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The best asset allocation ETFs in 2024

To the point In this article, discover the best asset allocation ETFs for investing in the stock market in a diversified and balanced portfolio.

Would you like to invest in the stock market, but don’t know where to start? Asset allocation ETFs are an excellent option for beginners and passive investors. But more experienced investors will also find something to their liking. These ETFs offer an all-in-one investment solution for diversifying and balancing your portfolio with ease. In this guide, we explain the different investment options, the benefits of asset allocation ETFs, online brokerage platforms, and more.

What are Exchange Traded Funds (ETFs)?

An Exchange Traded Fund (ETF) is a type of investment that combines several stocks and bonds into a single fund. This allows investors to purchase a share of the fund, rather than buying each share and bond individually.

ETFs are traded on stock markets like equities. This means you can buy and sell them using a brokerage platform such as Wealthsimple, Questrade (no trading fees for ETF purchases) or Qtrade Direct Investing.

ETFs are popular for their diversification (geographic, sectoral, etc.) and low management fees, compared with mutual funds or other comparable investments. This makes ETFs an accessible and practical option for both new and experienced investors.

That said, there are several types of ETFs. The best-known are :

  • Index ETFs
  • Fixed income ETFs
  • Sector ETFs
  • Thematic ETFs
  • Commodity ETFs
  • Asset allocation ETFs

Here’s a look at each of them…

Index ETFs

Index ETFs track indices, such as the S&P 500 in the U.S. or the S&P/TSX 60 in Canada. With a single purchase, you can invest in a diversified basket of equities. For example, if you buy an ETF that tracks the S&P 500 index, you own a small portion of the 500 largest U.S. companies. Index ETFs give you access to overall market performance, without having to select individual stocks. Management fees are generally very low, as this is a passive portfolio.

Fixed income ETFs

Fixed-income ETFs invest in government or corporate bonds and provide you, the investor, with regular income. One advantage is the low volatility of bonds compared with equities. However, they can be sensitive to interest rate fluctuations.

Sector ETFs

Sector ETFs focus on specific business sectors such as technology, finance or healthcare. One advantage of these ETFs is their ability to target growth sectors. However, the level of risk in your portfolio increases, depending on the exposure and performance of the business sector. For example, a technology ETF invests in technology companies such as Microsoft, Apple and NVIDIA.

Thematic ETFs

Thematic ETFs invest in specific themes such as renewable energies or artificial intelligence (AI). One advantage is the ability to take advantage of emerging trends. However, thematic ETFs are more volatile, as they depend on the success of a theme or trend (think of cannabis stocks during legalization in Canada). For example, an artificial intelligence ETF invests in companies focused on the development and use of AI, such as NVIDIA or Alphabet (Google).

Commodity ETFs

Commodity ETFs invest in materials such as gold or oil. One advantage is that you can diversify your portfolio with “tangible” assets. However, their value can be influenced by external factors such as global supply and demand.

Asset allocation ETFs or all-in-one ETFs

Which of the ETF categories presented so far should you choose? What should be the asset allocation in your portfolio? Asset allocation ETFs, also known as all-in-one ETFs, solve this problem. Asset allocation ETFs invest in a mix of stocks, bonds and cash, according to a predetermined level of risk. We cover this type of ETF in depth in the rest of this guide…

What is an asset allocation ETF?

Asset allocation ETFs are made up of several ETFs. As such, they are designed to offer investors a diversified portfolio by purchasing a single fund.

Composition

Asset allocation ETFs generally include a mix of Canadian and international equities, Canadian bonds and cash, depending on the risk profile chosen.

They offer diversification between asset classes (equities, bonds, cash) as well as sector and geographic diversification. For example, a balanced ETF may hold stocks from different sectors (technology, finance, health care, commodities) and geographic regions (Canada, U.S., Europe, Asia).

Depending on the performance of the various asset classes, automatic rebalancing maintains the desired asset allocation targets. This approach ensures that the investment portfolio remains aligned with the predetermined profile, generally determined as follows: cautious, conservative, balanced, growth and aggressive.

Risk

The risk level of asset allocation ETFs depends on their asset allocation. More equity-oriented funds have a higher level of risk, while more bond-oriented funds have a lower risk.

Although these ETFs are fairly new to Canada (about 5 years old), their underlying ETFs generally have a long track record. Asset allocation ETFs invest in well-known stock market indices, such as the S&P 500 in the U.S., the S&P/TSX 60 in Canada and developed markets outside North America.

