All-in-One ETFs: A Great Choice for DIY Investors

Ben Felix explains why all-in-one ETFs make DIY investing simpler — and often more effective.

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What do you think of the all in one ETFs that have become so popular over the last five to 10 years?

Yeah, so I, I alluded to them when we were talking about how often you should check your portfolio. Uh, the fact that they automate rebalancing, which used to be one of the sort of arduous tasks related to DIY investing is absolutely incredible. I’m a huge proponent of these, of these products. So the asset allocation ETFs, just for for listeners, are single ETFs that give you exposure to a globally diversified portfolio.

With allocations that have been de determined by, you know, the experts at Vanguard or BlackRock or wherever, that is rebalanced by the fund company at the ETF level. So you buy this one, ETF, this one, this one security, and it gives you everything that you need to be a, a very well diversified, sensible long-term investor.

And you can choose your asset allocation. So you can choose a 100% equity asset allocation, ETF but you can go right down to, I think some of ’em are, are down to 40% equity. There may be even one more conservative than that. Uh, but you, you choose an asset allocation that makes sense for your individual ability and willingness to take risk and you set it and forget it.

And to me that’s, that’s incredible because as we just talked about, checking your portfolio more frequently or having to check your portfolio to maintain it more frequently are detrimental to, to long-term outcomes because they get you more emotionally involved. There is evidence as well that,

there’s this concept in investing called the behaviour gap. It’s like, uh, how much less return do you as an individual earn than the fund that you invest in? And that usually happens because people get into and out of the fund at the wrong time, rather than just buying it and holding it. That behaviour gap, and this is from research that Morningstar does every year, that behaviour gap tends to be smallest for asset allocation funds, which are just, they’re self maintained.

You don’t have to touch ’em.