Best All-in-One ETFs in Canada for 2021

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by Enoch Omololu

Updated

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All-in-one ETFs by Vanguard, iShares, BMO, and other ETF providers can make investing much cheaper and easier for Canadian investors, whether you are a veteran or you are just starting your investment journey.

Exchange-Traded Funds (ETFs) sales continue to grow in Canada with net sales keeping pressure on and exceeding mutual funds sales last year.

This is not surprising. Like I have been saying for a while, Canada’s expensive mutual funds (one of the highest in the developed world) and less-than-stellar active management performance will eventually face a day of reckoning.

While we are not there yet, that day is closer than ever, and the Big Banks are starting to notice.

In this article, I cover some of the best all-in-one ETFs you can hold in your investment portfolio.

Best All-in-One ETF Portfolios in Canada

Vanguard pioneered all-in-one asset allocation ETFs in Canada and has been closely followed by the other major ETF providers – iShares, BMO, and Horizons.

These all-in-one low-cost ETF portfolios serve as a fund of funds with each one built using several underlying ETFs and essentially serving as a basket for tens of thousands of securities. They are pre-designed to satisfy investors with varying risk profiles.

These complete portfolios make it extremely easy to hold a diversified portfolio as a do-it-yourself investor and not have to worry about re-balancing or high management fees. Simply ‘set it and (almost) forget it.’

Vanguard All-in-One ETFs

1. Vanguard Conservative Income ETF Portfolio (VCIP): This portfolio seeks to provide a combination of income and some long-term capital growth by investing in equity and fixed-income securities. It is made up of 7 underlying Vanguard ETFs.

  • Asset allocation: 80% fixed income and 20% equity
  • Management fee: 0.22%
  • MER: 0.25%

2. Vanguard Conservative ETF Portfolio (VCNS): Seeks to provide a combination of income and moderate long-term capital growth. It is made up of 7 underlying ETFs.

  • Asset allocation: 60% fixed income and 40% equity
  • Management fee: 0.22%
  • MER: 0.25%

3. Vanguard Balanced ETF Portfolio (VBAL): Seeks to provide long-term capital growth with a moderate level of income. It consists of 7 underlying Vanguard ETFs.

  • Asset allocation: 60% equity and 40% fixed income
  • Management fee: 0.22%
  • MER: 0.25%

4. Vanguard Growth ETF Portfolio (VGRO): Seeks to provide long-term capital growth. It consists of 7 underlying Vanguard ETFs.

  • Asset allocation: 80% equity and 20% fixed income
  • Management fee: 0.22%
  • MER: 0.25%

5. Vanguard All-Equity ETF Portfolio (VEQT): Seeks to provide long-term capital growth and consists of 4 underlying ETFs.

  • Asset allocation: 100% equity
  • Management fee: 0.22%
  • MER: 0.25%

iShares All-in-One ETFs

1. iShares Core Balanced ETF Portfolio (XBAL): Seeks to provide long-term capital growth and income and is made up of 8 underlying iShares ETFs.

  • Management fee: 0.18%
  • MER: 0.20%
  • Asset allocation: 60% equity and 40% fixed income

2. iShares Core Growth ETF Portfolio (XGRO):  Seeks to provide long-term capital growth and is made up of 8 underlying iShares ETFs.

  • Management fee: 0.18%
  • MER: 0.20%
  • Asset allocation: 80% equity and 20% fixed income

3. iShares All-Equity ETF Portfolio (XEQT): Seeks to provide long-term capital growth and is made up of 4 underlying ETFs.

  • Management fee: 0.18%
  • MER: 0.20%
  • Asset allocation: 100% equity

BMO All-in-One ETFs

1. BMO Conservative ETF (ZCON): Seeks to provide income and moderate long-term capital appreciation and consists of 7 underlying BMO ETFs.

