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The annual Globe and Mail ETF Buyer’s Guide always saves the best for last.

The first five segments of the guide cover the Canadian, U.S. and international stock markets, Canadian dividend stocks and bonds. The sixth and final instalment is devoted to exchange-traded funds in the asset allocation category, which means funds that offer a fully diversified portfolio of stocks and bonds in a single convenient package.

Asset allocation ETFs are investing’s great problem-solver. Decide whether you want a conservative, balanced, growth or all-equity focus, and then choose a fund. This guide can help you review choices in the balanced and growth sub-categories – they’re the most popular and widely suitable.

This year finds asset allocation ETFs in fine form. They’ve attracted billions from investors and delivered returns that are right in line with what can reasonably be expected from diversified portfolios.

As the asset allocation ETF category matures, we’re seeing more variation between funds. A couple of them have a small cryptocurrency weighting, and one has a small weighting in the Nasdaq 100. There are also different takes on how much of a weighting to give Canadian stocks.

The ETFs presented here are “funds of funds,” which means they hold individual stock and bond ETFs from the same corporate family. Each fund has a guideline on how much of the portfolio to keep in each asset class and how often to rebalance back to those levels.

You really just need one well-chosen asset allocation ETF for investing success. You can also build a portfolio of individually chosen ETFs, which is itself a proven way to invest successfully. The appeal of asset allocation funds is that all the work is done for you, at a very reasonable cost.

Here’s a discussion of terms used in this edition of the ETF Buyer’s Guide:

Assets: Shown to give you a sense of how interested other investors are in a fund.

Management expense ratio: The MER is the main cost of owning an ETF on a continuing basis; published returns are shown on an after-fee basis. The MERs shown here include the cost of owning the underlying funds.

Trading expense ratio: The TER is the cost of trading commissions racked up by the managers of an ETF as they make adjustments to the portfolio of investments; add the TER to the MER for a full picture of a fund’s cost.

Distribution frequency: Noted for investors who want regular income from dividends and bond interest. Some funds are more suited to this purpose than others.

Stocks/bonds split: Shown as of the most recent portfolio update on ETF company websites. It’s normal for the actual split between stocks and bond to drift a little bit from the targeted asset allocation – periodic rebalancing takes care of this.

Top three weightings: “Canadian broad bond” means a bond ETF that includes both government and corporate bonds; the “total stock market” exposure some ETFs have means large, medium and small companies; the S&P 500 and S&P/TSX Composite tend to hold larger stocks.

Returns: Annualized total returns are shown – price changes plus dividends and bond interest.

One final note is that the Horizons ETF brand has been changed to Global X.

Download the source excel here.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/05/24 3:38pm EDT.

SymbolName% changeLast
BMO Balanced ETF
BMO Growth ETF
GX Balanced Asset Allocation ETF
Ishares Core Balanced ETF Portfolio
Ishares Core Growth ETF Portfolio
Vanguard Balanced ETF Portfolio
Vanguard Growth ETF Portfolio

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