Desert-island ETF picks for 2021
Our panellists each pick the one fund they'd leave in their portfolios if they were stranded somewhere and unable to touch their investments.
Our panellists each pick the one fund they'd leave in their portfolios if they were stranded somewhere and unable to touch their investments.
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.
Watch: ETF Academy Lesson 9Mark 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.”
ETF Name | Ticker | Management Fee | MER | # of Holdings | Description | Mark Yamada: Horizons Nasdaq 100 Index ETF | HXQ.U | 0.25 | 0.28 | 100 | Technology a key driver next 20 years; TRI structure minimizes tax |
---|---|---|---|---|---|
Yves Rebetez: First Trust Indxx Next G ETF (NXTG | NXTG (Nasdaq) | 0.7 | 0.7 | 100 | Nasdaq-based 5G focus back for second year |
Ioulia Tretiakova: BMO Low Volatility Canadian Equity ETF | ZLB | 0.35 | 0.39 | 46 | Low volatility allows gains to compound more efficiently |
Ben Felix: NEW! Avantis International Small Cap Value ETF | AVDV: NYSE ARCA | 0.36 | 0.36 | 967 | International developed small-cap value stocks have strong expected long-term returns |
Cameron Passmore: Avantis U.S. Small Cap Value ETF | AVUV: NYSE Arca | 0.25 | 0.25 | 554 | U.S. small-cap value fund is broadly diversified with low costs |
Robb Engen: Vanguard All-Equity ETF Portfolio Fund | VEQT | 0.22 | 0.23 | 23,000 | 100% equities, global diversification with a low-cost, one-ticket solution |
Dale Roberts: NEW! Purpose Bitcoin ETF | BTCC/B | 1 | N/A | N/A | Stars are aligned for bitcoin as it marches to mainstream adoption; this is the world's first true Bitcoin ETF |
Mark Seed: NEW! Horizons Growth TRI ETF Portfolio | HGRO | 0 | 0.16 | 100 | Fund of 6 Horizons equity funds with global exposure |
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]
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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.