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

Vanguard was the first company to jump into Canadian all-in-one ETFs back in 2018.  It should come as no surprise that that the historical leader in low-cost investments was the first to roll out this superstar product. 

With their Vanguard Conservative Income ETF Portfolio (VCIP), Vanguard Conservative ETF Portfolio (VCNS), Vanguard Balanced ETF Portfolio (VBAL), Vanguard Growth ETF Portfolio (VGRO), and Vanguard All-Equity ETF Portfolio (VEQT), Vanguard basically created a one-stop shop for people looking to create a diversified ETF portfolio in the 2nd-easiest way possible (more on that later). 

The products have proven to be a hit with Canadian investors, as the Vanguard all-in-one ETF portfolios now have over $2 Billion worth of investment money in them!

Of course, following Vanguard’s success, the other major ETF providers in Canada quickly jumped into the fray. Canadian consumers were the big winners in 2019, as we saw the competition heat up and overall costs go down. It’s hard to overstate what a game changer these products have become, as but I’ll do my best to summarize in one sentence:

For only $20 per $10,000 invested, every Canadian can now instantly invest in over 10,000 companies (94%+ of the world’s stock and bonds markets), and 900 bonds, in under 90 seconds.

Use our Table of Contents to jump to the part of the article you’re most interested in (it has become a bit lengthy as we have updated the article over time).

What is an “All-in-One ETF” or “All-in-One Portfolio”?

If you’re wondering what the heck an all-in-one ETF portfolio is, then you’re not alone.  Over the past six months, it’s been one of the most common questions that I get asked.

The basic idea is that some of Canada’s largest ETF providers decided that they didn’t want the robo advisors having all the fun when it comes to super simple investing solutions for the average Canadian.

One of the big value propositions of a robo advisor is the idea that a couch potato investor (aka index investor, passive investor, etc.) no longer had to worry about rebalancing their various types of ETFs. Gone were the days of doing a little math to figure out if you were still hitting your asset allocation targets when it came to bonds, Canadian equities, and international equities. It was the new era where you just put your money in one place, and let the automated solution do the work for you.  So Vanguard, BMO, iShares, and most recently Horizons ETFs put together products that are basically a few different ETFs, inside of a big umbrella ETF.

In order to understand what is actually inside these ETFs let’s take an in-depth look at the Vanguard Growth ETF Portfolio (VGRO), one of the most popular of these new “asset allocation all-in-one ETFs”

Picture from Vangaurd website. For more information visit <a href="https://www.vanguardcanada.ca/documents/press-release-asset-allocation-etf-launch.pdf"/>here
Picture from Vangaurd website. For more information visit here

VGRO seeks to give Canadians a quick and easy way to invest for the long-term.  Consequently, the asset mix skews towards the riskier side of the risk/return spectrum, with 80% of your money being invested in equities/stocks/shares and 20% being invested in bonds/fixed income.

If you were to invest $1,000 in this all-in-one ETF, your thousand bucks would then roughly be automatically split up into the following investments (*all data as of December 2019*):

  • $320 into the Vanguard US Total Market Index ETF 
  • $238 into the Vanguard FTSE Canada All Cap Index ETF 
  • $182 into the Vanguard FTSE Developed All-Cap-ex-North America Index ETF 
  • $55 into the Vanguard FTSE Emerging Markets All-Cap Index ETF 
  • $117 into the Vanguard Canadian Aggregate Bond Index ETF  
  • $46 into the Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged
  • $37 into the Vanguard US Aggregate Bond Index ETF CAD

Now, within those ETFs, there are obviously many different companies represented.  Let’s take a look at the ETF that makes up 32% of the portfolio, the Vanguard US Total Market Index ETF (VUN).

Out of your initial $1,000, you now have $320 going into the massive world of the USA stock market.  Here’s a partial look at what your investment dollars will eventually end up purchasing:

  • Microsoft Corp: $11.52
  • Apple Inc: $10.88
  • Alphabet Inc (Google): $8.00
  • Amazon Inc: $8.00
  • Facebook Inc: $4.80
  • Berkshire Hathaway Inc: $4.48
  • JP Morgan Chase & Co: $4.16
  • Johnson & Johnson: $3.84
  • Procter & Gamble Co. $3.20
  • Visa: $3.20

A pretty diverse group of companies, that ultimately only make up less than 20% of this specific ETF, which is only 32% of your overall all-in-one portfolio!  You really do get almost everything in one package.

Let’s take a look at the fixed income portion of our asset allocation ETF and dive into the Vanguard Canadian Aggregate Bond Index ETF (VAB).  Out of your initial $1,000, $117 will be used to automatically purchase a wide variety of Canadian bonds that break down as follows:

  • Provincial/Municipal Bonds in Canada: $45.75
  • Federal Government of Canada Bonds: $31.82
  • Bonds for Financial Institutions in Canada (such as TD Bank): $12.87
  • Bonds for Agencies (such as PSP Capital): $12.75
  • Bonds for Government-related Agencies (such as Hydro Quebec): $12.75
  • Bonds for private industrial companies (such as Apple Inc.): $3.20
  • Bonds for Utility Companies (such as Bell Canada): $2.70
  • Other Bonds/Cash Products: $1.17

To sum up your bond allocation: Your lending money mostly to Canada’s provincial and federal governments, with a smattering of other large Canadian entities tossed in, and a very small percentage of large foreign owned entities.  If you care about bond ratings, the average bond rating of this large collection (more than 900 separate bonds) is AA.

