Best All-in-One ETFs Canada

The Best All-in-One ETFs in Canada

Here are the best all-in-one ETFs to buy in Canada in 2024:

ETF PortfolioTickerAsset AllocationMER# of ETF Holdings
Vanguard All-EquityVEQT100% equities0.247
Vanguard GrowthVGRO80% equities
20% fixed income
0.247
Vanguard BalancedVBAL60% equities
40% fixed income
0.247
Vanguard ConservativeVCNS40% equities
60% fixed income
0.247
Vanguard Conservative IncomeVCIP20% equities
80% fixed income
0.247
iShares Core EquityXEQT100% equities0.24
iShares Core GrowthXGRO80% equities
20% fixed income
0.28
iShares CoreXBAL60% equities
40% fixed income
0.28
iShares Core Conservative
Balanced
XCNS40% equities
60% fixed income
0.28
iShares Core Income
Balanced
XINC20% equities
80% fixed income
0.28
BMO GrowthZGRO80% equities
20% fixed income
0.210
BMO BalancedZBAL60% equities
40% fixed income
0.210
BMO ConservativeZCON40% equities
60% fixed income
0.210
Horizons Growth
TRI
HGRO100% equities0.176
Horizons Balanced
TRI
HBAL70% equities
30% fixed income
0.168
Horizons Conservative
TRI
HCON50% equities
50% fixed income
0.158

Hold On… What is an All-in-One ETF?

If you’re an investor, then you probably know that picking the right stocks can quickly get overwhelming once you start going down the research rabbit hole.

With a wide selection of stocks, bonds, and exchange-traded funds available on the market today, it’s hard to know where to even begin!

Fortunately, these days investing is extremely straightforward for many do-it-yourself investors. So simple, in fact, that one single ETF can make up an entire investment portfolio.

In particular, recent years have led to the advent of all-in-one ETFs (also known as asset allocation ETFs), which allow an investor to create a diversified investing portfolio catered to their risk tolerance with the purchase of a single exchange-traded fund.

All-in-one ETFs are made up of a combination of underlying ETFs which together provide global diversification benefits, as well as a fixed income and bonds allocation that can be determined according to an investor’s individual circumstances.

Ever since Vanguard pioneered the concept back in 2018 with their original all-in-one ETFs, there have been a rising number of issuers offering one-fund investing solutions. They provide an ideal blend of simplicity, low cost, and broad diversification, making them an excellent choice for the passive index investor.

How to Buy All-in-One ETFs in Canada

In order to purchase all-in-one ETFs and other equities, you will need an online brokerage account.

There are many solid online brokerage choices available for Canadians today. Below are some of the most popular choices to choose from, which all are suitable for buying all-in-one ETFs because they all offer some capacity of free ETF purchases. This means your returns won’t be eaten up by trading fees, especially if you are dollar-cost averaging into the market.

PLAN - PRICE

Description

QUESTRADE

$0.01/share (min $4.95, max $9.95)

Free ETF purchases

$50 in free trades

QTRADE DIRECT INVESTING

$8.75 per trade
User-friendly platform
Up to $2,000 cashback + $50 bonus

WEALTHSIMPLE

Commission-free stock and ETF trades
Simple user interface
Ability to purchase fractional shares

How to Decide Which All-in-One ETF to Buy

The best all-in-one ETFs will depend on the investor’s individual risk tolerance and asset allocation preferences

By definition, you only need to pick one of these all-in-one ETFs for your investment portfolio. However, with an increasing number of all-in-one ETFs becoming available, it can be daunting to decide exactly which ETF you want in your portfolio.

For the most part, you can’t really go wrong with any of these, but here are the main considerations that you should to keep in mind when choosing the best option for you:

  • Risk vs Return: What is your risk tolerance and investing time horizon? (determines percentage in equities vs. fixed income)
  • Asset Mix: Do you prefer a greater proportion of Canadian, US, or international exposure? (choosing between Vanguard vs BlackRock vs BMO vs Horizons)
  • Management Expense Ratios (MER): Each all-in-one ETF has varying management fees that eat into your annual return. This seemingly small difference in cost can compound over the long-term.

Risk vs Return

When it comes to investing, there is always a tradeoff between expected return and risk. Generally speaking, the higher the risk, the higher the expected return needs to be to compensate for an investor taking on that risk.

The great thing about all-in-one ETFs is that they are broadly diversified, which means they eliminate unsystematic risk (risk from individual stocks) and offer favourable risk-adjusted returns. Therefore, the main decision to make is how much exposure you want in equities (i.e. stocks) vs fixed income (i.e. bonds).

Generally, equities consistently perform better over the long run and have higher annualized returns than fixed income. However, the volatility of equities is much higher, meaning that it’s very possible to lose money on your investment in the short term.

To account for this risk, you’ll need to be clear on your investing horizon (the length of time you are investing before you start to withdraw). As an example, if your investment horizon is 15 years, this is relatively long-term, so a suitable ETF choice would be one that has a higher equity allocation (one with 80% equities or more). The most popular ETFs in this category are VGRO and XGRO.

Another factor to consider for investors is that we are all susceptible to human emotions. You will need to accurately gauge your ability to stomach market volatility and understand whether you would deviate from your investing strategy when things take a turn for the worse.

Here are the best all-in-one ETFs in Canada to choose based on your investing horizon and risk tolerance.

