By Vikram Barhat on January 23, 2024
Estimated reading time: 10 minutes

Five ways to worry less about your investments with an all-in-one ETF

By Vikram Barhat on January 23, 2024
Estimated reading time: 10 minutes

Certain all-in-one ETFs can be a convenient, cost-effective option for investors looking for, among other things, long-term capital growth.

This article is 1 year old. Some details may be outdated.

A happy woman reading her ETF returns, while sitting at her work-at-home desk

Photo by Anna Shvets from Pexels

Equity market volatility can spook even the savviest investors into making rash decisions. Periods of pronounced market movements can spark emotional responses: buying high for fear of missing out or panic selling to cut losses.

Generally, these approaches are not beneficial for your long-term financial well-being. Emotion is the enemy of investing, goes the adage. Impulsive investment decisions can be detrimental to the long-term performance of your portfolio.

Taking emotions out of investment decisions and incorporating a professional, process-driven approach to managing your money is a good way to avoid investing missteps and misadventures.

One way to do that is through exchange-traded funds, or ETFs for short. An ETF is a basket of individual stocks and bonds, similar to mutual funds, that may be purchased for one price through a listing exchange. Investors can buy shares of ETFs, known as units, and gain exposure to the performance of securities within the ETF. ETF companies deduct a management fee as part of the ETF’s management expense ratio (MER).

Unlike mutual funds, though, ETFs trade on exchanges like equities, and their unit prices change throughout the day. ETFs, like mutual funds, are constructed and managed by investment firms. In essence, ETFs are a way for investors to shift the burden and anxiety of making investing decisions to professionals who have the experience and resources to navigate the complex investing landscape and can seek to capitalize on its opportunities.

Canadian investors have ploughed a record $48 billion into ETFs so far this year, surpassing 2020’s inflows, according to the Canadian ETF Association. With the soaring popularity of ETFs, issuers are using creative ways to tap a wider pool of securities, across sectors, factors and geographies. One investment product that you can consider is a Fidelity All-In-One ETF, such as Fidelity All-in-One Balanced ETF (FBAL) or Fidelity All-in-One Growth ETF (FGRO).

All-in-one ETFs are generally pools of lower-cost ETFs with different investment objectives and strategies. These ETFs provide broad market exposure in a convenient and cost-efficient way by providing exposure to a globally diversified selection of stocks and bonds.

Here are five key benefits of all-in-one ETFs and how they can help simplify your investing:

1. The investments have been selected for you.

The average retail investor has neither the time nor the know-how to analyze individual securities, understand business fundamentals, evaluate balance sheets, follow market trends and track changes to economic indicators. Fortunately, with all-in-one ETFs, investors can delegate these tasks to professionals. Fidelity’s FBAL and FGRO ETFs, for example, are one-ticket solutions diversified across regions, market caps and investment factors, with the benefits of professional management.

FBAL is designed for investors who are looking for a balanced approach and have a low-to-medium risk appetite: it holds approximately 59% global equities, 39% global fixed income investments and approximately 2% cryptocurrencies (as at Oct. 31, 2023).

FGRO may be better suited for investors with longer time horizons and who can tolerate a medium level of risk. Compared to FBAL, it puts greater emphasis on global equities, which make up approximately 82% of the portfolio. Approximately 15% is allocated to global fixed income investments, and approximately 3% cryptocurrencies (as at Oct. 31, 2023).

2. All-in-one ETFs are easy to buy and sell.

Since ETFs trade on exchanges like stocks do, you can buy and sell them throughout the trading day. To buy ETFs, including FBAL and FGRO, you need a brokerage account, online or conventional, or you can buy through a registered dealer.

Generally, a brokerage account’s maintenance and transaction fees can vary depending on whether the account is with a large institution or with a smaller online, discount or full-service brokerage firm.

Whether you’re investing for retirement, planning a big purchase or saving for a down payment, you can consider putting your savings to work in Fidelity’s All-in-One ETFs, such as FBAL or FGRO, depending on your investment goal.

