This article is sponsored by Fidelity Investments Canada ULC. All opinions are mine.
Conservative investors who want access to a diversified portfolio that aims to generate income and capital growth, can consider the Fidelity All-in-One Conservative ETF.
This ETF is one of four all-in-one ETF solutions offered by Fidelity Investments Canada.
The other three are:
- Fidelity All-in-One Equity ETF (FEQT)
- Fidelity All-in-One Growth ETF (FGRO)
- Fidelity All-in-One Balanced ETF (FBAL)
This FCNS review covers its holdings, fees, returns, pros, cons, and how it compares to FBAL.
What is FCNS?
The Fidelity All-in-One Conservative ETF aims to provide income and moderate growth using a mix of fixed income and equity securities.
With a low to medium risk rating, this one-ticket solution offers investors lower volatility than you would expect for FGRO or FEQT.
Key facts for FCNS as of June 30, 2023, include*:
- Inception date: January 20, 2022.
- Net assets: $68.7 million.
- Listing Exchange: NEO Exchange
- Eligible accounts: It can be held in non-registered and registered investment accounts like RRSPs, TFSAs, and RESPs.
This ETF also supports dividend reinvestment programs (DRIP). This means you can use dividends received to automatically purchase additional ETF units if your brokerage offers this feature.
FCNS Asset Allocation
FCNS is a basket of several Fidelity ETFs comprising bonds, stocks, and cryptocurrency. Its target asset mix is approximately 59% fixed income securities, approximately 40% global equity securities, and approximately 1% cryptocurrencies.
These assets are globally diversified and are subject to annual and periodic rebalancing when required to maintain the target allocation.
As of June 30, 2023, FCNS had the following underlying ETFs*:
|FCNS ETF Holdings||Allocation|
|Fidelity Systematic Canadian Bond Index ETF||43.8%|
|Fidelity Global Core Plus Bond ETF||14.5%|
|Fidelity U.S. High Quality Index ETF||5.4%|
|Fidelity U.S. Value Index ETF||5.2%|
|Fidelity U.S. Momentum Index ETF||5.1%|
|Fidelity U.S Low Volatility Index ETF||5.0%|
|Fidelity International Momentum Index ETF||2.6%|
|Fidelity International Low Volatility Index ETF||2.5%|
|Fidelity International Value Index ETF||2.5%|
|Fidelity International High Quality Index ETF||2.4%|
|Fidelity Canadian Momentum Index ETF||2.5%|
|Fidelity Canadian Value Index ETF||2.5%|
|Fidelity Canadian Low Volatility Index ETF||2.5%|
|Fidelity Canadian High Quality Index ETF||2.4%|
|Fidelity Advantage Bitcoin ETF||1.3%|
These ETFs are invested in securities from several countries, including (as of May 31, 2023)*:
- Canada: 64.9%
- United States: 21%
- Japan: 2.6%
- United Kingdom: 2.1%
- Germany: 1.7%
- France: 1.6%
- Switzerland: 1.2%
FCNS holdings are also diversified across industry sectors as follows (as of May 31, 2023)*:
Fidelity All-in-One Conservative ETF has had a 5.22% return over the last one year, as of July 31, 2023. And since inception, it has returned -1.10%.
Cash distributions from this fund occur once a year.
The Management Expense Ratio (MER) for FCNS was 0.38% as of March 31, 2023. This means you pay a $38 annual fee per $10,000 invested in the fund.
Self-directed investors may also be required to pay trading commissions to their brokerage when purchasing the ETF. That said, some discount brokers waive this fee by offering commission-free ETF trading.
Benefits of FCNS
FCNS offers several benefits, including:
- It is a one-ticket solution fund, which removes the need to trade multiple assets when designing your portfolio.
- Rebalancing is automated.
- It can be held in registered and non-registered investment accounts.
- It is eligible for DRIP.
- FCNS has a lower management fee compared to similar mutual funds.
- It trades like a stock and can be bought and sold throughout a trading day.
- It is globally diversified and professionally managed.
Cons of FCNS
FCNS has a target asset allocation, consisting of the asset class allocations set out above. As the holdings can’t be customized, you would have to consider adding other investments to your portfolio in order to achieve different exposures.
If you prefer to take on more risk in exchange for potentially higher returns, FGRO or FEQT may be better options, depending on your individual financial circumstances, investment objectives and time horizon.
FCNS vs FBAL
FBAL generally holds more equity securities than FCNS (about 59% vs. 40%) and includes around 39% fixed income securities.
Like FCNS, these assets are diversified by geography and industry, and both funds have a small allocation to cryptocurrencies (about 1% FCNS vs. 2% FBAL).
