Simplify Your Investing with All-In-One ETFs like VBAL, VGRO and VEQT
It’s never been easier to invest your money at a low cost. You can own a portion of thousands of companies and lend to hundreds of countries and businesses with the click of a button.
To help you manage your money in a hands-off and low-cost way, Vanguard, BlackRock and BMO have each recently launched all-in-one exchange-traded funds (ETFs). These funds are also called one-ticket, single-ticket or asset allocation ETFs.
What is an all-in-one ETF?
When you invest in a single company (e.g., Apple, Walmart) by purchasing shares, you take on a significant amount of risk if that company faces future challenges. To minimize the risk of investing in one or two companies, a common approach is to buy many different companies—called diversification. ETFs bundle many different investments into a single package that you can easily buy and sell.
ETFs used to focus on investing in a specific geography (e.g., Canada, Europe, developing countries) or a specific investment type (e.g., stocks, bonds). As a result, people used to buy multiple ETFs to make sure they had investments around the globe and the right balance of stocks and bonds.
An all-in-one ETF removes the need to buy and manage multiple ETFs because it does everything for you. It maintains a set level of risk by investing a certain amount in stocks and the rest of your money in bonds. It also makes investments around the globe to minimize the chance you miss out on the next major trend.
Each ETF has a ticker symbol, which is a unique code to help you buy and sell the fund. As an example, one of Vanguard’s all-in-one ETFs is called the Vanguard Growth ETF Portfolio, and its ticker symbol is VGRO.
Features of all-in-one ETFs
Three features make all-in-one ETFs so great.
Diversification
As we mentioned above, individual companies carry many risks (e.g., lawsuits, customer reviews, regulation). If you invest all your money in one or two companies, you could lose a significant portion.
Instead of buying one or two companies, all-in-one ETFs purchase thousands of investments. As an example, Vanguard’s VGRO ETF holds over 26,000 investments. This includes investments in large companies like RBC and Microsoft, as well as small companies like Sonim Technologies Inc. It also includes lending money to the Canadian Government, Province of Ontario and John Deere Capital Corp.
Low fees
To buy all the investments and bundle them together for you, the ETF provider (e.g., Vanguard, BlackRock, BMO) charges a fee called a management expense ratio (MER). All-in-one ETFs charge a low fee, ranging between 0.2% and 0.25%.
Canadians pay some of the highest fees in the world. Most mutual funds charge between 1.5% and 2.5% to manage your money. As a result, you may be paying ten times more than you need to. On a $50,000 investment, an annual fee of 0.25% is $125 compared to $1,250 if you’re paying 2.5%.
Monitoring
Once you’ve purchased an all-in-one ETF you can sit back and relax. The ETF provider will monitor the investments and rebalance if needed. Rebalancing is the process of occasionally buying and selling investments to make sure you’re taking on the right amount of risk.
Automating your investments is one of the surest ways to success. Our minds are wired to be terrible at investing. As a result, the less day-to-day involvement you have, the better.
Choosing the right all-in-one ETF for your needs
There are two main differences when selecting between all-in-one ETFs.
The company that manages your money
The three main providers of all-in-one ETFs in Canada are Vanguard, BlackRock and BMO.
Vanguard is owned by the investors of its funds rather than by shareholders.
BlackRock is the largest money manager in the world and operates the iShares brand.
BMO is the Canadian bank with the largest ETF offering.
While there are minor differences in fees and the amount of money invested in each fund, all three companies offer competitive options.
The amount of risk you want to take
Investing comes with different levels of risk. Leaving your money in a savings account at the bank has almost no risk, whereas buying shares of a small technology company could have significant risks. To help manage this, you can invest both in equity (e.g., stocks) and fixed income (e.g., bonds).
All-in-one ETFs are available in five different risk levels.
Conservative Income (20% equity, 80% fixed income) - lowest risk
Conservative (40% equity, 60% fixed income)
Balanced (60% equity, 40% fixed income)
Growth (80% equity, 20% fixed income)
All-Equity (100% equity) - highest risk
The following table provides the unique code for each all-in-one ETF available from Vanguard, BlackRock and BMO.
How to buy an all-in-one ETF
Once you’ve decided on the amount of risk you’re comfortable with for your investment goal and which company you’d like to use, you’re ready to invest.
You’ll need to open a brokerage account with any of the major banks or a digital service provider. Here’s a list of options with rankings to help you get started. You’ll need to decide whether to open a Tax-Free Savings Account (TFSA), a Registered Retirement Savings Plan (RRSP) or a non-registered account. If you don’t already have a TFSA and an RRSP, you’ll likely want to use one of these. We’ve covered the differences between the two account types previously.
Once you’ve opened your account and deposited your money, you can purchase the all-in-one ETF you’ve chosen above. Most brokerage companies have how-to guides or videos to teach how to invest through their platform. If you need further help, you can always speak with a contact representative by email, chat or phone.
Closing remarks
I use all-in-one ETFs for their simplicity, low cost and hands-off approach. I’m able to rest easy because I know less of my money is going to fees and, therefore, more is working towards my goals. I also know that professionals are regularly monitoring the investments to make sure I’m taking on the right amount of risk. And finally, I’m able to focus on other aspects of my life and not worry about the stock market or managing my investments.
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