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All-in-One ETFs Battle: Vanguard vs iShares vs BMO

Up until January 2019, Vanguard had the “all-in-one” ETF market cornered offering globally indexed portfolios that automatically rebalance to maintain a set ratio of equity/bonds.  All of this through a single ETF that only charges a very low management expense ratio (MER) of 0.25%.  Genius right?

With good products that have high demand, competition will follow.  Next came Blackrock iShares that has come out with their own version of all-in-one ETFs. They are just as good and even slightly cheaper!  They have some subtle differences as explained in a recent article dedicated to comparing Vanguard vs iShares all in one ETFs.

The battle has intensified further into a royal-rumble match with newcomer BMO entering the ring with all three fighters offering similar products.  But which should you choose for your portfolio?  Let’s take a look at each product in a little more detail.

Vanguard All-in-One ETFs

Here are the three Vanguard ETFs straight from the Vanguard website.   They each have a MER of 0.25%.  For more details, my post about the Vanguard all-in-one products here.

Vanguard ETF Investment objective Ticker Strategic asset allocation
Vanguard Conservative ETF Portfolio Seeks to provide a combination of income and moderate long-term capital growth. VCNS 40% equity/
60% fixed income
Vanguard Balanced ETF Portfolio Seeks to provide long-term capital growth with a moderate level of income. VBAL 60% equity/
40% fixed income
Vanguard Growth ETF Portfolio Seeks to provide long-term capital growth. VGRO 80% equity/
20% fixed income

iShares All-in-One ETFs

The iShares ETFs are a little cheaper with an estimated MER of 0.21% (official MER not posted yet).  It’s a great time to be an investor where you can build a completely hands-off indexed portfolio by purchasing a single ETF and paying only 0.21% in fees.  It can get even cheaper if you go with a discount brokerage that offers commission-free ETF purchases.

The biggest difference that I can see right now is that iShares does not offer a conservative portfolio (like Vanguard above), but they go head to head in the balanced and growth portfolios.

iShares ETF Investment objective Ticker Strategic asset allocation
iShares Core Balanced ETF Portfolio The Fund seeks to provide long-term capital growth and income by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate that provide exposure to equity and/or fixed income securities. XBAL 60% equity/
40% fixed income
iShares Core Growth ETF Portfolio The Fund seeks to provide long-term capital growth by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate that provide exposure to equity and/or fixed income securities. XGRO 80% equity/
20% fixed income

BMO All-in-One ETFs

The BMO products are a welcomed surprise with a very competitive MER (similar to iShares).  When I first checked BMO’s asset allocation, their website showed something different than what their holdings were showing.  But it seems that they have corrected the error (I have updated the table below to reflect).  

BMO offers three ETF products that match evenly with the Vanguard suite of all-in-one ETFs: ZCON (vs. VCNS); ZBAL (vs. VBAL); and ZGRO (VGRO).  BMO has chosen to be slightly more aggressive in their MER charging 0.20% (vs. Vanguard’s 0.25%). 

  Investment objective Ticker Strategic asset allocation
BMO Conservative ETF  The BMO Conservative ETF is designed to provide income and moderate long-term capital appreciation by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs.  ZCON 40% equity/
60% fixed income
BMO Balanced ETF  The BMO Balanced ETF is designed to provide moderate long-term capital appreciation and income by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs.  ZBAL 60% equity/
40% fixed income
BMO Growth ETF  The BMO Growth ETF is designed to provide long-term capital appreciation by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs. ZGRO 80% equity/
20% fixed income

Comparing Holdings

XBAL vs. VBAL vs ZBAL

Comparing the holdings of XBAL, VBAL and ZBAL show that there is little difference in the exposure and holdings.  With XBAL and ZBAL, you’ll get slightly more exposure to the US market and slightly less exposure to Canada.  In the grand scheme of things, that may not be a bad thing since Canadians have a tendency to have a home bias (myself included).

With VBAL, you’ll get slightly better diversification with your bonds portfolio with exposure to the US and global bonds.  However, XBAL and ZBAL gives you more exposure to corporate bonds.

