The Best All-in-One Exchange Traded Funds

The Best All-in-One Exchange Traded Funds

What are some of the Best All-in-One Exchange Traded Funds (ETFs) to own?

How can some of these All-in-One ETFs make investing better for you?

Read on!

My investing approach

Passionate readers of this site will know I take a “hybrid approach” to investing:

• I invest in a number of Canadian dividend paying stocks for long-term growth and income.
• I also invest in some low-cost Exchange Traded Funds (ETFs) for additional diversification.

This approach has worked very well for me/us in terms of meeting some of our future goals:

• We can own individual stocks from mostly Canada, skim low-cost ETF like XIU, to earn income and growth for the future; companies that we want to be in shareholders in, and
• We stay lazy and invest in some low-cost ETFs for growth at the same.

Here is a quick snapshot, just a point in time too, of just some of the Canadian stocks we’ve owned in recent years and bought more of: a mix of dividend growers, capital appreciation stocks and just for good measure…we continue to own even one company that cut their dividends recently too!

Sources (above and below): Portfolio Visualizer.

Portfolio 1 (XIU benchmark – blue line) vs. Portfolio 2 (basket of some of my stocks over a select time).

Your mileage including your stock mix or ETF mix or both, your returns, your holding periods may vary. This is just for simple illustrative purposes and not exactly my returns although I do own every stock above at the time of this post – including since Jan. 2017.  🙂

Where I’m going with this is not everyone is like me/us.

While I accept all forms of investing and discussions on this site, I do confess and fully realize that folks who might be new to investing and/or experienced investors might not invest the same way.

With that mentioned, there has never been a better time to be a DIY investor in my opinion.  

First up, some reader comments in the past to me on this subject worth sharing….

Hi Mark,

I know you like buying and holding Canadian banks, utility companies and more for income.  It seems to be a great way to invest but I have to be honest – doing so on my own seems overwhelming to a new investor like me.  What if I get it wrong and mess things up?  I’m thinking some of these new low-cost all-in-one ETFs might be right for me. Do you have any posts on these funds?

AND…

Hey Mark.

Love the site – what’s your take on Vanguard’s new all-in-one funds?  Do you think other companies are going to follow suit?

AND…

Hi Mark,

I’m a fan of the Vanguard all-in-one portfolios which I know you’ve covered before (VCNS, VBAL, VGRO). When they were launched, I was surprised they did not include an all-equity solution since it would help those who have taxable accounts but don’t want a fixed income drag there. Well, looks like they finally launched VEQT.

If you look at the total assets on Morningstar you will see VGRO’s $570.9bn exceeds VBAL ($392.0) and VCNS ($140.1) combined, so the market clearly favours a more aggressive tilt to these equity funds.

I wouldn’t encourage most investors to go 100% equity, for those looking for tax efficient allocations or who prefer not to have to rebalance a portfolio of individual ETFs (leading to market timing) I think the all in one funds are a great idea, and in my view, might even replace some advisor services.  Thoughts?  Maybe your take on these funds?

Great emails and great questions. Keep them coming!

In previous posts on my site I’ve discussed how many ETFs are enough, maybe a handful at best. 

Well, given our recent wave of All-in-One ETFs on the market, the answer for you might be just one ETF.

There is beauty in simplicity: why All-in-One Exchange Traded Funds work!

Essentially, other than making regular investment contributions into these products within your accounts, these one-fund solutions do all the work for you.

• You no longer need to worry about getting fleeced by high fees by your financial advisor. You’ll see below that these funds have very low management costs.
• You no longer need to worry about portfolio re-balancing. These funds are designed to keep a particular asset allocation in-check for you.
• You no longer need to worry about asset location – what funds to put where and why. These funds are designed to be held in registered accounts (RRSP, TFSA, RESP, RRIF, and more) and non-registered accounts alike, although some funds might be a bit more tax efficient than others.  
• You no longer need to fret about your risk tolerance or think about market timing. This is because the fund’s regular re-balancing act (for you) I mentioned above will keep your desired risk level in line with your investing goals.
• You no longer have to worry about your diversification. For some of these funds, you can obtain broad global and fixed income exposure as you wish to reduce investment risk while increasing your long-term return potential.

Let’s take a quick look at some of my favourite All-in-One ETFs to see the pros and cons of each product and what could work for your investing needs.

Vanguard All-in-One ETF solutions

Vanguard has always been a low-cost investing leader and they continue to prove it time and time again…

(All images from Vanguard Canada’s site.)

VBAL

• A “traditional” balanced fund – 60% stocks, 40% fixed income – long-term investing to weather any markets – up or down.

VGRO

• A great product for younger investors with a multi-decade investing horizon – holds 80% stocks, 20% bonds – so investors can take advantage of long-term equity growth from companies and countries from around the world.
• Could be a  great “set and forget” product for TFSA and RRSP for any 20- or 30-something. 

VEQT

• 100% equity, an aggressive fund, great for investors who might have a workplace pension and/or other fixed income assets who might wish to ride stock market returns from around the world while avoiding portfolio re-balancing on their own.

iShares All-in-One ETF solutions

These XBAL and XGRO iShares funds are designed to compete with VBAL and VGRO above and are some of my favourites to consider owning. 

(All images from iShares Canada’s site.)

XBAL

• A fund of 8 iShares funds.
• Management fee of 0.18%.
• Designed as “traditional” balanced fund of ~ 60% stocks, 40% fixed income.