As you can see, your $1,000 monthly investment (taking all of 90 seconds to make through your discount brokerage account) will instantly diversify your money into investments of more than 12,500 companies, and 900+ bonds.  Not bad for 90 seconds of work…

Review ItemDiscount BrokerRobo-Advisor
Wealthsimple
TitleBest for DIY InvestingBest for Passive Investing
FeesCharged per transaction.
In the $5-$10 range per trade (a trade is buying or selling a share).
ETF are free to buy.
Charged as a percentage of your investment portfolio.
In the .35% to .8% range once the underlying investments (ETFs) are taken into consideration.
StyleHands on. You’re in the driver’s seat.Hands off. You decide on a strategy (with the help of an automated survey and an advisor).
Your investments will be re-balanced according to passive index investing principles. 
ServicesNo one to ask for help. You are effectively on your own.General non-biased (no extra commissions) advice from knowledgeable people .
Tax loss harvesting to save money at tax time.
No need to worry about limit or no-limit orders, leftover cash, partial shares, or any other DIY stuff.
User FriendlinessAs complicated as you want to make it. One-off index buy or a daily rebalance/trading - up to you.The easiest way to turn a part of your paycheque into an excellent investment portfolio.
Simply setup an automatic contribution to your robo account, and then focus on your leisure time.
RRSP + TFSA + RESPYES!YES!
Sign Up

Investors Do Better With All-in-One ETFs than Managing Their Own Portfolio

We’re going to get to our all-in-one ETF vs rebalancing individual ETFs vs robo advisors in just a second, but first I wanted to draw your attention to a potentially much more important aspect of automated investing.

There’s a key fact to understand when it comes to understanding human beings, basic math, and investment returns: We really suck at passively sticking to a simple index investing strategy.

As Millionaire Teacher author Andrew Hallam recently pointed out in his Globe and Mail article, human beings are generally pretty good at sabotaging their investment returns EVEN AFTER they commit themselves to being couch potato investors.  He sites US-based data from target-date funds in the USA, which are similar in many ways to our all-in-one ETF portfolios. 

If you want more evidence that we’re really bad at following the basic passive investing rules that we set out for ourselves, there was a report released in 2017 called “Abusing ETFs” that used German data to paint a picture of investors being tempted to overweight one index ETF over another.  The temptation to try and “bet a little more” on your home country’s stock market, or emerging market stock markets, or to “tweak” your bond risk profile for example, is just a little too great.

This is the logical extension of what we’ve seen for so many years with the mutual fund industry.  Every single study I’ve read on mutual fund investors shows that the average mutual fund investor routinely realizes returns that are roughly half of what their mutual funds returned over the past 10+ years.  

This seems impossible, right?  I mean, if a person is invested in mutual funds, shouldn’t they get the average return of those mutual funds?  The problem is that people are tempted to put more money into funds when news reports tell them everything is great, and everyone is making money in the stock market.  Then when those news reports turn negative, people either invest less, sell their mutual funds and “go to cash”, or decide to invest in a fund that is “doing better right now”.  They often do this on the advice of their financial advisor. Of course, the end result of this “strategy” is that you end up buying most when the market is approaching or at peak, and then buying the least (or even cashing out) when the market is approaching or at a low point.

While index ETFs offer a better overall product than mutual funds, they don’t offer to cure your behavioural biases for you.  Our brains are still wired the same way those mutual fund investors’ brains were. We’re still tempted to think that we can skew our market returns just a bit higher by “putting a little more here than there”.  Of course we’re wrong much more often than we’re right.  

The all-in-one ETF portfolios (and robo advisors for that matter) take this temptation out of our hands.  This might be their most valuable feature!

Note: If you’re a little unsure about what active investing vs passive investing means, the basic idea is that passive investors believe that simply owning small pieces of every company or bond in a given market – then cutting fees as low as possible – is a much better bet than trying to pick which stocks/bonds will do better than others (which is called active investing).  Pretty much every long-term mathematical study on investment returns agrees that the average investor is much better off with index investing than trying to pick their own stocks.

Robo advisors, all-in-one ETFs, and DIY ETF portfolios, are all different ways of index investing.  Index investing is often referred to as couch potato investing.

All-in-One ETF MER Fee Comparison

When we look at comparing the costs of all-in-one ETFs vs robo advisors vs DIY couch potato portfolios vs mutual funds we must first understand what the acronym MER means.

A quick refresher: MER stands for Management Expense Ratio.  It is usually shown as a percentage of between .05% and 3%. To understand how much an investment costs you to hold each year, you multiply this percentage by the amount of money that you have in that product.  It’s worth noting that while many of us math-challenged folks see the numbers .05% and 3% as both being small and relatively comparable to one another, 3% is actually sixty times more than .05%!!!  If you are paying 60 times more for your investments than the person next to you, it doesn’t take a genius to explain that you’re going to have much less investment money in your pocket.

Ok, so now that we have MER down, let’s take a look at what the different types of investments will cost us to hold on to each year. 

