Best ETFs for 2023: Best all-in-one ETFs for Canadian investors

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: 

• It delivered a simple, low-cost solution for investors lacking the time, investment savvy or confidence to keep tabs on their own couch potato portfolio made up of a handful of ETFs tracking different sectors. 
• It offered a completely diversified, one-stop option for smaller side accounts to one’s principal RRSP nest egg.
• It made it easier to decumulate a portfolio without having to pick what to sell. 
• And, it’s given robo-advisors—those that charge an incremental 0.3 to 0.5% fee on top of the embedded ETF fees—a run for their money.

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

Read more on investing:

• The best online brokers in Canada
• A guide to the best robo-advisors in Canada
• The best TFSAs in Canada
• The best RRSP investments

About Michael McCullough

Michael is a financial writer and editor in Duncan, B.C. He’s a former managing editor of Canadian Business and editorial director of Canada Wide Media. He also writes for The Globe and Mail and BCBusiness.

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