Fees

Asset allocation ETFs have very low management fees compared to mutual funds suggested by bank branches. For example, the management expense ratios (MERs) of the leading asset allocation ETFs featured in this guide range from 0.15% to 0.25%, compared with over 2.00% for the leading mutual funds.

What are the advantages of asset allocation ETFs?

The benefits of asset allocation ETFs are many, including:

  • Simplicity: These ETFs simplify the management of your investment portfolio by eliminating the process of individual stock research and selection.
  • Diversification: By investing in a single fund, you gain instant exposure to several asset classes, reducing the overall risk of your investment portfolio. What’s more, you get sector and geographic diversification.
  • Adaptability: You can choose from several ETFs whose asset allocation matches your investment horizon and risk tolerance. For example: long-term growth, capital preservation or income generation.
  • Low costs: Management fees for asset allocation ETFs are very low compared to mutual funds.
  • Automatic rebalancing: These ETFs offer an automatic rebalancing approach to maintain asset allocation targets, without any intervention on your part.

How do I invest in an asset allocation ETF?

To invest in an asset allocation ETF, you must first open an investment account on an online brokerage platform. Traditional financial institutions offer their customers a trading platform. However, there are also independent brokerage platforms that offer very attractive services. Then you can choose the type of investment account that best suits your needs and objectives: TFSA, FHSA, RRSP, etc. Finally, you can trade asset allocation ETFs. It’s a passive investment approach that’s very easy to implement.

Brokerage platforms for financial institutions

Here are the main brokerage platforms of traditional financial institutions in Canada:

  • National Bank Direct Brokerage (NBDB)
  • BMO InvestorLine
  • Desjardins Online Brokerage (Disnat)
  • CIBC Investor’s Edge
  • RBC Direct Investing
  • Scotia iTRADE
  • TD Direct Investing

The latter are directly attached to a financial institution. Of course, they are protected by the Canadian Investor Protection Fund (CIPF) and are members of the Investment Industry Regulatory Organization of Canada (IIROC). Their fees are generally higher than those of independent platforms, but some of them stand out for the absence of trading fees for equities and ETFs, notably : NBDB and Disnat.

Independent brokerage platforms

Here are the main independent brokerage platforms in Canada:

They are not attached to a traditional financial institution. What’s more, most of them operate online, which reduces their costs and enables them to offer their customers many features free of charge. All these platforms are protected by the Canadian Investor Protection Fund (CIPF) and are members of the Investment Industry Regulatory Organization of Canada (IIROC). Independent brokerage platforms are distinguished by their costs. For example, some of them offer investment accounts with no administration or trading fees for stocks and ETFs. Wealthsimple Trade comes to mind.

Comparison of online brokerage platforms

The following table compares the main online brokerage platforms available in Canada:

Brokerage platforms ETF trading fees
Questrade Self-Directed Investments Buy: No fee, Sell: $0.01/share (min. $4.95 – max. $9.95)
Wealthsimple Self-Directed Investing (Wealthsimple Trade) No fees
National Bank Direct Brokerage No fees
BMO InvestorLine No fees among more than 95 ETFs with no commission charges, otherwise $9.95 per transaction
Desjardins Online Brokerage (Disnat) No fees
Interactive Brokers Canadian equities: $0.01/share (min. $1.00 – max. 0.5% of transaction value)
CI Direct Investing Buy: No fee, Sell: $0.01/share (min. $1.99 – max. $7.99)
CIBC Investor’s Edge No fee for young investors, otherwise $6.95 per transaction
Qtrade Direct Investing No fees among over 100 commission-free ETFs, otherwise $8.75 per transaction
RBC Direct Investing 9.95 per transaction
Scotia iTRADE 4.99 per transaction if you make 150 or more transactions per quarter, otherwise $9.99 per transaction
TD Direct Investing 7.00 per transaction for active investors, otherwise $9.99 per transaction

To find out more about online brokerage platforms, consult our guide:

Who are the main providers of asset allocation ETFs in Canada?

Now that you’ve opened your online brokerage account and selected your investment account (TFSA, FHSA, RRSP, etc.), you’re ready to choose an asset allocation ETF.

Among the various asset allocation ETFs, you need to choose one based on your investor profile: risk tolerance, investment horizon and financial objectives. But also according to your values. For example, some ETFs comply with ESG (environmental, social and governance) criteria.

Of course, more equity-oriented funds have higher growth potential. While they generally offer better long-term returns, they are also more volatile and riskier.

