Weekend Reading: Best All-In-One ETFs Edition

I’m a big fan of all-in-one ETFs and indeed invest my own money in Vanguard’s VEQT – the 100% equity version of its all-in-one balanced ETFs. These ETFs are a game changer for self-directed investors who want to invest in a low cost, broadly diversified, and automatically rebalanced portfolio.

Vanguard was first to launch its suite of asset allocation ETFs in January 2018, and they were quickly followed by Horizons and iShares later that year. BMO got in on the action in early 2019, and this year has seen the launch of TD’s “one-click” ETFs, and finally Tangerine’s global ETF portfolios.

Vanguard’s VGRO continues to be the most popular of the all-in-one ETFs, attracting $457 million of new in-flows year-to-date. The entire asset allocation ETF category has attracted $2.13 billion of new in-flows so far this year.

Before investing in an asset allocation ETF you’ll want to first identify a risk-appropriate asset mix. These ETFs come in several flavours, but most often you’ll find a conservative (40% equities and 60% bonds), balanced (60% equities and 40% bonds), or growth (80% equities and 20% bonds) option.

The point of an all-in-one ETF is for it to truly be your one fund portfolio solution. Don’t be fooled into thinking you’re putting all of your eggs in one basket. These ETFs are wrappers that contain several other ETFs, which themselves hold thousands of individual stocks and bonds.

“An asset allocation ETF is a simple and efficient way to invest in a portfolio of ETFs that is broadly diversified by asset class and across regions, in one convenient package.”

While each asset allocation ETF provider offers a slight difference in terms of how their ETFs are constructed, which indexes they follow, and the fees they charge, the general concept is the same across the board: low cost, broad diversification, and automatic rebalancing.

With that in mind, here’s an overview of the best all-in-one ETFs you’ll find on the market today:

ETF ProviderETF NameETF SymbolAsset MixMER
VanguardVanguard Conservative Income ETF Portfolio VCIP20 / 800.25%
VanguardVanguard Conservative ETF PortfolioVCNS40 / 600.25%
VanguardVanguard Retirement Income ETF PortfolioVRIF50 / 500.29%
VanguardVanguard Balanced ETF PortfolioVBAL60 / 400.25%
VanguardVanguard Growth ETF PortfolioVGRO80 / 200.25%
VanguardVanguard All-Equity ETF PortfolioVEQT100 / 00.25%
iSharesiShares Core Income Balanced ETF PortfolioXINC20 / 800.20%
iSharesiShares Core Conservative Balanced ETF PortfolioXCNS40 / 600.20%
iSharesiShares Core Balanced ETF PortfolioXBAL60 / 400.20%
iSharesiShares Core Growth ETF PortfolioXGRO80 / 200.20%
iSharesiShares Core Equity ETF PortfolioXEQT100 / 00.20%
HorizonsHorizons Conservative TRI ETF PortfolioXCON50 / 500.15%
HorizonsHorizons Balanced TRI ETF PortfolioHBAL70 / 300.15%
HorizonsHorizons Growth TRI ETF PortfolioHGRO100 / 00.17%
BMOBMO Conservative Index Portfolio ETFZCON40 / 600.20%
BMOBMO Balanced Index Portfolio ETFZBAL60 / 400.20%
BMOBMO Growth Index Portfolio ETFZGRO80 / 200.20%
TDTD One-Click Conservative ETF PortfolioTOCC30 / 700.25%
TDTD One-Click Moderate ETF PortfolioTOCM60 / 400.25%
TDTD One-Click Aggressive ETF PortfolioTOCA90 / 100.25%
TangerineTangerine Balanced ETF PortfolioINI42060 / 400.65%
TangerineTangerine Balanced Growth ETF PortfolioINI43075 / 250.65%
TangerineTangerine Equity Growth ETF PortfolioINI440100 / 00.65%

You can sort the table by ETF provider, asset mix, and fees.

