All-in-One ETFs for Canadian Investors

Mark McGrath breaks down how all-in-one ETFs simplify investing and why their fees are so low.

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You mentioned the all in one ETFs. Tell our audience what they are and why you in particular are so drawn to them.

Yeah. It’s essentially a one stop, globally diversified, low cost index fund portfolio, right? So if you think about building a portfolio traditionally, you’d have to go and buy US stocks and Canadian stocks and Japanese stocks and, you know, bonds and cash and whatever it is you wanna put in your portfolio. Generally speaking, you could go and buy like a big balanced fund or whatever, but if you wanted to get index funds for those components of the portfolio, you would often have to go and kind of slice it up and that’s fine.

And, and you can do that still and at a very low cost. Uh, but what these companies have started to do is launch these all-in-one funds that do all that work for you. So something like the iShares suite, uh, XEQT is one that I talk about online a lot. It’s not the only one. There’s other great ones that, um, other companies like Vanguard and, and BMO and globalx, they also provide these, um.

It’s a one-stop solution. So they’re gonna have some kind of Canadian home bias in the portfolio, and there’s good evidence to support that. You want to hold a more than you would expect from like a global market cap weight perspective. You would generally wanna hold more of your home country than the 3% that the Canadian stock market is worth on a global scale.

And then the rest of the other, you know, call it 70% of the portfolio is usually market cap weighted, just meaning it’s based on the size of all of these other companies all around the world. So you’re gonna get 35 to 40% US stocks and the balance, the other 30% is usually some mix of, um, global, international, and um, uh, emerging markets.

Right? And they’re gonna rebalance different funds have, and different providers have different kind of rebalancing schedules and tolerance spans and that type of thing. But it’s the type of thing you don’t have to think about, right? It’s taken, it’s kind of allowing you to outsource the rebalancing, the asset allocation decisions, all of that.

You pay a very small premium for it. You hand your money over to, you know, say high shares in this case. And you can theoretically kind of just hold that indefinitely. So they’re fantastic solutions.

You know, when you say you pay a very small premium, I mean, I think a lot of Canadians don’t recognize just how low the fees are. I mean, index fund fees of course have collapsed, but even the all in one ETFs, how many basis points are they charging now? It’s very low. Is it not?

Yeah. And they’re always, uh, the, the kind of race to zero is still on, right? Like they’re always undercut, undercutting each other. Vanguard not that long ago, came and reduced their fees. They were the highest fee of all of the providers, but by a few basis points. It was almost, you know, not worth considering.

And then they just came out and undercut everybody else, and then iShares immediately in response, matched their fees. So the MER, the management expense ratio on XEQT, I think is gonna come out to about 0.19 after ’cause it’s, I mean, it’s, it’s not free, but it’s like close enough to free that it’s not worth paying attention to.