1) All-in-one ETF portfolios: .18%-.27% MER  

We’ll have a more precise all-in-one ETF comparison below, but generally you’re looking at roughly a .25% MER in order to invest in these funds.  That means that each year, you’re paying $25 per $10,000 invested.

2) DIY Couch Potato Portfolios: .13%-.2% MER

You might be asking yourself: Wait a second, if Vanguard or BMO just lets me see what is in their all-in-one portfolios, then why can’t I just construct these portfolios on my own?

Well, you can – it’s just a pain in the butt, and you won’t save a lot of money unless your portfolio is fairly large.  

To illustrate, let’s take a look at our Vanguard Growth ETF Portfolio (VGRO) example.

Here are the MERs of the respective underlying ETFs that make up the all-in-one product.

  • Vanguard US Total Market Index ETF: MER of .16% 
  • Vanguard FTSE Canada All Cap Index ETF: MER of .06% 
  • Vanguard FTSE Developed All-Cap-ex-North America Index ETF: MER of .23% 
  • Vanguard FTSE Emerging Markets All-Cap Index ETF: MER of .24% 
  • Vanguard Canadian Aggregate Bond Index ETF: MER of .09% 
  • Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged: MER of .38% 
  • Vanguard US Aggregate Bond Index ETF CAD: MER of .22% 

Not all of these ETFs are weighted evenly, so to create your own copy of VGRO, you’d be paying about .15% MER.  Of course this doesn’t take into account transaction costs (we’ll get there), behavioural considerations, and your time spent rebalancing the portfolio each year.

To put it another way, if we ignore time cost, and transaction cost completely, on a $1 Million portfolio, the difference between creating your own identical index portfolio and investing your million bucks in VGRO would be about $1,000 per year.  On a $100,000 portfolio, it’d be about $100 per year.

Note: For super detail-oriented investors, it might be worth looking into how foreign withholding taxes work in regards to ETFs.  If you are willing to do some homework and hold specific individual ETFs in your RRSP, you may be able to reduce the small amount of tax that you will be paying on your USA dividends (not on USA capital gains) if you go with an all-in-one ETF.  This is a relatively small consideration, and I’ve only met a handful of folks willing to do this much math on an individual ETF level.

3) Robo Advisors: .4%-.8% MER

Remember that when investing through a robo advisor you have to add their management fees, to the underlying MER of the funds themselves.  So to compare to our example above, you’re looking at the robo advisor charging you .3%-.6% for their services, PLUS the .15% that our underlying ETFs will charge you.

Now remember, this isn’t truly an apples-to-apples comparison.  Robo advisors do things that your all-in-one portfolios don’t, such as:

  • No Transaction Costs
  • Financial Advice
  • Tax Loss Harvesting
  • Loyalty Perks
  • Automated Contribution Options
  • Easier Account Opening

BUT – in exchange for those really nice features, you’re going to pay about $60 per $10,000 that you have invested.  On a $1 Million portfolio, that means you will pay $3,500 more per year with a robo advisor than you would with an all-in-one portfolio.  With a $100,000 portfolio, that narrows to $350 per year difference (again, excluding transaction costs)

4) Mutual Funds: 1.5%-3.5% MER

When comparing the mutual funds in Canada, it’s important to note that there is a large range, but overall, we have the highest mutual fund fees in the world!

Let’s compare our new favourite all-in-one-ETF (VGRO) to a similar big mutual fund portfolio in Canada… say the Investors Growth Portfolio (Series A) from IG Wealth Management.  As of November 24th, 2019, this portfolio had a MER of 2.75%, and invested in several different equity funds in order to get diversification to 423 companies from all around the world.

That MER is more than TEN TIMES larger than the MER of our all-in-one portfolio!  

You would be paying $27,500 per year to hold this fund in your $1 Million portfolio versus the $2,500 you would be paying with VGRO.

To be fair to the mutual fund world, part of this MER fee goes to pay a financial advisor.  In theory, that financial advisor should be able to provide you with valued financial advice AND there is a chance that this mutual fund could have better returns than your index portfolio.

In practice, we know that unless you have an investment portfolio larger than $1 Million, most large wealth management companies won’t pay a ton of attention to you.  

We also know that only somewhere between .5% and 10% of mutual funds (depending on which study you read, and what asset class you’re referring to) beat their comparable market index over the long-term AND we have very little idea of how to predict which of those mutual funds will be able to do that.  

You might take away from this that I’m not big on mutual funds and think you can cut your MER costs down with index ETF investing.  You’d be correct.

Best All-in-One ETFs in Canada

Transaction Costs of All-in-One ETFs vs Robo Advisors vs Stock Picking vs Mutual Funds

There is one more key consideration when it comes to comparing the costs of Canadian investment vehicles: Transaction costs to buy or sell the investment.

Robo advisors and mutual funds do not have transaction costs.  You do NOT pay a small amount each time you buy or sell investments with them.

The same cannot be said for online discount brokerages such as Questrade, RBC Direct Investing, or TD Direct Investing.  See our full comparison of Canadian discount brokerages. Discount brokerages will usually charge a per-trade fee ranging from $4.95-$9.95.  They may also include Electronic Communications Network (ECN) fees – which are $0.01-$4.95.  See our Questrade Review for a detailed look at ECN fees.

