Weekend Reading – One ETF to Rule Them All?
Hey Folks!
Welcome to a new Weekend Reading edition, wondering if there is just one ETF to own that can rule them all?
First up, some recent reads on my site in case you have missed them!
Here is our latest income dividend and distribution update, money we are now spending:
And last weekend, I questionned the validity of millionaires everywhere.
Weekend Reading – One ETF to Rule Them All?
Image Source: Pexels
Inspiration for this Weekend Reading headline arrived from this recent MoneySense article: the best ETFs to pair with an asset allocation fund.
First, a primer on asset allocation ETFs and then my thoughts…
As the article suggests, there isn’t any universal definition for an asset allocation ETF, but most are a fund of funds that provide broad exposure to Canadian, U.S., international developed, and emerging market equities although depending on your risk-based strategy, bonds can be included in these asset allocation ETFs as well.
You can learn more about some of my favourite low-cost all-in-one (asset allocation funds) in this post.
The rise of these all-in-one ETFs is clear to understand:
- select one ETF aligned to your risk tolerance (i.e., 100% equities or 80% equities or other).
- contribute regularly to this ETF in registered accounts.
- keep at it until retirement.
As the MoneySense article hinted at “…for many investors, that’s probably enough. You could have considerable success investing in an asset allocation ETF for decades without adding anything else.”
True. So, for some, one ETF can be used to rule them all.
But you might recall there are many ways to invest:
- Buying and owning real estate.
- Becoming a private equity investor.
- Invest in the stock market via owning various funds or companies themselves.
- Become an entrepreneur and grow a business (or two)!
For our path, my wife and I have focused on this hybrid investing approach:
- owning 20+ Canadian stocks for income and growth, while
- index investing the rest.
That approach worked well to reach financial independence for us as far back as 2024.
So, it certainly didn’t mean one ETF was enough for us and in your particular case, it might not work either.
In fact, owning more than one all-in-one ETF offers benefits: that approach lets you customize your asset allocation, potentially reduce management fees, and optimize for tax efficiency across different accounts.
Example 1: how about a two-fund solution: you could own a “EQT” fund like ZEQT or TEQT for long-term capital growth and then mix-in a balanced bond ETF (as you wish) to adjust for your risk tolerance – a risk-level that might dial down a bit as you approach retirement.
Example 2: how about an asset location split: you could own a 100% equity fund in your TFSA for long-term growth but have a more modest risk “BAL” fund that is 60% equities/40% bonds inside your RRSP, since those tax-deferred assets (RRSPs/RRIFs) are generally tapped first in retirement income drawdowns and therefore should not be subject to full stock market risks.
On that very subject, check out our YouTube video on that!!
There are also other tilts (back to the MoneySense article) that could make some sense in your portfolio:
- You can own your personalized dose of crypto via ETFs.
- You can own sector ETFs for various company focus and concentrations.
- You can own factor-based ETFs or smart-beta ETFs at your leisure too.
“A factor is essentially a measurable characteristic shared by a group of securities that research has associated with differences in expected returns or risk. Rather than simply buying companies in proportion to their market capitalization, a factor strategy deliberately tilts toward stocks exhibiting particular characteristics.”
From the article:
“Factor investing does require patience. Value, size, profitability and other factor premiums don’t appear on schedule. Buying a factor ETF after it has performed well and abandoning it during the next period of underperformance is counterproductive.”
Personally, we ignore cryptocurrency exposure in our portfolio, we already have some sector-based risk with our basket of Canadian dividend paying stocks, and while factor-based ETFs seem interesting to me, we’ve done just fine without more moving parts and so we’re not fixing now what isn’t broken…
That means we don’t need any new shiny toys in our portfolio at this time although I won’t rule out new participants to our portfolio forever.
The MoneySense article was very measured with investing and portfolio construction concepts I’m very aligned with:
“If you do add satellite ETFs, keep their role explicit and their allocations reasonable. Decide on the percentages beforehand, rebalance periodically, and resist changing them simply because one has recently performed particularly well or poorly.”
If you’re just starting out with investing, I suggest you read this post or share it with the young adult in your household.
Answering “Why”, “What” and then “How” is at the heart of any planning process. Plans always come before products.
If you’re well into your 40s and 50s (or older!) and thinking seriously about retirement income planning, I suggest you read this post or share it with others. Enclosed is our 3-step process we used to help shape our early retirement dreams – and you can use it too. 🙂
More Weekend Reading – Beyond One ETF to Rule Them All?
Where on earth are all the returns YTD coming from in 2026??
What is a safe withdrawal rate after you have retired?
I’ve always been a fan of good enough when it comes to money management – so are you doing these three things ‘wrong’ with your money? (item #1 was paying off your mortgage early!) Oops, we did.
That reminds me of what Morgan Housel wrote in his popular book below:
“…few things matter more with money than understanding your own time horizon and not being persuaded by the actions and behaviors of people playing different games than you are. The main thing I can recommend is going out of your way to identify what game you’re playing.”
Thanks for reading and supporting the site and YouTube channel. It means a lot.
Have a great weekend!
Mark