Again, it’s tough to definitively say which all-in-one ETF is best. Each fund provider takes its own approach to ideally achieve a similar outcome (when comparing similar asset mixes). Here’s my takeaway:

  • If you want the lowest cost portfolio, go with an iShares or BMO asset allocation ETF.
  • If you’re a TD customer, and use the new TD GoalAssist investing app, go with the TD “one-click” portfolios (they’re free to trade)
  • If you’re looking for tax efficient investing in a non-registered (taxable) account, go with the Horizons TRI ETF portfolios

I chose the Vanguard funds because I believe in the company’s mission to take a stand for all investors and to treat them fairly. I also know that Vanguard regularly reduces its product fees and so I expect their asset allocation fees to eventually match the fees charged by iShares and BMO.

This Week’s Recap:

The TFSA new contribution limit for 2021 was officially released this week. It’s staying at $6,000, where the annual limit has been since 2018. I’ve updated my TFSA contribution limit guide to reflect the new changes and highlight that the total lifetime TFSA contribution limit is now up to $75,500.

Last week I explained why health and dental insurance isn’t really insurance – it’s an employee benefit.

Watch this week for my long-awaited post on how I changed up my approach to credit card rewards this year to maximize my cash back.

Promo of the Week:

Black Friday deals are already here and many of you will be taking advantage of online shopping as we head into the holiday season. This is a reminder to always be sure to visit a cash back rebates site before visiting your favourite online retailer. It’s a great way to collect an extra 1-5% (or more) cash back on spending you are going to do anyway.

Become a member of Great Canadian Rebates and take advantage of online coupons and earn cash back rewards. GCR features over 400 merchants to satisfy all your shopping needs.

Ebates.ca pays you cash back every time you shop online, and it’s FREE to join. Sign up now and when you spend $25 you’ll earn a $5 cash back bonus.

Weekend Reading:

Our friends at Credit Card Genius are getting into the Christmas spirit and have opened their annual $1,000 cash Christmas giveaway. They’re giving away five cash prizes, so head on over and enter to win.

One of Canada’s oldest personal finance sites – Million Dollar Journey – just got a new face lift. In addition to Frugal Trader’s regular financial freedom updates, Kyle Prevost has been writing some unique stuff about moving to the desert and making a tax-free income as a teacher.

Jamie Golombek shares everything you need to know about converting your RRSP into a RRIF this year.

Larry Swedroe explains an investing truth: that for every buyer there must be a seller.

If one spouse makes most or all the financial decisions, the uninvolved spouse can be left vulnerable. Jason Heath explains why seniors, their family and their advisors should try to involve both spouses in money discussions.

Jonathan Chevreau tackles an interesting question: Should retirees speculate in the stock market?

The Economist wrote about a passive attack – how index investing is reshaping the investment industry.

Dr. Bonnie-Jeanne MacDonald says that outdated assumptions and conflicts may be guiding advice on CPP timing:

“In a way,” MacDonald said, “advisors are being compensated to tell Canadians to take their CPP as soon as possible.”

We took a look earlier at asset allocation ETFs. Here, PWL Capital’s Justin Bender takes a look at iShares’ new ESG ETF portfolios:

Morgan Housel continues to write some incredibly thought-provoking articles – this one on the big lessons from history.

Of Dollars and Data blogger Nick Maggiulli explains how to save for a big purchase.

Rob Carrick answers a question from a reader who is on the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness.

Gen Y Money asks, do you need mortgage insurance? Likely not from your bank.

Michael James previously wrote about why owning long term government bonds is crazy, and followed up with a four question bond quiz.

Andrew Forsythe shares why he changed his free spending ways to become “cheap and proud”.

Finally, Rob Carrick interviews retirement expert Fred Vettese on low rates, when to start CPP, and millennials in love with stock trading.

Have a great weekend, everyone!

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10 Comments

  1. Daniel Roy on November 21, 2020 at 2:29 pm

    Like the idea of a one ETF portfolio such as Vanguard VQET but annual distribution of .403 cents per year does not cut it

    • Robb Engen on November 21, 2020 at 4:50 pm

      Hi Daniel, these funds take a total return approach so if you’re looking for income you just have to sell off some units. That said, if you’re in the withdrawal phase then an all-equity fund is likely not appropriate.

