Desert-island ETF picks for 2022

Presented By
Questrade
Our panellists each pick the one fund they'd leave in their portfolios if they were stranded somewhere and unable to touch their investments.
Presented By
Questrade
Our panellists each pick the one fund they'd leave in their portfolios if they were stranded somewhere and unable to touch their investments.
The “Best desert-island ETF” category, which was introduced in 2019, is always a fun one, as it allows our panellists to let loose a bit and choose ETFs that don’t fit in anywhere else. It’s here you’ll find more thematic funds and other types of products. These aren’t core holdings—look to our other categories for those kinds of stalwart securities—but they could complement the other funds in your portfolio, as long as they jibe with your investment objectives, risk tolerance level and time horizon.
The Internet of Things (IoT) is still in its infancy, but it has enormous potential to change how we live. IoT refers to the Internet-connected and wireless devices that collect data in factories, help self-driving cars navigate roads, allow people to have automated “smart homes” and more. “There is high growth potential from IoT,” says Rebetez. Global X says that the global share of 5G mobile connections could hit 47% by 2026, up from 4% in 2020, “unlocking vast potential for the IoT, thanks to increased bandwidth and download speeds.”
For another year, Roberts has picked Purpose’s bitcoin offering, which was the first-ever bitcoin ETF. The fund turned one year old in February 2021, and while it is down 30% since inception, Roberts is still a bitcoin believer. “I am a big fan of bitcoin exposure in the portfolio,” he says. “I treat it as another portfolio asset. To me it is modern gold. It is insurance against a basket of fiat currencies—also known as ‘melting ice cubes.’”
HGRO, which has 99% weighting to equities, was designed to provide long-term capital growth by investing primarily in Horizons Total Return Index ETFs. Seed likes it because it’s a simple all-in-one ETF that’s both low-cost—it has a 0.16% MER—and tax-efficient. “If I was stuck on a desert island and I had to pick just one low-cost fund to own for long-term growth, this would be it,” he says.
Passmore likes Dimensional Fund Advisors’ products because they’re designed based on academic asset-pricing literature and take five compensated risks into account, he says. That includes market, company size, relative price, profitability and investment risks. DFA increases the weights of its securities that have exposure to these risks, which “results in a more reliable expected return,” says Passmore. “DFSV is a small-cap value ETF that delivers deep exposure to multiple risk factors.”
A returning pick, this ETF holds a broad collection of small-cap companies from developed nations outside of the U.S. Felix likes small-cap value stocks because “they have higher expected returns than the market.” He adds: “This is true both theoretically and empirically. The theoretical basis for the higher expected returns of small-cap value stocks is that they are riskier, so allocating them does not make sense for everyone.”
This is a new pick, though it’s similar to HXQ, which Yamada chose last year. Many investors are familiar with QQQ, Invesco’s NASDAQ-tracking ETF. But what if you want to own even growthier names? Yamada suggests holding this fund, which tracks the 101st to 200th next-largest companies on the NASDAQ, most of which are mid-cap names. “This is a relatively new index of companies with better growth and valuation characteristics than the ‘grown-up’ NASDAQ-100,” he says.
Watch: ETF Academy Lesson 9
“VEQT is literally my own desert-island pick,” says Engen, who invests in this fund himself across all of his various accounts. While it is also on our all-in-one list, he’s putting his own money into this ETF because, with more than 13,000 global stocks, “it’s a simple, sensible, globally diversified and low-cost solution you can ignore for decades and be happy with the long-term outcome.”
Again this year, Tretiakova has chosen ZLB for her desert-island pick. “Volatility is persistent; forecasting and managing volatility is a fruitful exercise—unlike forecasting returns—and it improves capital preservation during turbulent markets,” she says, explaining why she chose this ETF. “Mathematically this would translate into slightly higher returns in the long run, assuming that management fees and higher rebalancing costs don’t wipe out the advantage.” ZLB’s MER is high (0.39%) but, she says, in a high-volatility environment, “it might be justified by the downside protection that it provides.”
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This article was originally published in 2012 and is updated annually (most recently on May 25, 2022).
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How can a bitcoin ETF be his pick on a stranded island? Is he realizing some people will actually that terrible advice ? And why pick HGRO instead of VGRO that is better diversified and not associated to a company less interested in his customers success than by its profit. Very bad article to be honest. Only reasonable pick is VEQT.
Great list, thanks! New to ETFs. As an investor in ETFs, do I pay the management fee and the MER? o
From Jonathan Chevreau:
Yes, but the management fee is part of the MER so you don’t pay twice. The MER is typically just a few basis points higher than the management fee and goes towards certain non investment expenses.
what a great site this is…enjoyed this series, thank you.
enjoyed reading the variety here, esp with one who has to diversify his own tfsa/rrsp holdings
These ETF’s pay little or no dividends, highest dividend from the 2 that pay anything is 1.9%. People need at least 6% dividends to pay bills, stay ahead of inflation, and make ends meet.
These financial ‘experts’ recommend ETF’s that require you to time the market and buy low and sell high to make money. But nobody has ever been able to do that on a consistent or predictable basis. In fact, it’s impossible to do that, though many keep trying.
The greatest investors of all time like Buffet and Lynch make most of their money by buying dividend payers when their prices have dropped, holding them, and buying more of them when price drop again.
Almost no dividends in any of those picks means you have to buy low and sell high if you want to make money. But that’s impossible to do over and over year after year.
I’ll stick with high dividend paying ETF’s so I get my ‘profit’ out every month instead of waiting for 10 years or hoping my ETF will be up when I sell.