ETF Portfolio TickerInvesting HorizonEstimated Annualized ReturnEstimated Worst 1-Year Return
VCIP, XINC0-2 years5-7%-6%
VCNS, XCNS, ZCON, HCON2-5 years5-8%-15%
VBAL, XBAL, ZBAL, HBAL5-10 years5-9%-20%
VGRO, XGRO, ZGRO10-20 years5-10%-30%
HGRO, VEQT, XEQT20+ years5-10%-40%

Asset Mix

Once you have determined what allocation of equities vs fixed income best matches your individual situation, you will now need to determine what issuer to choose. Do you go with Vanguard, BlackRock, BMO, or Horizons?

One factor to consider is the ETF’s regional asset allocation. Each issuer has a different target asset allocation of Canadian equities, US equities, international equities, and fixed income for each of their ETFs.

Asset Allocation for Canadian All-in-One ETFs

As you can see, some issuers are more heavily weighted in US equities compared to Canadian equities. Horizons has the highest proportion of US equities in its funds, while Vanguard funds have the highest proportion of Canadian equities. So if you want more Canadian exposure, go with a Vanguard fund. If you instead prefer to be more heavy on US equities, go with one of the other issuers.

Management Expense Ratios (MER)

The other important factor that you should consider when choosing which all-in-one ETF to buy is its MER. The good news is that the MER of all-in-one ETFs range from 0.15-0.25. This is quite low considering that the ETFs are automatically balanced for you, saving you the hassle of doing it yourself. And it’s also lower than the typical robo-advisor MER of about 0.5%.

However, it’s not something to overlook. When investing with an extremely long time horizon spanning several decades, every basis point that you can save in cost makes a tangible difference to your final portfolio value. That’s why when all else is equal, one possible deciding factor when choosing your ETF could be the MER of the fund.

For example, VGRO and XGRO both target 80% equities and 20% fixed income, but since XGRO has a lower MER than VGRO (0.20 vs 0.25), it seems to be a slightly more appealing option.

By considering risk tolerance, asset allocation, and fund fees, you will be well equipped to pick the all-in-one ETF that best suits your individual investing needs.

When Is a Good Time to Buy All-in-One ETFs?

As they say: time in the market beats timing the market. The great thing about buying a globally diversified ETF is that you don’t have to worry about anything except dollar-cost averaging into the market whenever you have the funds to invest. That’s because given enough time, the market as a whole has proven time and time again to provide consistently positive returns.

You should consider buying all-in-one ETFs if any of the following apply to you:

  • You’re building up for your retirement nest egg
  • Want to switch out of the higher management costs of mutual funds and roboadvisors
  • You’re done with the headache of spending time trying to research individual stocks or continually balance your portfolio by yourself
  • You’re saving up for a big purchase a few years out and you want to make higher than bank account returns

Are All-in-One ETFs The Right Investing Choice For Your Lifestyle?

For the DIY index investor, all-in-one ETFs are gems among a saturated market consisting of a dizzying variety of stocks and ETFs to choose from. They make the task of investing as simple as it has ever been. But what if you’re the type of investor that takes a more in-the-weeds approach? Here are some factors that investors should consider before jumping aboard the all-in-one ETF train.

Should I Buy an All-in-One ETF?

A good choice when...
  • You want simple, effective, and time-efficient – with the need for only one ETF in your portfolio and automatic rebalancing, this is as set-it-and-forget-it as it gets with DIY investing.

  • You are disciplined in buying the ETF every time you contribute – you will still need to manually buy the ETF whenever you contribute into your investment account. Make sure that you won’t forget to keep up this habit along the way.

  • You aren’t tempted to constantly fiddle with your portfolio – holding one ETF in your portfolio is so simple that it’s downright boring. You need to be able to tune out the noise and stick with your strategy, whether times are good or bad.

Perhaps not the best if...
  • You have the time and energy to rebalance – if you have more time on your hands to invest, consider using a 3-fund portfolio in which you will need to periodically rebalance, but the MER is reduced to below 0.10.

  • You might forget to buy ETFs because life gets in the way – if you want an even more hands-off approach and have your contributions automatically invested, consider using a robo-advisor service.

  • You’re always changing your portfolio – if you’re tempted to switch up your investing strategy depending on the latest trends, you probably wouldn’t be able to sustain an all-in-one ETF investment strategy.

A Word On Horizons All-in-One ETFs

If you are considering choosing one of Horizon’s all-in-one ETFs, you should know that these are swap-based ETFs. The underlying structure of such ETFs are more complicated than a typical ETF, but essentially their purpose is to save on taxes by deferring dividends and interest into unrealized capital gains. This makes them more appealing to those in a higher tax bracket.

However, due to their structure, there is slightly increased risk to holding these ETFs in the form of regulatory risk and counterparty risk. Therefore, if you’re holding all-in-one ETFs in a registered account such as a TFSA or RRSP, it’s probably best to stick with an ETF from one of the other issuers.

Final Thoughts On All-in-One ETFs

When it comes down to it, all-in-one ETFs are becoming the go-to choice for many Canadians. And with research done by the S&P Dow Jones Indices showing that nearly 90% of actively managed mutual funds performed worse than the broad stock market over the last 15 years, it’s hard to argue against the effort-to-reward ratio of investing in an all-in-one ETF.

If you’re looking for a simple, low-maintenance, and time-efficient way to invest, all-in-one ETFs are the way to go.

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