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Alex Bryan, John DeGoey and Daniel Straus provide their choices of ETFs for three different types of clients.Jim Young/Reuters

Building a nest egg with exchange-traded funds (ETFs) is growing in popularity, but keep in mind that one size may not fit all.

When choosing ETFs for a registered retirement savings plan (RRSP), investors need to be aware of their risk tolerance and time left until their golden years. Paying attention to fees also matters because costs can eat away at returns.

With the March 1 RRSP contribution deadline looming, we asked three ETF experts for their top picks to suit millennial, Generation X and baby boomer investors.

Picks for millennials, from Alex Bryan, ETF and mutual fund analyst at Morningstar Inc., Chicago

The pick: iShares Core S&P/TSX Capped Composite ETF (XIC-TSX)

Management expense ratio (MER): 0.06 per cent

Millennials can benefit from owning this Canadian equity ETF as a core holding because stocks have higher-return potential than bonds, while this cohort also has time to ride out market volatility, Mr. Bryan says. This fund, which holds some 240 small- to large-company stocks, is one of the cheapest options among its peers so “you keep more of your money,” he adds. This fund, which provides a quarterly dividend, is a capitalization-weighted fund so it tilts toward larger, more established companies with durable competitive advantages, he says. No individual stock can make up more than 10 per cent of the holdings. This restriction increases diversification and limits exposure to company-specific risk, he notes. With one-third of the ETF in financial services firms, a bigger risk is a potential shock in the market – such as the 2008 credit crisis – which could hurt this sector.

The pick: Vanguard U.S. Dividend Appreciation ETF Hedged to CAD (VGH-TSX)

MER: 0.30 per cent

This U.S. equity ETF, which owns companies that have grown their dividends over time, is ideal for younger investors, says Mr. Bryan. “If you have a long time to invest, dividend growth is probably more important than income.” This ETF, which has a quarterly payout, owns stocks that have increased their dividends in each of the past 10 years. It also favours higher-quality stocks than an ETF tracking the S&P 500 Index and can provide better downside protection than the overall market, but it will probably lag when stocks rally strongly, he says. Top holdings include Walmart Inc., Johnson & Johnson, PepsiCo Inc., McDonald’s Corp. and Nike Inc. The ETF’s fee, which includes the cost for hedging its foreign currency exposure, is reasonable, he says. The hedged Vanguard S&P 500 ETF (VSP), whose fee is 0.08 per cent, might appeal to more aggressive investors.

Picks for Gen-Xers, from John DeGoey, portfolio manager with Wellington-Altus Private Wealth, Toronto

The pick: Vanguard FTSE Canadian High Dividend Yield ETF (VDY-TSX)

MER: 0.22 per cent

This Canadian dividend-stock ETF is suitable for Gen-X investors since many of them have about 20 years until retirement, says Mr. DeGoey. “Over the long term, you should be looking for growth,” but that should be matched with tolerance for volatility, he adds. This ETF, which holds 59 stocks and offers a monthly payout, is one of the least volatile growth offerings out there, he says. Major holdings include Canada’s large banks as well as Enbridge Inc. and Sun Life Financial Inc. While rising interest rates can be a risk to high-yielding dividend stocks, some market observers suggest that this policy could be nearing an end soon, or future rates hikes will be modest and few and far between, he notes. This ETF’s fee is also “pretty low” for a dividend fund, he adds. “I would recommend a balanced portfolio that includes this ETF.”

The pick: Vanguard FTSE Emerging Markets All Cap ETF (VEE-TSX)

MER: 0.24 per cent

Gen-Xers who have more tolerance for volatility might want to diversify their portfolios with this emerging-markets ETF, says Mr. DeGoey. “Most Canadians have very little or nothing in emerging-markets equity.” The long-term growth prospects for these countries is good, however, because of a burgeoning middle class, while their stock markets have a low correlation to those in developed countries, he notes. This fund, which owns 4,700 stocks and has a quarterly distribution, is 34 per cent invested in China, 14 per cent in Taiwan and 12 per cent in India. China A shares, which trade on Chinese mainland exchanges, were added several years ago. Stocks in this ETF are cheap, trading at about 12 times earnings, while those in developed markets trade well into their teens, he adds. This ETF’s fee is among the cheapest among its peers in Canada, he notes.

Picks for baby boomers, from Daniel Straus, ETF analyst at National Bank Financial Inc., Toronto

The pick: Vanguard Conservative ETF Portfolio (VCNS-TSX)

MER: 0.24 per cent

This fund, which holds seven fixed-income and equity ETFs, is a one-ticket solution for baby boomers nearing or in retirement, says Mr. Straus. This global ETF, which has a quarterly payout, is 60 per cent invested in bonds and 40 per cent in stocks. The equity portion has 35 per cent in financials and 15 per cent each in the technology and oil & gas sectors. During last year’s market downturn, this ETF lost 5 per cent including dividends from July 19 to Dec. 24, while the S&P 500 Index fell 15 per cent in U.S. dollar terms. “The 60-per-cent bond allocation certainly did its job at mitigating that equity drawdown,” he says. But bonds can also be hurt by spikes in interest rates, he notes. The ETF’s fee, he says, is low for a fund of ETFs. The Vanguard Balanced ETF Portfolio (VBAL), with 60 per cent in stocks and 40 per cent in bonds, is an option for more risk-tolerant investors.

The pick: BMO Equal Weight U.S. Health Care Hedged to CAD ETF (ZUH-TSX)

MER: 0.39 per cent

Aging baby boomers might consider this ETF as a hedge against rising or runaway health care costs, suggests Mr. Straus. “As the population ages, the demand for health care might come to outpace supply, which would in turn raise prices in the medical system.” Drug and other health care companies can benefit from the demographic tailwind, he adds. This ETF, which has a yearly distribution, is 27 per cent invested in health care equipment and 24 per cent in biotechnology companies. The fund, whose holdings include Cigna Corp., Anthem Inc. and Eli Lily and Co., is the lowest-cost Canadian-listed health care ETF, he says. Because the ETF’s 63 stocks are equally weighted, it has a bit of a tilt toward potentially riskier smaller companies, he notes. The fund can face volatility from “headline risk” stemming from statements by politicians on health reforms and proposed changes, he adds.