Being a DIY ETF investor is not particularly hard, but up until recently, it was not particularly easy, either. Back in 2017, the simplest portfolio around was Robb Engen’s four-minute portfolio, which consists of only two equity ETFs. If you wanted to reduce your equity exposure you would have had to buy a third ETF for bond exposure.
Three ETFs is pretty simple, but it still requires some thinking for rebalancing and some discipline to rebalance into whatever asset class is down at the time. All of that changed when Vanguard launched their asset allocation ETFs last year.
I’m Ben Felix, associate portfolio manager at PWL Capital. In this episode of Common Sense Investing
One-Decision Asset Allocation ETFs VCIP / VCNS / VBAL / VGRO / VEQT | XBAL / XGRO)
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One-Decision Asset Allocation ETFs: A Smart Investment Strategy
Investing in the stock market can be a daunting prospect for many individuals. There are so many options to consider and the risks can seem overwhelming. However, One-Decision Asset Allocation ETFs provide a solution for those looking for a simple and effective investment strategy.
One-Decision Asset Allocation ETFs, also known as all-in-one ETFs, are a type of exchange-traded fund that allocates investments across a range of asset classes, such as stocks and bonds, in a single fund. These ETFs are designed to provide investors with a diversified portfolio without the need for constant monitoring and rebalancing.
There are several One-Decision Asset Allocation ETFs available in the market, each with its own unique blend of asset allocations to suit different risk appetites and investment goals. Some popular options include VCIP (Very Conservative), VCNS (Conservative), VBAL (Balanced), VGRO (Growth), VEQT (Equity), XBAL (iShares Core Balanced ETF), and XGRO (iShares Core Growth ETF).
One of the key benefits of One-Decision Asset Allocation ETFs is their simplicity. Instead of having to research and select individual stocks and bonds, investors can simply choose an all-in-one ETF that aligns with their risk tolerance and investment objectives. This saves time and effort, making investing more accessible to a wider range of individuals.
Another advantage of One-Decision Asset Allocation ETFs is their built-in diversification. By investing in a single ETF, investors gain exposure to a variety of asset classes, sectors, and geographic regions, reducing the impact of volatility and potential losses on their portfolio. This diversification can help to stabilize returns and mitigate risk over the long term.
Additionally, One-Decision Asset Allocation ETFs offer automatic rebalancing. As market conditions change, the asset allocation of the ETFs is adjusted to maintain the desired mix of stocks and bonds. This eliminates the need for investors to regularly monitor their portfolios and make adjustments, freeing up time and reducing the potential for emotional decision-making.
For those who are new to investing or simply prefer a hands-off approach, One-Decision Asset Allocation ETFs can be an ideal choice. They provide a straightforward and low-maintenance way to build a diversified investment portfolio, offering convenience and peace of mind.
In conclusion, One-Decision Asset Allocation ETFs can be a smart investment strategy for individuals looking for simplicity, diversification, and automatic rebalancing. With a range of options available to suit different risk profiles, these all-in-one ETFs provide an accessible and effective way to invest in the stock market. Whether you’re a beginner investor or a seasoned pro, consider the benefits of One-Decision Asset Allocation ETFs for your investment portfolio.
This is the type of video you have to rewatch or watch in segments to be able to understand. Kind of went over my head and I'm an accounting student
Wait, I have to worry about withholding tax on my tfsa held etf's? Err.. I wish you would make another beginners video with all the recent trends going on.
Why does VEQT have such a higher ER than VT?
Is there something like VGRO or XGRO for American investors? (80 % stocks and 20 % bonds) I use TDAmeritrade as a platform
Thanks
The real struggle with ETFs are single issue morality tests… there are often just a few companies you wish you could exclude even from the ESG ETFs. Hopefully we continue to get some more niche ETFs and some more finely grained ESG data for them to put together diversified but morally tailored holdings, particularly in the realm of small cap stocks where ESG info trails. If I had the right connection in the industry I would try setting up a custom ETF service, i.e. it sets up a diversified portfolio to track a chosen index that excludes stocks based on a deep survey of the client's moral standings. There are plenty of clients that are not served by current ESG ETF offerings, for instance, someone that is fine with adult entertainment industries but would take issue with Intel's Fab 18. As it stands currently it's hard (impossible?) to find an S&P500 tracking ETF without Intel, even the ESG ones as it rates quite well in most ESG metrics.
