus return
When it comes to investing, there is always a balance between expected return and risk. In general, the higher the risk, the higher the expected return must be to compensate the investor for taking that risk.
The beauty of all-in-one ETFs is that they are broadly diversified, which means they eliminateunsystematic risk(individual stock risk) and offer favorable risk-adjusted returns. So the most important decision you have to make is how much exposure you want to stocks (ie stocks) versus fixed income (ie bonds).
In general, stocks consistently outperform over the long term and have higher annualized returns than fixed income. However, the volatility of stocks is much higher, which means that you are very likely to lose money on your investment in the short term.
To account for this risk, you need to be clear about your investment horizon (the length of time you invest before you start withdrawing). For example, if your investment horizon is 15 years, that's a relatively long term. Therefore, a suitable ETF choice would be an ETF with a higher equity allocation (one with 80% equity or more). The most popular ETFs in this category are VGRO and XGRO.
Another factor that investors should consider is that we are all sensitive to human emotions. You will need to accurately assess your ability to absorb market volatility and understand whether you will deviate from your investment strategy if the situation worsens.
Here are the best Canada All-in-One ETFs to choose based on your investment horizon and risk tolerance.
| ETF Map Ticker | investment horizon | Estimated profitability annually | Worst Estimated Performance in a Year |
|---|---|---|---|
| VCIP, XINC | 0-2 years | 5-7% | -6% |
| VCNS, XCNS, ZCON, HCON | 2-5 years | 5-8% | -15% |
| VBAL, XBAL, ZBAL, HBAL | 5-10 years | 5-9% | -20% |
| VGRO, XGRO, ZGRO | 10-20 years | 5-10% | -30% |
| HGRO, VEQT, XEQT | 20+ years | 5-10% | -40% |
Activamix
Once you've determined which equity versus fixed income allocation best suits your individual situation, you now need to determine which issuer to choose. Do you choose Vanguard, BlackRock, BMO or Horizons?
One factor to consider is the ETF's regional asset allocation. Each issuer has a different specific asset allocation of Canadian Stocks, US Stocks, International Stocks and Fixed Income for each of their ETFs.
As you can see, some issuers are more heavily weighted in US stocks than in Canadian stocks. Horizons has the largest proportion of US stocks in its funds, while Vanguard funds have the highest proportion of Canadian stocks. So if you want more Canadian exposure, choose a Vanguard fund. If you prefer a stronger emphasis on US stocks, choose one of the other issuers.
Management Expense Ratio (MER)
The other important factor to consider when choosing which all-in-one ETF to buy is the MER. The good news is that the MER of all-in-one ETFs ranges from 0.15 to 0.25. That's pretty low considering that ETFs rebalance automatically, saving you the hassle of doing it yourself. And it's also lower than Robo-Avisor's standard MER of about 0.5%.
However, it is not something to be ignored. When you invest with an extremely long time horizon of decades, every basis point you can save in cost makes a tangible difference in the ultimate value of your portfolio. That's why, all things being equal, a potential deciding factor in your ETF selection could be the fund's EIR.
For example, VGRO and XGRO target 80% equity and 20% fixed income, but since XGRO has a lower MER than VGRO (0.20 vs. 0.25), it seems like a slightly more attractive option.
By considering your risk tolerance, asset allocation and cost of funds, you'll be well equipped to choose the all-in-one ETF that best suits your individual investment needs.
When is the right time to buy all in an ETF?
As they say, market timing is better than market timing. The nice thing about buying an internationally diversified ETF is that you don't have to worry about anything other than the average dollar cost in the market, as long as you have the money to invest. This is because the market as a whole, given enough time, has repeatedly shown that it generates consistently positive returns.
You may want to consider buying an all-in-one ETF if any of the following apply to you:
- You are saving for your retirement savings
- Do you want to get rid of the higher management costs of mutual funds and robo-advisors?
- No more headaches from wasting time researching individual stocks or constantly rebalancing your portfolio yourself.
- You are saving for a major purchase in a few years and you want to get more out of your bank account.
Are all-in-one ETFs the right investment option for your lifestyle?
for DIYindex investorAll-in-one ETFs are gems in a crowded market with a staggering array of stocks and ETFs to choose from. They make the task of investing easier than ever. But what if you are the type of investor who takes a more "introspective" approach? Here are some factors investors should consider before jumping on the all-in-one ETF bandwagon.
Should you buy an all-in-one ETF?
A good choice if...
- You want something simple, effective and save time– with the need for a single ETF in your portfolio and automatic rebalancing, it's as easy as investing yourself.
You have the discipline to buy the ETF every time you contribute.– You will still have to buy the ETF manually when you make a contribution to your investment account. Make sure you don't forget to stick with this habit as you go along.
You won't be tempted to play with your wallet all the time– Keeping an ETF in your portfolio is so easy it's downright boring. You have to be able to keep the noise down and stick to your strategy, whether times are good or bad.
It may not be the best if...
- You have time and energy for it.rebalancing– if you have more time to invest, consider using a three-fund portfolio where you have to periodically rebalance your balance, but the MER falls below 0.10.
You may forget to buy ETFs because life gets in your wayform– If you want an even smoother approach and have your contributions invested automatically, consider using a Robo-Advisor service.
You are constantly changing your portfolio.– If you are tempted to adapt your investment strategy to the latest trends, you probably cannot follow an all-in-one ETF investment strategy.
A few words about the Horizons All-in-One ETFs
If you are considering purchasing one of Horizon's all-in-one ETFs, you should know that they areStock-based ETFs.The underlying structure of these ETFs is more complex than a typical ETF, but essentially their purpose is to save taxes by deferring dividends and interest on unrealized capital gains. This makes them more attractive to people in a higher tax bracket.
However, due to their structure, there is a slightly higher risk associated with holding these ETFs in the form of counterparty and regulatory risk. So if you have all-in-one ETFs in an account registered as a TFSA or RRSP, you're probably better off holding an ETF from one of the other issuers.
Final Thoughts on All-in-One ETFs
On balance, all-in-one ETFs are becoming the best option for many Canadians. And withsurvey conducted by S&P Dow Jones IndicesProving that nearly 90% of actively managed mutual funds have underperformed the overall stock market over the past 15 years, it's hard to question the effort-reward ratio of investing in an all-in-one ETF.
If you're looking for a simple, low-maintenance, and time-saving way to invest, all-in-one ETFs are the way to go.