Desert-island ETF picks for 2021

As mentioned in the Best ETFs overview, we have retained this new feature introduced in the 2019 edition to provide additional ETF selections for readers who may be frustrated by the fact so many of our All-Star picks are the same from year to year.  

We asked each panellist to suggest a single ETF they’d be comfortable holding for the long run if they were stranded on a desert island and couldn’t reach the mainland to contact their brokerage. Admittedly, we cribbed the idea from The Motley Fool, but its version involves individual stocks, while ours is focused on much more diversified single ETFs. 

Mark Yamada: Horizons Nasdaq 100 Index ETF (HXQ.U), a returning pick. “Technology will be a key driver for the next 20 years and the TRI structure means no tax will be incurred while I’m on that island—no CRA penalties! Unhedged is always better for the long run to avoid costs.”

Ioulia Tretiakova: BMO Low Volatility Canadian Equity ETF (ZLB), also a returning pick. Low volatility allows gains to compound more efficiently (it’s about the arithmetic) and exploits the investing “anomaly” that lower risk leads to higher returns. ZLB offers a better diversified take than others in the space.  

Yves Rebetez: Yves is also standing by his 2020 pick: First Trust Indxx Next G ETF (NXTG). It focuses on fifth-generation technology (5G) wireless networks and next-generation digital cellular technologies. He is also keen on the Internet of Things (IOT) theme, accessible through Global X’s SNSR. 

Mark Seed: New panellist Mark Seed picked Horizons Growth TRI ETF Portfolio (HGRO/TSX)—itself a new addition to our lineup this year, along with the two other Horizons Asset Allocation ETFs. HGRO holds six Horizons equity ETFs, with exposure to U.S. large-caps, the Nasdaq 100, Emerging Markets, Europe and other developed markets, including Canada.

Ben Felix: A new pick: Avantis International Small Cap Value ETF (AVDV/NYSE Arca) is like an international developed small-cap value index fund due to its broad diversification, low costs, and systematic approach, but has some evidence-based tweaks. International developed small cap value stocks with robust profitability have exposure to theoretically sound and empirically robust sources of expected returns which should increase the reliability of long-term outcomes, as described in Five Factor Investing with ETFs.

Cameron Passmore: Back from last year is Avantis U.S. Small Cap Value ETF (AVUV). This is like a U.S. small-cap value index fund due to its broad diversification, low costs and systematic approach, but has some evidence-based tweaks. Same dynamics of expected returns as in the AVDV description above. 

Robb Engen: Vanguard All-Equity ETF Portfolio Fund (VEQT): a returning pick. Many investors in the accumulation stages prefer to push the risk envelope and tilt their portfolios to 100% equities. VEQT provides global diversification with a low-cost, one-ticket solution. The 30% Canadian allocation gives him some pause, but it’s not out of line with most model ETF portfolio weightings, and certainly less volatile to the movement of foreign currencies.

Dale Roberts: Roberts dropped his pick from last year to make room for the world’s first Bitcoin ETF: Purpose Bitcoin (BTCC.B/TSX). “All the stars are aligned for Bitcoin as it marches towards mainstream adoption.”

MoneySense Investing Editor at Large Jonathan Chevreau is also founder of the Financial Independence Hub, author of Findependence Day and co-author of Victory Lap Retirement. He can be reached at [email protected]