      • Daniel Roy on November 21, 2020 at 5:09 pm

        Thx Rob
        Yes I’m in withdrawal mode, retired 4 years now
        My all equity/ dividend portfolio is doing very well.
        I did purchase VET (25k) in late December for the dividend, did well till April but that’s gone as well as down about 26k)
        All my other stocks are still paying dividends – averaging 7%
        Not planning on touching the principal any time soon

  2. Friro on November 21, 2020 at 3:34 pm

    Still say TFSA should be the first dollars saved in all cases followed by RRSP.

    • Robb Engen on November 21, 2020 at 4:52 pm

      Hi Frito, I disagree. Let’s say you make six figures but only have $6,000 to invest. Assuming that money is for retirement, I’d suggest the RRSP is more advantageous for tax planning and maximizing resources.

      • Frito on November 21, 2020 at 6:24 pm

        Ok, if all you ever do is invest $6,000 a year, you’ll be far better off when retired tax wise than you would be with the same in an RRSP wouldn’t you? If you invest in the same way as an RRSP (which you can and should) you’ll save tons more in taxes overall at the back end. You’d get a few hundred dollars back on your tax return this year, but after years of growth you can withdraw completely tax free. No planning required. AND, most high earners who contribute to RRSPs end up with a relatively large pile of money that they end up having to pay more than low tax rates, figure out when and how much to withdraw, are forced to draw down at 71 and risk clawbacks that could be avoided. If you’ve got a large portfolio, a TFSA is guaranteed fun money – easily withdrawn for big ticket items like a new vehicle or a bucket list trip with no tax consequences. I’ve said before, if I had access to TFSAs throughout my career I would be a happy camper right now. Unfortunately I was near 50 when it came to be. A person’s perspective changes once you cut loose the regular pay cheque and have to try to get through 30 years of managing your lifestyle spending.

  3. Hayjin on November 22, 2020 at 6:00 am

    Hi Rob,
    I have TFSA, RRSP and Non registered account as well. I have been purchasing VGROs in my non registered account without knowing tax efficiency. You mentioned that Horizon TRI ETF portfolio for tax efficiency.
    Do I need to switch to Horizon ETF instead of investing Vanguard in my non registered account?

    • Jim R on November 22, 2020 at 6:35 pm

      I’m looking at what to do in my own non-registered account and did take a look at the Horizon HGRO TRI ETF portfolio. The other ETF I’m looking at is XEQT.

      I have several concerns about HGRO:
      – It is unclear whether there are tax consequences arising due to rebalancing, or something else, that are in addition the tax consequences of the underlying ETFs.
      – HGRO appears to have a very small amount of assets under management ($12M), and seems relatively thinly traded. Assuming that’s correct, does this mean other investors know something that we don’t.
      – The true cost-of-ownership MER of the fund appears to be significantly above 0.17%. See my other comment about this.

      FWIW, I currently own shares of HXT and HXS, purchased prior to the change to corporate class ETFs.

  4. Jim R on November 22, 2020 at 6:21 pm

    I believe the actual MER of Horizon’s TRI ETF portfolios are significantly above 0.17%. The is because, AFAICT, in addition to the fund-of-fund’s MER charge, the underlying funds are still charging their trading expense ratios. This makes the true MER of the fund significantly higher. From the below info, I infer the true MER is at least 0.45% (0.17 + 0.28), or over 2.5 times the nominal MER of 0.17%.

    I am hoping Horizons will clarify the true total cost of ownership of these ETFs.

    From Horizon’s own website w.r.t. HGRO:
    “HGRO is subject to the fees of its underlying ETFs. Horizons ETFs currently anticipates that the management expense ratio of HGRO will be approximately 0.17%, and will not exceed 0.19%, while the aggregate trading expense ratio of the portfolio of Horizons TRI ETFs held by HGRO will be approximately 0.28%. As trading expense ratios include expenses outside of the Manager’s control, the trading expense ratio of HGRO is subject to change at any time.”

  5. MJ on November 29, 2020 at 5:23 pm

    We opened a TFSA with Tangerine years ago when they only offered the 1.07% fee portfolios. Now that they offer the ETF portfolios, is there any reason not to move the TFSA account over — one simple step so we’d lower fees without having to move to another provider altogether? Assuming we can open a TFSA with their ETF offering? Thanks for any insights you can provide.

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