  • MER: 0.20%
  • Asset allocation: 60% fixed income and 40% equity

2. BMO Balanced ETF (ZBAL): Seeks to provide moderate long-term capital appreciation and income. It is made up of 7 underlying BMO ETFs.

  • MER: 0.20%
  • Asset allocation: 60% equity and 40% fixed income

3. BMO Growth ETF (ZGRO): Seeks to provide long-term capital appreciation and is also made up of 7 underlying BMO ETFs.

  • MER: 0.20%
  • Asset allocation: 80% equity and 20% fixed income

Horizons All-in-One ETFs

1. Horizons Balanced Tri ETF Portfolio (HBAL): This one-ticket solution portfolio seeks long-term capital growth. It currently holds 8 underlying Horizons ETFs.

  • MER: 0.16%
  • Asset allocation target: 70% equity and 30% fixed income

2. Horizons Conservative Tri ETF Portfolio (HCON): Seeks moderate long-term capital growth and is comprised of 8 underlying Horizons ETFs.

  • MER: 0.15%
  • Asset allocation target: 50% equity and 50% fixed income

3. Horizons Growth Tri ETF Portfolio (HGRO): Seeks long-term capital growth and is comprised of 5 underlying Horizons ETFs.

  • MER: 0.16%
  • Asset allocation target: 100% equity

Vanguard vs. iShares vs. BMO vs. Horizons One-Ticket ETFs

I generally like all the one-ticket solution ETFs provided by the major ETF providers in Canada.

While I tend to be biased in favour of Vanguard given their historical leadership when it comes to providing everyday investors with cost-saving opportunities in the financial markets, the others are just as good in my opinion.

In fact, iShares, BMO, and Horizons are currently beating Vanguard slightly on fees by up to 10 basis points (0.10%). Not much, but worth noting for the cost-conscious investor.

There are also some subtle differences between the different portfolio offerings by these providers.

For example, Vanguard’s fixed income consists of U.S., Canada, and international bonds, whereas for iShares, the fixed income component only consists of U.S. and Canadian bonds. You will also find some variations in how the different providers allocate their share of Canadian, U.S., and international equities.

Horizons uses a type of derivative (swaps) as part of the investment strategy for its one-ticket ETF offerings.

All the aforementioned all-in-one ETF portfolios are re-balanced to keep their asset allocation within the target range. For example, BMO re-balances on a quarterly basis, while Horizons does it semi-annually.

All-in-One ETF Portfolios for Investors in Canada

Low Cost Investing in Canada

To cut investment fees, investors can follow one or a combination of options:

1. Do-it-yourself investing

DIY completely by using a discount brokerage account to purchase individual stocks, low-cost ETFs, etc.

This option requires that you are comfortable with the idea of allocating assets inside your portfolio to match your risk tolerance and investment objectives. You also need to be willing /able to re-balance your portfolio as required from time to time.

With the advent of all-in-one ETF portfolios, it has never been easier to jump on the do-it-yourself investing bandwagon.

Low-cost to no-fee brokerage platforms in Canada include Questrade and Wealthsimple Trade.

2. Use a robo-advisor

These online wealth managers use low-cost ETFs and do all the work for you so there’s no need to fret over portfolio diversification or re-balancing. In exchange, they charge a management fee.

The management fee you pay to a robo-advisor is significantly lower than the fee you pay for comparable mutual funds at your bank.

When you open a new account, robo-advisors ask you some questions to determine your risk tolerance, time frame, and investment objectives. You can update your preferences later if required and can also easily set up automatic contributions to your account.

Compare Canada’s Best Robo-Advisors.

Investment fees are not the be-all and end-all of investing. However, they are very important, especially when you realize that active mutual fund managers rarely live up to their hype, and the investment returns that matter to you, in the long run, are ‘net’ of fees.

Canada’s most popular online wealth manager, Wealthsimple Invest, is offering our readers a $75 cash bonus when they open an account.

What is an ETF and Why Should You Use Them?