What that means is that every time you buy or sell a share of a company, you have to pay that transaction fee.  When you are managing a portfolio of $1 Million+ those five dollar fees represent a negligible overall percentage of your nest egg.  When you are just getting your portfolio off the ground however, those trade costs can add up in a hurry, and end up costing you substantially more money than an extra percentage of your overall portfolio

Now, to make matters even more confusing.  When we look at the all-in-one ETFs specifically, our two leading discount brokerage platforms, Wealthsimple Trade and Questrade allow you to purchase these ETFs without paying those transaction fees at all!  This development over the last couple of years has really chipped away the advantage that mutual funds once held in Canada, as it is now essentially free to invest in broad-market index funds such as these all-in-one ETFs. Sign Up To Questrade & Receive $50 Free

Note: As we write this article, Wealthsimple Trade continues to evolve as a platform, and may represent the best path for cost-conscious ETF investors.  They currently offer unlimited, no fee trades on both ETFs and stocks, as well as an exclusive sign up bonus available only to our readers. You can read my Wealthsimple review or sign up through this link to get $10 free on your first deposit.

Canada’s All-in-One ETFs vs Robo Advisors

The best comparison when it comes to the Canadian market and of these new all-in-one ETFs are robo advisors.  You can see in our above fee comparison, the dollar difference between building your own portfolio of index ETFs and purchasing an all-in-one Portfolio ETF.  The only real difference there is your fees, and the amount of time you spend rebalancing your own portfolio. It’s close to an apples-to-apples comparison. The same can’t be said when we look at all-in-one ETFs vs robo advisors.

By far the biggest advantage that robo advisors have is that they are the easiest possible way to take your paycheque and turn it into a diversified investment portfolio.  You might not think that’s a big advantage, but I’ve helped enough people over the years to know that one of the biggest obstacles to getting people to actually invest their money, is the procrastination of setting up a discount brokerage account, and to actually purchase shares of stock or units of an ETF.  If we are being completely vulnerable and honest, it can be very intimidating the first time you open that trading screen and realize you are about to click “buy” after doing the math on how many units of an ETF to purchase. Once you have done it a couple of times, and get used to sending money from your chequing account to your brokerage account, it gets much less intimidating – but that initial obstacle is juuuuussssst enough to prevent 80-90% of the people I try to help from getting started with index investing.  While all-in-one ETFs make investing easier, they don’t get rid of this annoying obstacle.

Robo advisors are great at getting rid of this obstacle!

In one hour you can open a Wealthsimple account, set up an automatic contribution from your chequing account for the day after payday – and boom – you are set.  Your money will be automatically invested month after month into a portfolio that looks very similar to the leading all-in-one ETFs. Here are a few more things that Wealthsimple (Canada’s largest robo advisor) offers that all-in-one ETFs do not.  Some of these features might be more valuable to you than others, but what each investor will ultimately have to decide is if these features are worth paying the extra .25%-ish MER on their portfolio as we illustrated above.

  • HELP: Wealthsimple advisors are available to help online or on the phone from 8AM-8PM Monday-Friday.  They will also respond promptly to email inquiries.
  • Tax-loss harvesting – depending on how large your portfolio is, this feature could save you a substantial amount of money come tax season.  The basic idea is that Wealthsimple will look at your portfolio and do some simple buying/selling that will save you tax dollars.
  • No need to do the math on how many units to buy or worry about stuff like market vs limit orders.
  • No “left over cash” in a robo advisor from partial unit purchases.
  • Automatic dividend reinvesting (not that hard to do in a discount brokerage account, but still a nice automated feature).
  • Cool perks such as VIP airline lounge access.
  • Easy access to the Wealthsimple High Interest Savings Account option.

Alright, so now that we’ve got a clear look at how Canada’s all-one-ETFs compare with robo advisors, mutual funds, and DIY options, let’s dive into the specific options that are available for your portfolio.

Vanguard All-in-One ETFs

The leader in low-cost index investing was the first company out of the gates, as the Vanguard all-in-one asset allocation ETFs were the first of their kind in Canada and charge a straight MER of .25% across all five of their all-in-one ETF options.  Vanguard builds their portfolio ETFs by including specific weightings of their line of ETFs including:

  1. Vanguard US Total Market Index ETF (VUN)
  2. Vanguard FTSE Canada All Cap Index ETF (VCN)
  3. Vanguard FTSE Developed All-Cap-ex-North America Index ETF (VIU)
  4. Vanguard FTSE Emerging Markets All-Cap Index ETF (VEE)
  5. Vanguard Canadian Aggregate Bond Index ETF (VAB)
  6. Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged (VBG)
  7. Vanguard US Aggregate Bond Index ETF CAD (VBU)

The chart below illustrates the differences between the five Vanguard all-in-one portfolio options.