We have these funds here in the UK, they are called lifestrategy funds, 20,40,60,80 and 100% equity versions. Obviously they are different to the similar Vanguard funds available in the US, or Canada. The asset allocation is aimed at UK investors. The only thing I see is that on portfolio visualiser, which does backtestimg for US investors, simple passive portfolios like the 3 fund bogleheads portfolio appear to do better over many time periods than the lifestrategy. I wonder if this is because of lifestrategy re balancing much more often than once a year. We don't have these funds in etf format. Also in the UK most investors will be in in a non taxable account or pension which isn't taxable until you start drawing income from your pension fund
How about in One decision funds in US dollars (I am a Canadian) like AOA…with regards to foreign witholding taxes. I cannot hold all under a TFSA, because I am looking to invest 180K USD.. I am a Canadian but most of my liquid Cash is in USD, and do not want to convert.
First time I see your video. You seem to know your thing but I wish you could explain with examples and more in layman’s terms rather than business jargon which is Chinese for the average joe. Thanks
I see you endorse one decision funds for their simplicity, however you also support the idea of weighing more heavily towards small cap and value stock ETFs. Do these ideas not conflict with one another? Would it make sense to purchase a one decision fund like VEQT and additionally invest in IJS and IUSV for both benefits?
VGRO or VEQT
Simplicity how ? How is this simple ? Seems more complicated and confusing. And expensive.
Thank you Ben for your video! I am planning to invest in VGRO or VEQT. I have a long time horizon and I will be using a cash account. How beneficial is it for me to hold VEQT instead of VGRO in my cash account when considering taxes due to the 20% bond holding? If the difference is small would it still be beneficial to hold VEQT over VGRO in a cash account or should I not consider this tax difference.
XEQT all the way!!
What's the point if you can't sell a specific asset and they are all tied together? I want to be able to sell my bonds independently from my stocks.
BMO/Horizons are Canadian. Vanguard/iShares is Foreign Crap. Period.
Believe in Your Country(CANADA) – Stompin' Tom Connors
XEQT
This video put the nail in the coffin for deciding between a robo advisor and full on DIY. Thanks Ben!
why not VGRO one fund solution and tilt with your avantis small cap value at 10 percent each?
Thank you for this video and the valuable information therein, Ben. I appreciate it very much.
Question: How relevant is the fact that the Vanguard equity funds in VEQT track the CRSP and FTSE index while the iShares equity funds in XEQT track the S&P and MSCI index?
Is the the tracking index material in deciding between Vanguard and iShares one-decision ETFs? FWIW, as far as I can tell, the equity funds on both sides provide broad exposure (small, medium, and large cap) to the markets they track. So does that make them largely equivalent? Or is there still a difference worth considering?
Thank you!
Hey Ben, what are your thoughts on the idea supported by individuals like Jack Bogle that international diversification outside US isn't necessary? I've been researching and considering owning VEQT long-term. However, because of things like home country bias and long-term historical underperformance of non-US international equities, I'm leaning towards just owning VUN/VTI. Bogle argues that ~40% of US company profits come from overseas anyways and US has had one of the best and most stable environments for businesses to thrive, making owning non-US equities unnecessary (and historically a performance drag).
I suppose the biggest risk with this approach could be a black swan such as what happened with Japan but the vast majority of innovation has come out of the US in the past and it seems if something extreme happened to hinder the US economy over a prolonged period, we'd have far greater problems anyways considering Canada's reliance and close ties to the US. Would love to know your thoughts on owning something like VEQT vs simply VUN.
Ben 'Boglehead' Felix
My parents are retired in their late 60’s and have 50k they don’t need to tap into for at least another 5-10 years, after which they’d slowly withdraw from. Does VCNS (40% equity) in a TFSA sound like a reasonable way for them to invest this 50k?
Ben, Any chance you could do an update? it's been 2 years!
I own VDY XIC and VFV in my TFSA…. Should I just combine them into either vgro or xgro to simplify things ? I'm pretty confused
Is it better for young investors to buy etfs with higher equity than bond ratios?
This is such valuable information, thank you for your videos and for the Rational Reminder Podcast. Can't get enough of either. Respect from up in Thunder Bay
What about HBAL from horizons?
I tend to Ishares because they are accumulating ETFs and are basically the same as Vanguard