XGRO

• Another fund of funds.
• Management fee of 0.18%.
• Designed as a more aggressive mix of stocks and bonds (80% stocks, 20% bonds) – for long-term equity growth from markets around the world.

XEQT

• One of my favourite funds because it has a lower Canadian exposure than VEQT.
• Another fund of funds.
• 100% equities.

Need an ex-Canada All-in-One equity solution? Look at XAW

XAW

• Invest beyond Canada’s borders to own companies from around the world. 
• Easy, simple global portfolio diversification without Canada – whereby you can buy and hold Canadian stocks at your leisure. 
• Low-cost way to own U.S., international and emerging market stocks.
• A low management expense ratio of 0.22%
• 100% equities.
• Disclosure: I own this fund have done so for years. 

BMO All-in-One ETF solutions

Not to be outdone…Bank of Montreal (BMO) has a few great, low-cost risk-based asset allocation ETFs to challenge the Vanguard and iShares funds above. 

(All images from BMO’s site.)

ZBAL

• Another fund of 7 BMO funds and cash.
• Management fee of 0.18%.
• A more aggressive fund for growth that targets exposure of 60% equity and 40% fixed income.

ZGRO

• Another fund of 7 BMO funds and cash.
• Management fee of 0.18%
• A growth-oriented fund designed to take advantage of an investors’ long-term holding objectives; 80% equity and 20% fixed income.

Horizons All-in-One ETF solutions

And finally, let’s bring in Horizons ETFs.

Marketed as their “family of TRI Portfolio ETFs” to “help take the guesswork out of building an index ETF portfolio” – these are absolutely ones to consider. Better than potentially the products above, these TRI ETFs are tax-efficient and can offer after-tax benefits if held in taxable or non-registered accounts.

Let’s have a look at their key funds.

(All images from Horizons ETFs site.)

Horizons Conservative TRI ETF Portfolio (HCON)

• HCON invests primarily in Horizons Total Return Index ETFs* (“Horizons TRI ETFs”). The portfolio targets a long-term asset allocation of approximately 50% equity securities and 50% fixed income securities at the time of any rebalance. The portfolio will be rebalanced semi-annually.
• Because of this asset balance, this fund is for the conservative investor I believe.

Horizons Balanced TRI ETF Portfolio (HBAL)

• HBAL is designed to compete in the same ballpark as VBAL, XBAL and ZBAL.
• It provides a one-ticket-ETF solution that targets a long-term asset allocation of approximately 70% equity securities and 30% fixed income securities, and rebalances semi-annually.

Horizons Growth TRI ETF Portfolio (HGRO)

• Despite the “GRO” name, HGRO is a 100% equity product.
• This fund seeks long-term capital growth using a portfolio of primarily equity-focused total return index exchange traded funds. 
• This product could be a game-changer in that with HGRO taxable distributions are not anticipated. Instead, distributions compound and lead to tax-deferral benefits until the asset is sold. Something to consider for non-registered investing for sure…

I had a great interview with Mark Noble about Horizons ETFs you should not miss out on.

Tax Efficient Investing – Horizons ETFs

Best All-in-One ETFs summary

As a passionate buy-and-holder of many Canadian and U.S. dividend paying stocks, as well as a couple of low-cost ETFs, I’m not quite ready to switch to one All-in-One fund for my entire portfolio.

Some of these choices are however very compelling to me; I might eventually re-think how I’m investing especially beyond Canada’s borders including owning more HGRO in particular. 

Amongst all of them, I’m a big fan of 100% equity funds above since I have a big bond in my portfolio already.

That means I would have a bias to owning HGRO in particular, or XEQT, VEQT or XAW as secondary top-choices for most of my portfolio over time if I ever had to choose just one ETF, a desert island pick if you wish.

If I ever decide to move away from my basket of Canadian and U.S. stocks for higher income growth, those are the asset allocation funds I would gravitate to: HGRO, XEQT, VEQT and some XAW.

Here is a summary table to start your research with my favs. in bold:

Fund Mix (Equities / Bonds)	Vanguard Canada	iShares	BMO	Horizons ETFs
Balanced (60/40)	VBAL	XBAL	ZBAL
Growth (80/20)	VGRO	XGRO	ZGRO
All Equity (100/0)	VEQT	XEQT	ZEQT	HGRO
Ex-Canada (100% equity)	VXC	XAW

To invest in equity-only ETFs or high-growth ETFs you’ll need to become an investor who has learned to live with stocks.

If you’re a new investor, tired of paying pricey mutual fund fees and tired of costly financial advice for investing it might be time to switch into any one of these funds. In doing so, you’ll undoubtedly keep more of your hard-earned money and you will likely earn better returns over time since paying fees is forever money lost…

Here is my older primer on self-directed investing 101.

If you’re an experienced investor, it might also be time to switch anyhow. While you can use a few individual ETFs to be more tax-efficient across your portfolio (e.g., by putting Canadian equity ETFs in your TFSA; by putting U.S. equity ETFs in your RRSP or LIRA) – see why here – using one ETF to rule them all could be an easy, diversified, low-cost way to invest without any re-balancing effort.

Invest regularly and stay the course!

What’s your take on the wave of new all-in-one ETFs?  Fan?  Not so much?  Tell me (and others) in a comment!

Thanks for reading, 

Mark