?Fund nameTickerManagement feeMERTrailing Yield 12 monthsAnnual return 1 year
Vanguard All-Equity ETF PortfolioVEQT0.22%
Vanguard Balanced ETF PortfolioVBAL0.22%0.25%2.20%11.09%
Vanguard Conservative ETF PortfolioVCNS0.22%0.25%2.25%10.67%
Vanguard Conservative Income ETF PortfolioVCIP0.22%
Vanguard Growth ETF PortfolioVGRO0.22%0.25%2.18%11.52%

Blackrock iShares All-in-One ETFs

Shortly after Vanguard used their in-house ETFs to create a suite of all-in-one ETFs, Blackrock/iShares followed suit and released their two all-in-one portfolio ETFs: XGRO and XBAL.  Technically these two products were reboots of older portfolio ETFs that had been around since 2007, but were not popular due to their high MER.  They differ from Vanguard’s offerings in that they have a slightly lower MER, no international bond exposure, and slightly less exposure to Canadian equities vs their American counterparts.  The two portfolio options are made up of the following ETFs:

  1. ISHARES CORE S&P TOTAL U.S. STOCK (ITOT)
  2. ISHARES MSCI EAFE IMI INDEX (XEF)
  3. ISHARES S&P/TSX CAPPED COMPOSITE (XIC)
  4. ISHARES CORE CAD UNIV BND IDX ETF (XBB)
  5. ISHARES CORE MSCI EMERGING MARKETS (IEMG)
  6. ISHARES CANADIAN SHORT TERM CORPOR (XSH)
  7. ISHARES BROAD USD INVESTMENT G (USIG)
  8. ISHARES US TREASURY BOND ETF (GOVT)
Fund nameTickerManagement FeeMERTrailing Yield 12 monthsYTD Return 2019
iShares Core Balanced ETF PortfolioXBAL0.18%0.20%1.78%12.51%
iShares Core Growth ETF PortfolioAOM0.18%0.20%1.66%13.17%

BMO All-in-One ETFs

Not one to be left behind, the Bank of Montreal (BMO) wasted very little time in packaging their ETF offerings together to create three BMO all-in-one ETF portfolios.  If price is your main comparison tool, then you might want to note that BMO has the cheapest Canadian all-in-one ETFs at only .20% MER across all three asset allocation ETF options.  Here’s a look at the underlying ETFs that BMO uses to make up their all-in-one ETFs.

  1. BMO Aggregate Bond Index ETF (ZAG)
  2. BMO S&P 500 Index ETF (ZSP)
  3. BMO Government Bond Index ETF (ZGB)
  4. BMO MSCI EAFE Index ETF (ZEA)
  5. BMO S&P/TSX Capped Composite Index ETF (ZCN)
  6. BMO Mid-Term US IG Corporate Bond Hedged to CAD Index ETF (ZMU)
  7. BMO MSCI Emerging Markets Index ETF (ZEM)
Fund nameTickerManagement FeeMER
BMO Conservative ETFZCON0.18%0.20%
BMO Balanced ETFZBAL0.18%0.20%
BMO Growth ETFZGRO0.18%0.20%

Horizons All-in-One ETFs

The newest entry into the Canadian all-in-one ETF market is Horizons all-in-one-ETFs.  Due to the unique swap-based structure of their ETFs, Horizons is able to keep fees relatively low.  Here’s a look at their current lineup of all-in-one-ETFs and their respective MERs (you’ll notice that, unlike the other three ETF providers in Canada, Horizons all-in-one ETFs differ in their respective MERs).

  • Horizons Conservative TRI ETF Portfolio (HCON) – .18% MER
  • Horizons Balanced TRI ETF Portfolio (HBAL) – .20% MER
  • Horizons Growth TRI ETF Portfolio (HGRO) – .28% MER

The underlying ETFs that Horizons purchases in order to makeup their portfolio ETFs are:

  1. HORIZONS CDN SELECT UNIVERSE CL A UNIT
  2. HORIZONS S&P 500 INDEX ETF CL A UNIT
  3. HORIZONS US 7-10 YR TREAS BD CL A UNIT
  4. HORIZONS NASDAQ-100 INDEX ETF CL A UNIT
  5. HORIZONS INTL DEVELOPED MKT CL A UNIT
  6. HORIZONS S&P/TSX 60 INDEX ETF CL A UNIT
  7. HORIZONS EURO STOXX 50 INDEX CL A UNIT
  8. HORIZONS US 7-10 YR TREASR BD CL A UNIT
  9. HORIZONS S&P 500 CAD HEDGED CL A UNIT

These ETFs are slightly more complex to understand due to their swap-based nature than the first three groups of all-in-one-ETFs that we looked at.  Personally, due to their increased complexity, somewhat odd weighting of treasuries vs bonds, lack of exposure to developing markets, and just the relatively low volume traded daily, I don’t see these current Horizons all-in-one-ETF asset allocation ETFs as a serious contender versus the other excellent options out there.

Comparing iShares vs BMO vs Vanguard vs Horizons Canadian All In One ETFs 

When comparing the iShares vs Vanguard vs BMO vs Horizons all-in-one Portfolio ETFs, it’s important to understand this fact first and foremost:

They are all excellent choices for your portfolio – just choose one!

If comparing these products is going to in anyway delay you from opening a discount brokerage account and get started investing, then just go with Vanguard, and get started today!

