Building a “core and explore” portfolio with an all-in-one ETF – MoneySense

For investors who embrace this hybrid strategy, new all-in-one exchange-traded funds (ETFs) can offer a one-ticket solution for their portfolio’s core. Many all-in-one ETFs are lower-cost investments that are bundled together so that investors don’t have to track or manage them. These products often include ETFs and pooled stocks and bonds, which are rebalanced, if the investment mandate permits.

With an all-in-one ETF as their portfolio’s core, investors can then be a little bolder with their room to explore. Here’s what to consider before getting started.

Take stock of your needs

All-in-one ETFs can be appropriate if you have a medium- to long-term savings goal, such as home renovations, a sabbatical or retirement.

First, consider how much you need to save, how much stable income you’ll have from other sources and when you’ll need your money. Think about your risk tolerance, as well. Are you a cautious type or more adventurous? What is your investment horizon? Is your financial position better suited for an investment with fewer ups and downs or one that’s more volatile but has the potential for higher long-term returns?

For example, Fidelity All-in-One Balanced ETF (FBAL) is a low- to medium-risk option, with a mix of approximately 59% global equity, 39% global fixed income and 2% cryptocurrencies (as at Oct.31, 2023]. If you’re a less conservative investor with an eye for growth, Fidelity All-in-One Growth ETF (FGRO) has a higher equity weighting, with approximately 82% global equity, 15% global fixed income and 3% cryptocurrencies (as at Oct. 31, 2023) and has a medium level of risk. Both ETFs were launched in 2021.

Two more funds, Fidelity All-in-One Conservative ETF (FCNS) and Fidelity All-in-One Equity ETF (FEQT), joined the program in 2022. The more conservative of the two, FCNS, offers a global multi-asset strategy with a neutral mix of approximately 40% global equity, 59% global fixed income and 1% cryptocurrencies (as at Oct. 31, 2023) and has a low-to-medium level of risk. FEQT has a neutral mix of approximately 97% global equity and 3% cryptocurrencies (as at Oct. 31, 2023) and has a medium level of risk.

You can hold Fidelity’s All-in-One ETFs in a tax-free savings account (TFSA), registered retirement savings plan (RRSP), first home savings account (FHSA) or registered education savings plan (RESP).

Decide how much of your portfolio will be the “core”

Core holdings are usually investments that strive for consistent results. They typically include a mix of equities and fixed income, weighted to the investor’s risk tolerance. The core can be globally diversified across countries and regions—Canada, the U.S. and international markets.