In Canada, there are four major passively managed asset allocation ETF providers:

  • Vanguard Canada
  • BlackRock Canada (iShares funds)
  • BMO
  • Global X

Here’s an overview of each of them and their product ranges…

Vanguard Asset Allocation ETFs

Here are Vanguard Canada’s asset allocation ETFs:

Ticker Symbol ETF name Asset allocation MER
VCIP Vanguard Conservative Income ETF Portfolio Equities: 20%; Bonds: 80%. 0,24%
VCNS Vanguard Conservative ETF Portfolio Equities: 40%; Bonds: 60%. 0,24%
VRIF Vanguard Retirement Income ETF Portfolio Equities: 50%; Bonds: 50%. 0,32%
VBAL Vanguard Balanced ETF Portfolio Equities: 60%; Bonds: 40%. 0,24%
VGRO Vanguard Growth ETF Portfolio Equities: 80%; Bonds: 20%. 0,24%
VEQT Vanguard Equity ETF Portfolio Equities: 100% of sales 0,24%

To learn more about Vanguard’s Asset Allocation ETFs, click here.

iShares Asset Allocation ETF (BlackRock Canada)

BlackRock Canada also offers a wide range of investment products, including passively managed asset allocation ETFs. Here are the iShares asset allocation ETFs. Note that some of these iShares ETFs meet ESG criteria.

Ticker Symbol ETF name Asset allocation MER
XINC iShares Core Income Balanced ETF Portfolio Equities: 20%; Bonds: 80%. 0,20%
XCNS iShares Core Conservative Balanced ETF Portfolio Equities: 40%; Bonds: 60%. 0,20%
GCNS iShares ESG Conservative Balanced ETF Portfolio Equities: 40%; Bonds: 60%. 0,25%
XTR iShares Diversified Monthly Income ETF Equities: 50%; Bonds: 50%. 0,61%
XBAL iShares Core Balanced ETF Portfolio Equities: 60%; Bonds: 40%. 0,20%
GBAL iShares ESG Balanced ETF Portfolio Equities: 60%; Bonds: 40%. 0,25%
XGRO iShares Core Growth ETF Portfolio Equities: 80%; Bonds: 20%. 0,20%
GGRO iShares ESG Growth ETF Portfolio Equities: 80%; Bonds: 20%. 0,25%
XEQT iShares Core Equity ETF Portfolio Equities: 100% of assets 0,20%
GEQT iShares ESG Equity ETF Portfolio Equities: 100% of assets 0,25%

To learn more about BlackRock Canada’s asset allocation ETFs (iShares funds), click here.

BMO Asset Allocation ETFs

BMO is another provider of asset allocation ETFs in Canada. Here are the ETFs it offers, including an ESG ETF:

Ticker Symbol ETF name Asset allocation MER
ZCON BMO Conservative ETF Equities: 40%; Bonds: 60%. 0,20%
ZBAL BMO Balanced ETF Equities: 60%; Bonds: 40%. 0,20%
ZESG BMO ESG Balanced ETF Equities: 60%; Bonds: 40%. 0,20%
ZMI BMO Monthly Income ETF Equities: 60%; Bonds: 40%. 0,20%
ZGRO BMO Growth ETFs Equities: 80%; Bonds: 20%. 0,20%
ZEQT BMO All Equity ETF Equities: 100% of assets 0,20%

To learn more about BMO Asset Allocation ETFs, click here.

Global X Asset Allocation ETFs

Global X (formerly Horizons ETFs) is also a provider of asset allocation ETFs in Canada. Here are the Global X ETFs:

Ticker Symbol ETF name Asset allocation MER
HCON Global X Conservative Portfolio Equities: 40%; Bonds: 60%. 0,15%
HBAL Global X Balanced Portfolio Equities: 60%; Bonds: 40%. 0,16%
HEQT Global X Growth Portfolio Equities: 100% of assets 0,13%

To find out more about Global X Asset Allocation ETFs, click here.

What are the best asset allocation ETFs in 2024?

The best asset allocation ETFs are those that match your investor profile. As mentioned earlier, ETFs with higher equity exposure have higher long-term growth potential. However, this growth potential comes with greater volatility and risk.

You should choose an asset allocation ETF based on your investor profile. If you choose an ETF on the basis of its potential return, you could find yourself in a situation where a falling stock market and (unrealized) investment losses prompt you to sell on the spur of the moment. Which could be a costly mistake…

Here are the best asset allocation ETFs for every investor profile: cautious, conservative, balanced, growth and aggressive.

Asset Allocation ETFs - Cautious Portfolio

Here are the best asset allocation ETFs for a “cautious” investor profile, i.e. 20% equities and 80% bonds:

Provider ETF Symbol MER Net assets (CAD)
Vanguard VCIP 0,24% 222M$
BlackRock (iShares) XINC 0,20% 36M$

Asset Allocation ETFs - Conservative Portfolio

Here are the best asset allocation ETFs for a “conservative” investor profile, i.e. 40% equities and 60% bonds:

Provider ETF Symbol MER Net assets (CAD)
Vanguard VCNS 0,24% 593M$
BlackRock (iShares) XCNS 0,20% 126M$
BlackRock (iShares) GCNS 0,25% 22M$
BMO ZCON 0,20% 42M$
Global X HCON 0,15% 46M$

Asset Allocation ETF - Balanced Portfolio

Here are the best asset allocation ETFs for a “balanced” investor profile, i.e. 60% equities and 40% bonds:

Provider ETF Symbol MER Net assets (CAD)
Vanguard VBAL 0,24% 2,2G$
BlackRock (iShares) XBAL 0,20% 1,3G$
BlackRock (iShares) GBAL 0,25% 75M$
BMO ZBAL 0,20% 212M$
BMO ZESG 0,20% 62M$

Asset Allocation ETF - Growth Portfolio

Here are the best asset allocation ETFs for a “growth” investor profile, i.e. 80% equities and 20% bonds:

Provider ETF Symbol MER Net assets (CAD)
Vanguard VGRO 0,24% 3,3G$
BlackRock (iShares) XGRO 0,20% 2,3G$
BlackRock (iShares) GGRO 0,25% 92M$
BMO ZGRO 0,20% 281M$

Asset Allocation ETFs - Aggressive Portfolio

Here are the best asset allocation ETFs for an “aggressive” investor profile, i.e. 100% equities:

Provider ETF Symbol MER Net assets (CAD)
Vanguard VEQT 0,24% 1,8G$
BlackRock (iShares) XEQT 0,20% 3,7G$
BlackRock (iShares) GEQT 0,25% 86M$
BMO ZEQT 0,20% 89M$
Global X HEQT 0,13% 242M$

Bottom Line

In short, the popularity of asset allocation ETFs is unequivocal. These ETFs offer an all-in-one investing solution that simplifies the management of your portfolio. By investing in a single fund, you are exposured to several asset classes (equities and bonds) and diversification (sector and geographic). This reduces the risk of your investment portfolio. What’s more, management fees are very low, and regular rebalancing is carried out without any intervention on your part, to maintain asset allocation targets. This is a handy feature for novice and passive investors.

Frequently Asked Questions

What is an index ETF?

An index ETF is an exchange-traded fund that tracks a market index, such as the S&P 500 in the U.S. or the S&P/TSX 60 in Canada. For example, if you buy an ETF that tracks the U.S. S&P 500 index, you own a small portion of the 500 largest U.S. companies.

What's an all-in-one ETF?

An all-in-one ETF, also known as an asset allocation ETF, is an exchange-traded fund composed of several ETFs. They generally comprise a mix of equities, bonds and cash, depending on the risk profile chosen. These ETFs offer a number of advantages, including diversification, automatic rebalancing, low management fees and a simplified investment strategy.

What's the best ETF for a TFSA?

The best ETF for a TFSA depends on a number of factors, such as your financial goals, investment horizon and risk tolerance. If you’re saving in a TFSA for a travel project, you may want to consider a conservative or cautious asset allocation ETF, since capital protection is essential. Conversely, if you’re investing in a TFSA with a long-term horizon, you may want to select a more aggressive asset allocation ETF.

What's the best ETF for an RRSP?

The best ETF for an RRSP depends on a number of factors, such as your investment horizon and risk tolerance. If you’re on the cusp of retirement, a conservative asset allocation ETF or a monthly income ETF could be a good solution. Conversely, if you have one or more decades before retirement, you may want to consider growth or aggressive asset allocation ETFs.

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Vincent Morin
My name is Vincent and I've been a stay-at-home parent to two young boys since achieving financial independence in 2021 (FIRE). Previously, I worked for 12 years in financial technology for a major US investment bank (G-SIB). I'm passionate about personal finance, stock market investing, reading, writing, cycling and gardening. I'm also the founder of Retraite 101, a personal finance blog followed by over 20,000 people on social networks and quoted in several media, blogs and finance books. Despite early retirement, I continue to write about personal finance to share my passion with Quebecers and motivate them to take charge of their finances.

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