Every single one of these all-in-one-ETFs offers the following:

  • Instant diversification to thousands of companies and hundreds of bonds/treasuries
  • Incredibly low costs
  • Super stable, safe companies that have been around for decades
  • Very high odds that your returns will beat those of actively managed mutual funds

All of that said, if you really want to dive into choosing the absolute perfect all-in-one-ETF for you, I’d look at the following areas to compare:

  • MER 
  • The asset allocation percentages relative to your investing goals
  • Home-country bias (might there be too much of a Canadian focus?)
  • Great diversification vs Incredible diversification (some of these products offer slightly more exposure to developing countries, etc)

TD One-Click ETF Portfolios

In August of 2020, Canada’s 2nd largest bank decided to join the all-in-one ETF party with their “TD One-Click ETF Portfolios”.  While they are very solid products, I’m not sure they’ll move the needle as far as challenging the leaders that we noted above.  However, one major positive that I’m taking away from seeing yet another major financial player join the all-in-one ETF movement, is that these products aren’t just here to take part – they’re here to take over.

Fund nameTickerManagement FeeMER
TD One-Click Conservative ETF PortfolioTOCC0.250.27
TD One-Click Moderate ETF PortfolioTOCM0.25%0.27%
TD One-Click Aggressive ETF PortfolioTOCA0.250.27%

Much like the other all-in-one ETF competitors, the three TD One-Click options offer consumers an instant portfolio of assets from around the world.  The ETFs that TD has chosen are:

  • TD Canadian Aggregate Bond Index ETF (TDB)
  • TD Global Technology Leaders Index ETF (TEC)
  • TD International Equity Index ETF (TPE)
  • TD U.S. Long Term Treasury Bond ETF (TULB)
  • TD Select Short Term Corp Bond Ladder ETF (TCSB)
  • TD U.S. Equity Index ETF (TPU)
  • TD Active Global Income ETF (TGFI)
  • TD Canadian Equity Index ETF (TTP)
  • TD Canadian Long Term Federal Bond ETF (TCLB)
  • TD Active U.S. High Yield Bond ETF (TUHY)
  • TD Q Canadian Low Volatility ETF (TCLV)
  • TD Q Global Dividend ETF (TQGD)
  • TD Q Global Multifactor ETF (TQGM)
  • TD Q U.S. Small-Mid-Cap Equity ETF (TQSM)

And then those ETFs are obviously balanced differently depending on your desired asset allocation.

For example, while the TD One-Click Conservative ETF Portfolio (TOCC) has you in 63% fixed income (with the majority of that in Canadian domestic bonds) and the remainder in stocks, the TD One-Click Aggressive ETF Portfolio (TOCA) will funnel you into only 5% fixed income, and 95% equities from around the world.  Interestingly enough, that 5% bonds is all American treasuries.

Overall, I honestly find the new TD all-in-one ETFs to be needlessly complicated, with up to 15 component ETF in each “One-Click Portfolio”.  This is likely also the reason their slightly higher MERs.

They’re in no way a bad product – in an absolute sense they’re much superior to the mutual fund options for instance – it’s just that compared to the rest of Canada’s all-in-one ETFs I’d probably place TD’s offerings at the bottom of the totem pole. 

The Best All-in-One ETFs for your TFSA and RRSP

The ultimate question that most Canadians have when it comes to their investment choices is which is the best one for their TFSA or RRSP. Again, the rule of thumb here is: all of these products are better than the typical Canadian mutual fund!

The real decision on which all-in-one ETF belongs in your portfolio has more to do with your specific risk profile, than the product itself.  If you are tolerant of risk (not an easy question to answer), have a long investment window, and will not panic when your portfolio’s value goes down by 30% in a given year, then I’d go with more of a growth portfolio.  If you’re approaching retirement or can’t sleep at night if you lose more than 15% of your portfolio in a given year, then I’d recommend more of a balanced or conservative portfolio.

Here’s a look at my current favourite asset allocation ETFs in each broad category.

Best All-in-One Growth or Equity ETF – VEQT (Vanguard All Equity ETF)

I love what VEQT does for Canadians.  It’s a very simple all-equity ETF that instantly diversifies your investment dollars into thousands of small, medium, and large companies from around the world.  Some might argue that the 30% allocation to Canadian stocks is a bit high for a home country bias, but I’m fine with it. Here’s a look at what’s under the hood of the Vanguard All Equity ETF.

  • Vanguard US Total Market Index ETF 40%
  • Vanguard FTSE Canada All Cap Index ETF 30%
  • Vanguard FTSE Developed All Cap ex North America Index ETF 23%
  • Vanguard FTSE Emerging Markets All Cap Index ETF 7%

I personally love this all-in-one ETF because I am fortunate enough to still have a relatively long investment horizon, and my pension is sufficient to represent a fixed-income part of my portfolio.  If you’re appetite for risk is not the same as mine, one of the following ETFs might be a better option.

Best All-in-One Balanced ETF – VBAL (Vanguard Balanced ETF Portfolio)

Admittedly this balanced (60% equities, 40% fixed income) all-in-one ETF comparison is more difficult for me than the growth one was.

Truth be told, it is really hard to separate VBAL vs XBAL vs ZBAL.

I default to Vanguard’s offerings (despite their slightly higher MER, that will cost you $5 more for every $10,000 invested) because I love supporting the company that has been there innovating on behalf of index investors for decades.  I also prefer VBAL over XBAL and ZBAL because it has some global bond exposure that others don’t have. That said, all three are excellent products.

Best All-in-One Conservative ETF – VCNS (Vanguard Conservative ETF Portfolio)

There are even more “income based” conservative portfolios out there, such as the Vanguard Conservative Income ETF Portfolio, but if we’re comparing straight apples-to-apples “40/60” conservative portfolios (40% equities, 60% fixed income) then we have to look at VCNS vs ZCON vs HCON.  The Blackrock iShares all-in-one ETF suite does not currently include a similar conservative portfolio.

The argument here mirrors the one above.  I again default to Vanguard for the exact same reasons as above. You could certainly go with either the Horizons or BMO offerings if you prefer to save a cup of coffee worth of fees, and don’t see value in getting more bond diversification. 

Why All-In-One ETFs are Ideal for Young Investors

All-in-one ETFs are a great option for investors of all ages and experience. However, they are particularly ideal for young investors, individuals in their 20s or even early 30s who are just starting to get into investing. Here’s why.

To start with, you don’t have to have a lot to invest. Using an all-in-one-ETF you can create a pretty diverse portfolio with relatively low investment amounts. Many young investors are struggling with student debt, looking to buy a house, just starting out in the workforce etc. So knowing that you can begin to invest with smaller amounts of money makes all-in-one ETFs a very manageable option for anyone new to investing.

Secondly, the low fees really come into play here. I’ve mentioned earlier how all-in-one ETFs have much lower fees than the typical mutual fund. Granted, every investor would rather pay lower fees, however, this tends to be a more important factor among young investors who likely don’t have as much money to invest/use as more mature investors. The lower fees make all-in-one ETFs less intimidating.

Another point that makes all-in-one ETFs particularly attractive to young investors is the passive investing aspect. Investing can be daunting to those just starting out so the ability to just leave it to grow is an easy solution for many young Canadians.

All-in-One ETF Interviews with Dan Bortolotti and Andrew Hallam

If you’re hungry for even more all-one-ETF content then check out these two interviews that I did for the Canadian Financial Summit, where I go in-depth with two long-time passive investing experts!

FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

43 Comments
Oldest
Newest
Inline Feedbacks
View all comments
Adan
1 year ago

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
1 year ago
Reply to  FT

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

Adam
1 year ago
Reply to  FT

Thanks!

Linda Rocco
1 year ago

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.

Dave
1 year ago

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
1 year ago
Reply to  Dave

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
1 year ago
Reply to  Anh

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

Linda
1 year ago
Reply to  FT

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.

Stephen van Egmond
1 year ago

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
1 year ago

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.

Sarina
1 year ago

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
1 year ago
Reply to  Sarina

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.

Dividends on the Prairie
1 year ago

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.

Sagar Sridhar
1 year ago

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

Peter
1 year ago

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
1 year ago
Reply to  Peter

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.”

retireby45
1 year ago

All your articles has really helped me in deciding how i want to go about investing in index ETF’s.
I was always a guy who believed that i can retire comfortable on my rental incomes. But i really love the concept and simplicity of index investing

Opened my account with questrade last week and bought shares in ZGRO for RESP. I will open TFSA as well but just need to make sure i am doing right allocations

Thanks again.

KB
11 months ago

I think all these products are great for RRSP and TFSA accounts. What about non-registered accounts where the general recommendation is to invest in Canadian equities in non-registered accounts while keeping bonds and internatiaonal equities in tax sheltered accounts (ie RRSP/TFSA)? Would it then be worthwhile to split up the ETF’s in the classic Canadian Couch Potato 3 fund ETF (XAW, VCN, ZAG)?

Editor
Kyle Prevost
11 months ago
Reply to  KB

Hey KB,

Non-registered starts to get tricky for tax purposes. We’re working on another article (check back over the next few weeks) that looks at tax liability in-depth. What it boils down to (in my opinion) is difference in tax treatment, as well as figuring out adjusted cost base for accounting purposes.

KP
11 months ago

Great content!
I’m going to purchase VBAL in my RRSP and Non-Reg. Accounts. Just wondering if VBAL is the right choice for a TFSA, with the US component and withholding taxes. Or would this be so minimal it’s not worth worrying about? Your thoughts would be appreciated. Thanks again!

Editor
Kyle Prevost
11 months ago
Reply to  KP

Hey KP,

Check back in a couple weeks and we’ll look at this exact question in a bit more depth!

LENA
10 months ago

Thank you!

PFT
10 months ago

Hey KP,

I am a novice investor. When looking at the Vanguard ETF chart shown above, there is a management fee of 0.22% and MER of 0.25% for VGRO. Doesn’t that mean each year you are paying $47 per $10,000 invested, not $25 per $10,000 as mentioned in your article?

Is there a similar management fee for mutual funds on top of the MER? Why not make this clear for novice investors? Or am I totally off-base?

Editor
Kyle Prevost
9 months ago
Reply to  PFT

Thanks for the question PFT. MER is the entire fee for ETFs. Mutual funds have many many different kinds of fees. All you really have to know at the beginning is that Canada has the highest mutual fund fees in the world, and that most mutual funds actually trail what you would get with an ETF even before the fees are calculated in. I’m not sure what you mean with the math question… When you multiple $10K by .0025 you get $25 right? There are no additional fees there.

