An All-in-One Investing Solution to Simplify Your Portfolio
One of the challenges of do-it-yourself investing is periodically rebalancing your portfolio, especially if you have several funds with varying percentages.
On top of that, many of us may have some combination of RRSP/RRIFs, LIRA/LIFs, TFSAs, company defined contribution pension plans, and non-registered investments. If you’re married you double some, or all, of these accounts.
There are some online spreadsheets you can download, or you can make your own. But, no doubt about it, it can be time consuming.
An All-in-One Fund Solution
Balanced funds have long been popular with mutual fund investors. Now there are ETF versions of balanced index mutual funds.
Both Vanguard Canada and iShares have a few solutions for you with their single, low-cost ETFs. Each one is built using already existing ETFs in different proportions. The funds automatically rebalance on a regular basis, doing all the work for you and making it super simple for investors.
These funds offer a diversified, low maintenance investment option for investors
The fixed income portion of the Vanguard funds includes US and global bonds as well as Canadian giving some interest rate diversification. Stocks include core asset classes using traditional cap-weighted indexes. This means there are no tiny sector asset classes that make things more complicated and add to the cost.
These funds offer a diversified, low maintenance investment option and are a good choice if you are – or soon will be – drawing income from your registered investments.
Vanguard Canada All-in-One Funds
Management fees start at .22%. Because of the wrap structure you would still pay withholding tax even in a RRSP/RRIF. It’s recoverable in a non-registered account. This would add .1 – .2% to your fees, which is still a very low cost compared to other offerings in the financial marketplace.
This fund is for those of you who are quite averse to any risk and are primarily concerned with preserving your assets
The asset allocation is 40% stocks and 60% fixed income and provides a combination of income and moderate long-term growth.
This ETF follows the traditional asset mix of 60% stocks to 40% fixed income that is found in many investor portfolios.
This fund is for higher risk investors, or, perhaps, someone who has sufficient regular income from other sources and wishes to grow their portfolio for their heirs.
It contains 80% stocks and 20% fixed income.
iShares All-in-One Funds
iShares has revamped some of their existing ETFs to provide these new offerings. One difference to Vanguard funds is the fixed income component which contains only Canadian and US bonds. The management fees start at .18%.
Again, we have the traditional 60% stock and 40% fixed income split.
With 80% equity exposure, it’s for the more aggressive investor.
The bottom line
The appeal of these all-in-one asset allocation funds is the low-cost, international diversification with automatic rebalancing.
One of the disadvantages of ETFs that you usually have to pay a commission to buy and sell them, but with these funds you’ll still probably come out ahead.
I know it’s not something we like to think about, but what if your mental or physical health starts to deteriorate? Could your spouse easily take over if something happened to you? Could your executor?
Or, maybe you’re just too busy doing other interesting activities and have no time to work on rebalancing your investments.
In any case, it may be worth giving these funds a look.