All-In-One ETF (Part 1) – Conservative ETFs Portfolio

Do-it-yourself (DIY) investors are constantly challenged to manage diversification, rebalancing, asset allocation, yield, and more within their portfolios. These have always been key concerns for investors when managing a portfolio prudently.

With that said, at the end of the day, not every person can be their own portfolio manager—people have full-time jobs and other commitments in life beyond just financial matters. In addition, most investors find it challenging to construct a broadly diversified portfolio in a cost-effective way, considering trading expenses and other fees.

We believe that similar to other professions like doctor, lawyer, or accountant, unless people are interested in becoming investors themselves or have a hobby to invest on a “part-time” basis, it makes sense to outsource some of those decisions to professionals.

What are “All-in-One” ETFs?

“All-in-One” Conservative ETFs are designed to address those concerns by providing a “one-stop-shop” solution for investors. These ETFs not only provide exposure to an appropriate mix of assets—including stocks, bonds, preferred shares, and Real Estate Investment Trusts (REITs)—but also tackle the headaches investors face with diversification, risk management, rebalancing, and taxes.

Some of the prominent advantages of these ETFs consist of:

Diversification: While investors may have expertise in one asset class, such as bonds, it may be challenging to fully understand the workings of other asset classes, such as REITs. These ETFs address that issue by holding a wide variety of asset classes across geographies, helping investors benefit from diversification by owning various assets that may not otherwise be easily accessible to retail investors—all without requiring expertise in each class.
Low Cost: Investors need to rebalance their portfolios occasionally to ensure proper asset allocation and selection. For investors who choose to do this themselves, it can be quite expensive in terms of trading fees and tax efficiency. These ETFs provide a low-cost way to gain those benefits.
Yields and Asset Allocation: These funds earn income from both dividends and interest across various assets. Depending on the strategies being pursued, fund managers set a targeted asset allocation strategy that dictates the allocation, investment objectives, and risk tolerance of the fund. For example, a fund may have a higher allocation to dividend-paying stocks if managers believe the economy is expanding, or a fund could have an objective leaning toward more international securities rather than domestic. Investors can pick and choose the ETFs that best fit their needs.
Risk Management: These funds apply various strategies to enhance downside protection and capital preservation by actively selecting or divesting securities at opportunistic times through active management to mitigate or take advantage of market conditions.

This blog will discuss all the current offerings of All-in-One ETFs for conservative investors. This is the first part within a series of All-in-One ETFs that target investors with different risk tolerances, including conservative, balanced, and growth. This series is expected to serve as a single place for investors to view and compare all the products offered by different providers, including Fidelity, Global X, BMO, BlackRock, Vanguard, etc.

1. iShares Core Conservative Balanced ETF (XCNS)

Asset allocations: 40% equity, 60% fixed income
Yield: 2.19%
Distribution Frequency: Quarterly
Assets Under Management (AUM): $288 million
Management Expense Ratio (MER): 0.20%
Number of holdings: 8