Spancha
9 months ago

I have been a reader of this forum as well as Money Sense, but first time posting this. I have a situation and hope to get some feedback here. I have a portfolio with GWL invested in their Advanced Continuum (comparable to VGRO). It was a group RRSP with my previous employer and stopped all the contribution in 2014 as I left the company. Since then, the fund has returned 33% over 5.5 years. Didn’t contribute anything or changed any investments during this time…just left it alone. The MER is 1.998%…say 2%. In the mean time, my wife’s TD e-series returned about 50%, invested in 40-20-20-20 split across the couch potato portfolio. Again, didn’t touch anything during this 5.5 yrs. Now, I am wondering if I should move my GWL to either e-series or ETF. I am 48 now…so also debating to consider Balanced or Conservative types. I know with e-series, you have to balance every year (at least). I would rather invest and forget about it. I have trading account with iTrade. Any suggestions are welcome.

By the way…great forum for DIY investors. You learn a lot by even reading the Comments from the readers. Thank you.

Editor
Kyle Prevost
9 months ago
Reply to  Spancha

Hi Spancha. As I’m not a fiduciary, my comments are only an opinion (important to get that caveat out of the way). Now, that said, were I in your situation, I would definitely leave GWL tomorrow! A 2% fee is way way too much to pay these days. You noted the inferior performance of your mutual fund. That is unfortunately the norm. The all-in-one ETFs do the rebalancing for you. It is almost “set it and forget it”. All you have to do is remember to keep adding investments periodically by purchasing units of the same fund.

Also – if you open an account with Questrade, you can buy these ETFs for free (no transaction costs).

Spancha
9 months ago
Reply to  Kyle Prevost

Hi Kyle,

Thank you for your input. If I get out of GWL and switch to an ETF, wouldn’t the number of units I own be lower now because I will be buying high in ETF? With GWL, since the units were bought long ago hence more units, I maybe getting more dividend that get re-invested. Great point you brought up to add investments periodically, which I didn’t do in the past 5.5 yrs. Thanks.

Merry
9 months ago

VEQT seems great but for someone just starting out the dividend yield is fairly low. Would the vanguard growth ETF be a better option for the higher dividend yield? Or is it better to have all equities since I have about 37 years until retirement (age 60).

Aaron
9 months ago
Reply to  Merry

Just the article I’ve been searching for. Thank you.

Ian M
6 months ago

I have a lot of ZGRO and some VGRO too. While the performance is similar with ZGRO being slightly ahead this year (i.e. it fell less), I found one annoying issue with the BMO’s ETF: liquidity. It sometimes takes an hour to buy or sell one. It definitely has a lot to do with the fund size: Vanguard’s is $1.1B and BMO’s is mere $40M. Less shares on the market means less liquidity and some issues with the market price. I always have to put a limit on the price before trading ZGRO ETFs.

catherine
4 months ago

if the doing 4-5 individual etfs and rebalancing them 1x a year works for me. would it be better to just continue with the status quo? switching to these all in 1 etfs would require me to sell all of the shares correct?

Linda Rocco
3 months ago

New competition within the “All-In-One” ETFs:

Introducing TD One-Click ETF Portfolios

TD One-Click Conservative ETF Portfolio (TOCC)
This ETF is designed to earn a moderate level of income and preserve investment capital, with the potential for capital growth. It has a target asset mix of 70% fixed income and 30% equities.

TD One-Click Moderate ETF Portfolio (TOCM)
This ETF is designed to generate long-term capital growth, while providing the opportunity to earn some income. It has a target asset mix of 60% equities and 40% fixed income.

TD One-Click Aggressive ETF Portfolio (TOCA)
This ETF is designed to generate long-term capital growth with the added potential for earning a modest level of income. To help achieve this, the target asset mix will generally be 90% equities and 10% fixed income.

Management Fee is listed at 0.25%.

Mike
2 months ago

Great post, thanks. Given that the all in one ETFs are purchased in Canadian dollars, yet many of the component ETFs are invested in foreign markets, I’m curious if you have any opinion on currency risk? If the Cdn $ weakens or strengthens relative to other currencies, how might that affect returns of an all in one ETF?

Editor
Kyle Prevost
2 months ago
Reply to  Mike

Hey Mike,

Generally speaking, I don’t worry about currency risk at all. I can’t control it anyway, and currency markets are notoriously fickle! Besides, are you really going to go through the process of opening up an account that lets you trade on all different exchanges in a bunch of difference currencies?

Gordon
2 months ago

Great article and discussion in the comment section. I have seen a lot of discussion around MER with all in one eft compared to individual etf. In your view, how do you compare the annual return for these etf when compared to all in one vs individual etf?

Editor
Kyle Prevost
2 months ago
Reply to  Gordon

You mean the single ETFs vs the all-in-ones Gordon? It’s not really a fair comparison. One seeks to give you all-encompassing diversification (literally your whole portfolio inside one etf) and the other one is diversification within a specific country/industry/asset class right?

Farhan
1 month ago

“if we’re comparing straight apples-to-apples “40/60” conservative portfolios (40% equities, 60% fixed income) then we have to look at VCNS vs ZCON vs HCON. The Blackrock iShares all-in-one ETF suite does not currently include a similar conservative portfolio.”

First of all, excellent article. The above statement needs a correction. HCON is 50/50. Blackrock iShares offers a 40/60 AIO ETF – XCNS, so the true comparison should be VCNS vs ZCON vs XCNS.