Allocation XBAL VBAL ZBAL
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 15.21% VCN Vanguard FTSE Canada All Cap Index ETF 17.1% BMO S&P/TSX CAPPED COMPOSITE INDEX ETF 15.21%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 26.56% VUN Vanguard US Total Market Index ETF 23.0% BMO S&P 500 INDEX ETF 24.29%
International XEF ISHARES MSCI EAFE IMI INDEX 14.93%

IEMG ISHARES CORE MSCI EMERGING MARKETS 3.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 13.7%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 4.2%

BMO MSCI EAFE INDEX ETF 14.97%

BMO MSCI EMERGING MARKETS INDEX ETF 5.29%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 25.56%

XSH ISHARES CANADIAN SHORT TERM CORPOR 6.40%

VAB Vanguard Canadian Aggregate Bond Index ETF 24.8% BMO AGGREGATE BOND INDEX ETF 27.94%

BMO GOVERNMENT BOND INDEX ET ETP 8.18%

US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 4.04%

GOVT ISHARES US TREASURY BOND ETF 3.99%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 9.7%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 7.5%

BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF 3.94%

XGRO vs. VGRO vs ZGRO

Comparing the iShares, Vanguard and BMO all-in-one growth ETFs, again, there are slight differences.  iShares  and BMO give you slightly more US equity exposure (36.5% vs 31% vs 32.35%) and slightly less Canadian equity (20.51% vs 23.2% vs 20.3%). 

Vanguard, on the other hand, gives you better global exposure to bonds.  However, this is less important as bonds are only 20% of these portfolios.

ZGRO will give you more international equity exposure, which I appreciate!

Allocation XGRO VGRO ZGRO
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 20.51% VCN Vanguard FTSE Canada All Cap Index ETF 23.2% BMO S&P/TSX CAPPED COMPOSITE INDEX ETF 20.3%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 36.52% VUN Vanguard US Total Market Index ETF 31.0% BMO S&P 500 INDEX ETF 32.35%
International XEF ISHARES MSCI EAFE IMI INDEX 19.71%

IEMG ISHARES CORE MSCI EMERGING MARKETS 4.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 18.6%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 5.7%

BMO MSCI EAFE INDEX ETF 20.13%

BMO MSCI EMERGING MARKETS INDEX ETF 7.10%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 12.22%

XSH ISHARES CANADIAN SHORT TERM CORPOR 3.06%

VAB Vanguard Canadian Aggregate Bond Index ETF 12.5% BMO AGGREGATE BOND INDEX ETF 13.96%

BMO GOVERNMENT BOND INDEX ET ETP 4.05%

US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 1.92%

GOVT ISHARES US TREASURY BOND ETF 1.89%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 4.9%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 3.8%

BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF 1.97%

Final Thoughts

Comparing all three products, they are all very similar!  the biggest difference is the more aggressive asset allocation of the BMO products. In terms of which I like better, it’s a toss-up between iShares and BMO due to their slightly lower fees.  If you’ve already started a portfolio using Vanguard all-in-one products, I’d say to stay the course.  As previously mentioned, I like 50% equity/50% fixed income during retirement, so it’s nice to see BMO offering this product. Although the bond allocation of these ETF portfolios cannot be adjusted, there are some easy strategies to fix this

If you’re new to investing, then I think the iShares and BMO all-in-one ETF line will serve you well with a slightly lower MER and slightly more equity exposure outside of Canada.  Either way, investors win with the low fees and ease of use.  As mentioned earlier, combine it with a discount broker that offers commission-free ETFs, and you’ll save even more!

You decide, which product do you like better?

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21 Comments

  1. Adan on March 11, 2019 at 11:22 am

    Thanks for posting this. Is there a place where I could invest in these products using regular contributions without paying a trading fee every time I bought units?

    • Adam on March 11, 2019 at 10:15 pm

      Thanks!

    • Adam on March 11, 2019 at 10:19 pm

      And I just noted you included it in the post. So double thanks!

  2. Linda Rocco on March 12, 2019 at 12:21 am

    Are you sure about the more aggressive allocation of BMO’s AiO ETF ?

    ZGRO is listed as 20% FI, not 16% since you forgot to include the non-Canadian component of FI.

    • FT on March 13, 2019 at 4:49 pm

      Thanks for asking about this Linda. When I wrote the article, BMO’s website was reporting the more aggressive numbers, but have since corrected. I have modified the article with the new information.

  3. Dave on March 12, 2019 at 4:33 am

    I really love these all in one ETFs.

    The only thing I struggle with is deciding between VGRO and XGRO.

    I love the business model of Vanguard (funds own the company, so always trying to minimize costs and maximize fund performance).

    But I also really like the lower cost of XGRO and the higher allocation of US and International funds.

