A look at how people are using the best all-around investing product. Plus, top stock picks from our new Readers’ PortfolioHalf the greatness of asset allocation ETFs is that they’re a cheap, easily accessible and effective way to invest.
Asset allocation ETFs are a fund-of-fund product where an ETF company bundles six or so of its stock and bond funds into a single portfolio that offers periodic rebalancing and fees as cheap as 0.2 per cent in total. TD says there are now more than 50 of these funds in the Canadian market from a dozen providers.
Two-thirds of the assets held in these products are in all-equity and growth funds, which typically have an 80-20 mix of stocks and bonds. Another 23 per cent is in balanced funds, which usually have a 60-40 mix. Conservative funds account for 5 per cent of assets and income-focused funds for 4 per cent. This rest is a mix of strategies.
BlackRock’s iShares brand introduced asset allocation ETFs back in 2007, but the category didn’t take off until Vanguard launched its version in January 2018. TD reports that Vanguard has a 52 per cent share of the asset allocation ETF market, iShares has 31 per cent, Fidelity has 8 per cent, BMO and Global X have 3 per cent each and the rest is spread among a group of small players.
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