3. No need to rebalance—it’s done for you.

Portfolio rebalancing takes skill and intimate knowledge of business fundamentals, industry trends and financial markets. Therefore, it may be easier to leave portfolio rebalancing to the experts. Investing in all-in-one ETFs can achieve exactly that, if rebalancing is part of the ETF’s investment mandate. It can save investors from making rash or uninformed decisions that could have financial implications.

A Fidelity All-In-One ETF, for example, mixes and matches different lower-cost ETFs managed by Fidelity so you don’t have to worry about building, managing or tracking its assets.

Fidelity’s All-in-One ETFs target known equity factors like value, momentum, low volatility and quality, while the fixed income sleeve provides diversification and can provide downside protection.

4. You can hold ETFs in different types of investment accounts.

Investors can hold ETFs in non-registered and registered investment accounts. Registered accounts allow Canadians to grow their savings and investments on a tax-sheltered basis.

Registered accounts include tax-free savings accounts (TFSAs), registered retirement savings plans (RRSPs), first home savings accounts (FHSAs), registered education savings plans (RESPs) and others.

5. An all-in-one ETF saves us from our own human nature.

Behavioural finance gurus stress that one of the biggest risks to an investment portfolio is investors themselves. Emotional responses to day-to-day events and market fluctuations can cost investors dearly. These responses could include chasing hot trends, knee-jerk reactions to news headlines or trying to capitalize on daily market swings, among others.

All-in-one ETFs can provide an antidote to human emotion in many types of market conditions. Investing in all-in-one ETFs means fretting less about whether your portfolio has too much exposure to Canadian equities based on your risk tolerance, or what portion of your portfolio is tethered to cyclicality, or whether it is adequately tapped into secular winds.

Each Fidelity All-In-One ETF, for example, is managed to be a one-ticket, lower-cost solution diversified across regions, market caps and investment styles. Each comes with the benefit of professional management and rebalancing. Focus on the things you love and let experts handle the rest.

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An important message from Fidelity Investments Canada ULC

Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in ETFs. Please read the ETF’s prospectus, which contains detailed investment information, before investing. The indicated rates of return are historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of distributions. The indicated rates of return do not take into account sales, redemption, distribution or option charges or income taxes payable by any unitholder that would have reduced returns. ETFs are not guaranteed. Their values change frequently, and investors may experience a gain or a loss. Past performance may not be repeated.

The management fees directly payable by Fidelity All-in-One ETFs are nil. The Fidelity All-in-One ETFs invest in other underlying Fidelity ETFs that charge a direct management fee and/or administration fee. Based on the weightings of underlying Fidelity ETFs, it is expected that the effective indirect management and/or administration fee for Fidelity All-in-One Conservative ETF will be approximately 0.35%, Fidelity All-in-One Balanced ETF will be approximately 0.36%, Fidelity All-in-One Growth ETF will be approximately 0.38% and Fidelity All-in-One Equity ETF will be approximately 0.39%. The actual effective, indirect fees may be higher or lower than the estimated rates shown above based on the performance of the underlying Fidelity ETFs, rebalancing events initiated by the portfolio management team of the Fidelity All-in-One ETFs and changes to the strategic allocation, which may include the removal or addition of underlying Fidelity ETFs. Actual indirect fees will be reflected in the management expense ratio (in addition to sales tax, fixed administration fees, commissions, portfolio transaction costs and other expenses, as applicable, of each Fidelity All-in-One ETF and mutual fund version), posted semi-annually.

Each of the Fidelity All-in-One ETFs has a neutral mix, which includes a small allocation to Fidelity Advantage Bitcoin ETF™ ranging between 1% and 3%. If each portfolio deviates from its neutral mix by greater than 5% between annual rebalances, it will also be rebalanced. Such rebalancing activity may not occur immediately upon crossing that threshold but will occur shortly thereafter.

The statements contained herein are based on information believed to be reliable and are provided for information purposes only. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. It does not provide investment, tax or legal advice, and is not an offer or solicitation to buy. Graphs and charts are used for illustrative purposes only and do not reflect future values or returns on investment of any fund or portfolio. Particular investment strategies should be evaluated according to an investor’s investment objectives and tolerance for risk. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered. Portions © 2024 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC.