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Junk products with high fees are what you so often end up with when you take short cuts in building a diversified portfolio.

Overpriced balanced mutual funds are one example. Another is the wrap product, where fund companies bundle some of their products together into a single fund, pad the fees a bit in some cases and then pretend like they've solved all your investing problems in a single stroke.

But there are some simple solutions that make sense. Five of them, in fact. After much screening of the mutual fund database, that's how many funds made the grade as all-in-one portfolios worth your consideration.

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Novice investors, here are five portfolio-building vehicles to consider for a long-term commitment. Savvy investors, these funds range in cost from reasonable to very cheap by mutual fund standards and have highly competitive returns. A cost-benefit analysis of these funds and exchange-traded funds might surprise you.

Think of these five funds as being for do-it-yourself investors who don't actually want to do it themselves. Each is a balanced fund, which is to say it meets the first requirement of effective diversification by blending stocks and bonds together. All but one stick more or less to that most utilitarian of portfolio models, the 60-40 mix of stocks and bonds.

Canadian government and corporate bonds are used for the bond component, while a mix of Canadian, U.S. and international stocks are used. In fact, four of the five funds are classified as global rather than Canadian balanced funds. Mawer Balanced is an example – it has 22 per cent of its assets invested in Canadian stocks and 39 per cent invested in the United States and internationally. The rest is in bonds and cash.

Does the high concentration of global stocks trouble you? Maybe you've been burned in global or U.S. equity funds that have generated copious fee revenue for your fund companies while leaving you with next to nothing, or even a small loss over periods as long as 10 years. With the five all-in-one funds, you leave the driving to some very capable managers who have consistently generated returns that are well above the mutual fund rabble.

Check out Beutel Goodman Balanced D, which over the decade to June 30 made an average 5.4 per cent annually after fees. Competing funds in the Canadian equity balanced category averaged 4.3 per cent over that period and the mix of benchmark indexes used by used to measure funds in this category returned 4.2 per cent. As of mid-year, this fund had close to 30 per cent of its assets in U.S. and international stocks, with another 34 per cent in Canadian stocks. Again, the rest was in bonds and cash.

Beutel Goodman is typical of most of the mutual fund families represented here in that it works on a low-cost model. Beutel's main business is running pension funds and investing the money for rich people. Mutual funds are a cost-efficient offshoot of this business. Leith Wheeler and Mawer have similar business models. The one firm that doesn't fit the low-cost profile is CI Investments, a big player in the mainstream fund industry. Companies like this usually have comparatively high fees because they need to compensate advisers who sell their products. While the management expense ratio for CI Signature High Income is the highest on our list at 1.6 per cent, it's still a bargain when compared to other funds of its type and size.

Several of the funds on this list are actually fund-of-fund products, which is to say they're mutual funds that invest in other mutual funds within the same family. This is exactly how mainstream fund companies build their wrap funds – they pick funds from a variety of categories and combine them into a wrapper that is billed as a total portfolio solution.

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The balanced funds on our list are better options for most people. Wraps are typically bundles of high-cost funds, sometimes with extra fees built to cover the cost of managing and rebalancing the portfolio. With the balanced funds presented here, you get an investment build on low-cost products.

There's an obvious correlation between low costs and high returns in our list of balanced funds. All have above-average returns over the one-, five- and 10-year periods to June 30, and all rank in the first or second quartile in their categories for the past three years. Quartiles divide funds in a category into four groups by performance – one is best and fourth is worst.

Experienced investors know that exchange-traded funds have the lowest costs in the fund world and, in fact, there are half a dozen ETFs that offer all-in-one portfolios (check out this quick overview: The MERs for these funds range from about 0.61 per cent to 0.71 per cent, which makes them cheaper than any mutual funds on our list.

But there are some benefits to these mutual funds that offset their price disadvantage when compared to both individual ETFs and ETF portfolios. For one thing, each of the five all-in-one mutual funds can be bought and sold at no cost from most online brokerage firms. A couple of brokers offer a limited menu of ETFs that can be traded without incurring commissions, but generally you'll pay anywhere from $5 to $29, depending on which firm you deal with and the size of your account.

Also, the Beutel Goodman, Leith Wheeler and Mawer funds can be purchased directly from the companies. If you buy this way, you can get investment advice from staff at no extra cost. One final benefit: All-in-one portfolio convenience that, for once, doesn't come at a high cost or require compromises on quality.

For more personal finance coverage, follow me on Twitter (rcarrick) and Facebook (Rob Carrick).

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