Best ETFs for 2023: Best all-in-one ETFs for Canadian investors
Asset-allocation ETFs have become so popular that they comprise nearly half of this year’s all-star panel picks.
Asset-allocation ETFs have become so popular that they comprise nearly half of this year’s all-star panel picks.
To view all the data in this chart, use your mouse or two fingers to slide the columns right or left. To download the list to your device, tap or click your preferred format (Excel, CSV or PDF) below.
Vanguard did Canadian investors a valuable service when it introduced the first asset-allocation exchange-traded funds (ETFs) to Canada five years ago. This innovation—providing a complete portfolio with exposure to multiple asset classes in a single ETF—did a number of things:
But our loyalty has limits.
The Moneysense Best ETFs panel couldn’t help but note that Vanguard Canada’s suite of asset-allocation ETFs all continue to carry a management expense ratio (MER) of 24 basis points (0.24%). A sixth, the Vanguard Retirement Income ETF, designed for registered retirement income funds (RRIF), has an even higher MER at 32 basis points (0.32%). That compares with 20 basis points on all-in-one ETFs from Vanguard’s two main rivals in the space, BMO and iShares, and even lower for the offerings from Horizons (which, truth be told, are not a like-for-like switch). A fee of 0.2% per year for a fully diversified portfolio is only $200 per $100,000 of investments.
The strongest argument for continuing to manage one’s own portfolio remains cost; only by putting most of your savings into equity and fixed-income ETFs, with MERs ranging from five to 25 basis points (0.05% to 0.25%), can you really minimize the fees you’re paying. But if newer competitors come into the marketplace with a substantially similar product knocking a few hundredths of a percentage point off asset-allocation funds’ fees, that advantage of having your portfolio constantly rebalanced begins to look worth the extra change, at least for some of your accounts.
Our panel’s top picks—iShares Core Equity ETF Portfolio (XEQT), iShares Core Growth ETF Portfolio (XGRO) and BMO Growth ETF (ZGRO)—all hew to an aggressive, growth mindset and have no more than a one-fifth allocation to fixed income.
For a more traditional 60/40 balance, the panel suggests to consider iShares Core Balanced ETF Portfolio (XBAL) or BMO Balanced ETF (ZBAL). Investors prioritizing wealth preservation would not be amiss holding more conservative iShares Core Conservative Balanced ETF Portfolio (XCNS), BMO Conservative ETF (ZCON) or iShares Core Income Balanced ETF Portfolio (XINC) with a higher bond allocation.
Watch: Asset-Allocation ETFs
Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
Rebalancing my ETFs by myself is not rocket science. Set up a spreadsheet and use a simple formula to calculate percentages. When you are making a investments to cash in your LIF or RIF accounts for a monthly withdrawal, look at the percentages and withdraw accordingly. The trouble with all in ones as I see it is deciding you want to change your percentages from 80/20 to 75/25 for example. That sounds like a pain in the butt. It’s good to keep an eye on your money. Set it and forget it might be good enough for you though so whatever….
HGRO has been performing very well this year.
Why was Horizon’s HGRO not included in the “Best all-in-one ETFs for 2022”. It blew away the returns on the three that are listed – ZGRO, XGRO and XEQT. Maybe I’m not understanding the criteria.
With this said, do you recommend transferring investments from Vanguard to one of these lower MER recommendations? or begin investing with them now? Thanks 🙂
“But our loyalty has its limits”. Seems like you’re splitting hairs on fees with VEQT being only $4 more expense per year to hold on a $10,000 investment than XEQT. To suggest someone choose XEQT over VEQT is really getting lost in the minutiae.