    First world problems :)

    • Anh on March 12, 2019 at 3:58 pm

      MER posted for XBAL at .75% and XGRO at 0.80% at my RBCDI. So, iShare is not as competitive as Vanguard for VBAL at .25% and VGRO also at .25%

      • Dave on March 13, 2019 at 3:05 am

        If you read the article, FT mentions that the MER isn’t posted for XGRO yet
        The reason is they can’t post the MER until a full year since the ETF is opened
        The current MER that exists is because XGRO is not a completely new ETF. Unlike VGRO which vanguard created new last year, iShares took a pre-existing ETF, CBN, and then changed it to become XGRO. I don’t understand what financial wizardry happens to do that but that’s the reason the MER posted is so high. In one year the true MER will come out and its anticipated to be about 0.22

        • FT on March 13, 2019 at 8:30 am

          Thanks Dave , I’ve also done some digging into the higher mer issue and I’ve come to the same conclusion.

          Since iShares switched their CBN ETF to xgro, xgro inherited the printed mer. Since mer is not calculated until one year after (like filing taxes), we do not know the true mer for xgro but it ‘should’ be around 0.21%. The part that I need to look into further is how CBN had a management fee of 0.18% but then had a mer of 0.80%.

          • Linda on October 4, 2019 at 7:37 pm

            Not sure if I’m too late to comment… I tried posting this before, but not sure it worked. Just wondering if you ever figured out why CBN had a management fee of 0.18% but then had a MER of 0.80%? Just asking in case there are some unexpected surprises about what XGRO’s MER finally ends up being.



          • FT on October 14, 2019 at 3:40 pm

            I have not seen the reason why, I will dig a little further. I suspect that XGRO will stay very competitive with their competition (ie. vanguard and bmo).



  4. Stephen van Egmond on March 12, 2019 at 11:36 am

    ugh!
    XGRO is negative since inception.
    VGRO is barely positive. VCNS marginally more so. Like $25.30 since launching at $25 a year ago.

    • Ian on April 3, 2019 at 6:59 pm

      When are you measuring inception for XGRO? The fund has been growing since mid-December – before that it was a completely different ETF. VGRO’s price has tracked the North American stock markets pretty well – if you aren’t happy with it, you won’t be happy with ANY broad-market ETF.

  5. Sarina on March 12, 2019 at 4:09 pm

    Hi I just opened my Questrade account last week, bought some XGRO shares but now I see that the MER is 0.80. I feel bad because I think I should have bought VGRO, their MER is lower at 0.25%. I thought they would have comparable fees but seems iShares costs a lot more.

    • Ian on March 13, 2019 at 10:16 am

      Hey Sarina,
      Read the article above – the MER will be around 0.22. You’re quoting the MER of the old funds that were re-branded as XGRO.

  6. Dividends on the Prairie on March 14, 2019 at 12:30 am

    Vanguard has also come out with two other ‘all in one’ ETF options (VCIP and VEQT). Any thoughts about having VEQT as the only equity position in a portfolio? It seems like such a simple and easy idea.

    • FT on March 14, 2019 at 10:03 am

      I like VEQT as an option, but only if you don’t have much Canadian holdings elsewhere. Otherwise, I would suggest XAW.

  7. Sagar Sridhar on March 16, 2019 at 12:29 am

    Thank you for the amazing content and information shared across.

    I own a few of the iShares ETF’s and it’s performing great so far.

    Thanks

  8. Peter on April 4, 2019 at 3:06 pm

    Are the quoted MERs the full MER including the underlying funds or are they on top of the underlying fund cost? In other words, what would I save by buying the underlying funds in the same percentages? What would I save by buying the stocks directly?

    • Ian on April 4, 2019 at 4:38 pm

      There are two paragraphs from the prospectus for XGRO that describe this:
      “In accordance with applicable securities legislation, including NI 81-102, an iShares Fund may invest in one or more iShares ETFs, provided that: (i) no management fees or incentive fees are payable by an iShares Fund that, to a reasonable person, would duplicate a fee payable by an iShares ETF for the same service…”

      “Under the new fee structure, BlackRock Canada will adjust the management fee payable to it by each iShares Fund to ensure that the total annual fees paid directly or indirectly to BlackRock Canada and its affiliates by each iShares Fund will not exceed the percentage of net asset value set out in the table below. These changes are expected to significantly reduce each iShares Fund’s management expense ratio.”

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