The top-15 ETF holdings for FBAL as of June 30, 2023, are*:
|FBAL ETF Holdings||Allocation|
|Fidelity Systematic Canadian Bond Index ETF||28.6%|
|Fidelity Global Core Plus Bond ETF||9.5%|
|Fidelity U.S. High Quality Index ETF||7.8%|
|Fidelity U.S. Value Index ETF||7.7%|
|Fidelity U.S. Momentum Index ETF||7.5%|
|Fidelity U.S Low Volatility Index ETF||7.3%|
|Fidelity Canadian Value Index ETF||3.7%|
|Fidelity Canadian Momentum Index ETF||3.7%|
|Fidelity Canadian High Quality Index ETF||3.6%|
|Fidelity Canadian Low Volatility Index ETF||3.6%|
|Fidelity International Momentum Index ETF||3.7%|
|Fidelity International Low Volatility Index ETF||3.6%|
|Fidelity International Value Index ETF||3.6%|
|Fidelity International High Quality Index ETF||3.6%|
|Fidelity Advantage Bitcoin ETF||2.5%|
Like FCNS, FBAL has a low to medium risk rating. Its MER was 0.40% as of March 31, 2023.
It can be challenging for a self-directed investor to replicate the level of diversification provided by all-in-one ETFs like FCNS.
Instead of juggling a bunch of individual bonds and stocks, you can try to achieve diversification with a single diversified fund solution.
All-in-one ETFs can also be cost-effective compared to traditional mutual funds, or a trading strategy that involves buying and holding multiple individual funds.
Lastly, FCNS offers a convenient do-it-yourself approach for new investors who may not have the time or confidence to research or build a diversified portfolio from scratch.
*Source: Fidelity Investments Canada ULC
Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in ETFs. Fidelity’s All-in-One ETFs pay indirect management fees through their investments in underlying Fidelity ETFs that pay management fees and incur trading expenses (in addition to the indirect management fee, the Fidelity ETFs will also pay indirectly the operating expenses of the underlying Fidelity ETFs). Please read the ETF’s prospectus, which contains detailed investment information, before investing. The indicated rates of return are historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of distributions. The indicated rates of return do not take into account sales, redemption, distribution or option charges or income taxes payable by any unitholder that would have reduced returns. ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.
The management fees directly payable by Fidelity All-in-One ETFs are nil. The ETFs invest in underlying Fidelity ETFs that charge a direct management fee, and as a result, pay an indirect management fee. Based on the management fees and the anticipated weightings of the underlying Fidelity ETFs, it is expected that the effective, indirect management fee for Fidelity All-in-One Conservative ETF will be approximately 0.34%, Fidelity All-in-One Balanced ETF 0.35%, Fidelity All-in-One Growth ETF 0.37%, and Fidelity All-in-One Equity ETF 0.38%. Actual indirect management fees will be reflected in the management expense ratio in addition to applicable taxes, fixed administration fees, trailing commissions, portfolio transaction costs and expenses, as applicable, of each ETF/Fund, posted semi-annually.
Each of the Fidelity All-in-One ETFs has a neutral mix, which includes a small allocation to Fidelity Advantage Bitcoin ETF™ ranging between 1% and 3%. If each portfolio deviates from its neutral mix by greater than 5% between annual rebalances, it will also be rebalanced. Such rebalancing activity may not occur immediately upon crossing that threshold but will occur shortly thereafter.
The investment risk level indicated is required to be determined in accordance with the Canadian Securities Administrators standardized risk classification methodology, which is based on the historical volatility of a fund, as measured by the ten-year annualized standard deviation of the returns of a fund or those of a reference index, in the case of a new fund.
A fund’s volatility is determined using a statistical measure called “standard deviation.” Standard deviation is a statistical measure of how much a return varies over an extended period of time. The more variable the returns, the larger the standard deviation. Investors may examine historical standard deviation in conjunction with historical returns to decide whether an investment’s volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate how an investment actually performed, but it does indicate the volatility of its returns over time. Standard deviation is annualized. The returns used for this calculation are not load-adjusted. Standard deviation does not predict the future volatility of a fund.
The statements contained herein are based on information believed to be reliable and are provided for information purposes only. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. It does not provide investment, tax or legal advice, and is not an offer or solicitation to buy. Particular investment strategies should be evaluated according to an investor’s investment objectives and tolerance for risk. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.
Certain statements in this commentary may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest, and assuming no changes to applicable tax or other laws or government regulation. Expectations and projections about future events are inherently subject to, among other things, risks and uncertainties, some of which may be unforeseeable and, accordingly, may prove to be incorrect at a future date. FLS are not guarantees of future performance, and actual events could differ materially from those expressed or implied in any FLS. A number of important factors can contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition and catastrophic events. You should avoid placing any undue reliance on FLS. Further, there is no specific intention of updating any FLS, whether as a result of new information, future events or otherwise.