An ETF is similar to a mutual fund in that it is a basket of securities that tracks a market index. Unlike mutual funds, however, the market price of an ETF fluctuates during the trading session similar to stocks (Equity) and they are bought and sold on an exchange at the market price.

Broadly, there are two types of ETFs – passive and actively managed.

Index (passive) ETFs attempt to replicate the performance of the broad index they are tracking e.g. S&P 500, while active ETFs are similar to mutual funds and aim to beat the market. The low-cost ETFs discussed in this post are index-style ETFs for the most part.

Here are more details on ETFs.

Some of the core benefits of ETFs include:

1. Lower Fees: The management expense ratio (MER) charged by ETFs is much lower than mutual funds with annual costs as low as 0.06% compared to up to 2% or more for the average equity mutual fund. Over time, lower fees may translate into higher returns.

2. Diversification: An ETF can hold hundreds to thousands of stocks, bonds, commodities, currencies, and real estate on a global basis, providing investors with diversification across asset classes and Geo-locations.

They also come with some downsides:

1. Trading fees: If you are an investor hoping to purchase a few ETFs monthly to add to your portfolio, the transaction fees can add up. There are now options to purchase commission-free ETFs in Canada, so this is no longer a big issue.

That being said, frequent small-size trading using an online discount brokerage that charges commissions on either buy or sell-side can easily wipe out the savings from lower MERs.

2. Re-balancing: Unless you are using a robo-advisor or all-in-one ETF, you will need to re-balance your portfolio 1-2 times a year when the asset allocation significantly strays from its desired target due to variations in price fluctuation for different assets.

Conclusion

Successful investing can be all about your costs. Over time, investment fees can significantly erode your returns and negatively impact your retirement savings.

All-in-one ETF portfolios are already designed to fit the different spectrum of investors’ risk appetites and you can easily switch between funds if your financial situation changes.

Questrade offers access to a variety of investment products including stocks, ETFs, options, FX trading, IPOs, precious metals, GICs, and more. And, when you open a new account and deposit $1,000 or more, you get free trade credits worth $50.

Wealthsimple Trade offers no-commission trading for ETFs and stocks. When you open an account and trade at least $150, you receive a $50 bonus.

If you’d rather not get your hands dirty with DIY investing, you can still enjoy the benefits of low-cost ETF investing by using one of Canada’s best robo-advisors, Wealthsimple, and get a $75 cash bonus.

Related Reading:

Best All-in-One ETFs in Canada for 2021

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, Credit Canada, MSN Money, National Post, CIBC, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

4 thoughts on “Best All-in-One ETFs in Canada for 2021”

  1. Hi, great content as always. Can one invest in mutual funds via TFSA/RSP and also invest in ETFs for diversification?

    You said, in point 1 above about trading fees, that “If you are an investor hoping to purchase a few ETFs monthly to add to your portfolio, the transaction fees can add up..” does this apply even when Wealthsimple is used?

    Apologies if the answers to my questions are obvious.

    Thanks.
    Ror

    • @Ror: No. With Wealthsimple Invest, you can make regular deposits and they will invest them on your behalf. Your management fee does not change. If you choose to DIY and buy the ETFs individually yourself using Wealthsimple Trade, you also get free trades for Canadian ETFs.

  2. Hi, I read your post at https://www.savvynewcanadians.com/guide-to-robo-advisors-canada-and-comparison/ and I was wondering if one could do both active investing (using banks or other FIs for mutual funds) and also robo-advisors (passive investing on ETFs)? I don’t know if my question makes sense.

    I currently do active investing buying mutual funds with an FI (think it might include ETFs but im not entirely sure) and i believe the MER is much > 1%. Having read your post, I think i’d like to do passive investment with low MER fees using robo-advisors like Wealthsimple etc.
    Can you have both passive and active or just one or the other?

    Thanks

    Ror

    • @Ror: Yes, you can do both. This is also one way to test passive investing if you are not fully sold on it yet.

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