Investing doesn’t have to be an all-or-nothing decision where your entire portfolio must match a single risk profile. Many investors prefer a “core and explore” (also called “core and satellites”) strategy, putting most of their assets into a diversified core—often broad-market index funds or all-in-one solutions—and using the remaining allocation for higher-risk, higher-reward opportunities such as thematic stocks or cryptocurrencies. All-in-one exchange-traded funds (ETFs) can serve as a convenient, lower-maintenance core that simplifies diversification, rebalancing and ongoing management.
All-in-one ETFs typically bundle a range of underlying ETFs, stocks and bonds into a single product with a clear strategic allocation. They can be especially useful for investors who want to spend less time managing individual holdings but still achieve global diversification and regular rebalancing. With a reliable core in place, investors gain the flexibility to pursue more speculative opportunities in their explore portion.
Take stock of your needs
All-in-one ETFs are usually best suited to medium- and long-term financial goals—retirement, major renovations, a career break or other plans that give your investments time to grow. Before selecting a fund, outline how much you need to save, the income sources you can rely on, and when you will need the money. Assess your risk tolerance: are you cautious and prefer steadier returns, or are you willing to accept volatility for higher long-term growth?
Consider your investment horizon. A longer horizon typically supports a higher equity weighting, while a shorter horizon often calls for a larger allocation to fixed income and safer assets. For example, Fidelity’s All-in-One ETFs offer different risk profiles and strategic mixes to fit varying investor preferences. As of Oct. 31, 2023, Fidelity All-in-One Balanced ETF (FBAL) held approximately 59% global equity, 39% global fixed income and 2% cryptocurrencies, reflecting a low- to medium-risk orientation. By contrast, Fidelity All-in-One Growth ETF (FGRO) had about 82% global equity, 15% global fixed income and 3% cryptocurrencies, representing a medium risk profile aimed at growth investors.
Fidelity later expanded the lineup with two additional funds: Fidelity All-in-One Conservative ETF (FCNS) and Fidelity All-in-One Equity ETF (FEQT), launched in 2022. FCNS is positioned for lower volatility with roughly 40% global equity, 59% global fixed income and 1% cryptocurrencies (as at Oct. 31, 2023). FEQT carries a higher equity tilt—around 97% global equity and 3% cryptocurrencies—and targets investors seeking a more equity-focused approach while retaining the convenience of a single, diversified product.
These all-in-one funds can be held in registered accounts, including a tax-free savings account (TFSA), registered retirement savings plan (RRSP), first home savings account (FHSA) or a registered education savings plan (RESP), which makes them versatile building blocks for many investors’ tax and savings strategies.
Decide how much of your portfolio will be the “core”
Your core investments should aim for steady, consistent results and usually consist of a balanced mix of equities and fixed income tailored to your risk tolerance. The core is the foundation of your asset allocation, offering broad geographic diversification across Canada, the U.S. and international markets. How large you make your core depends on age, goals and risk tolerance: younger investors with longer time horizons often allocate more to growth-oriented core holdings, while those nearing a spending goal may prefer a heavier core allocation to preserve capital.
Choose your “explore” investments
After setting the size of your core, your explore allocation is where you can target higher growth or thematic bets. Explore investments might include initial public offerings (IPOs), special-purpose acquisition companies (SPACs), sector or thematic funds, venture capital exposures, or cryptocurrencies where permitted. Sustainable investing options, technology and health care stocks are other common explore choices for investors seeking aggressive growth potential.
Keep in mind that explore positions tend to be more volatile and require regular monitoring. Because the core already provides diversification and risk mitigation, the explore sleeve can take on greater risk without jeopardizing your overall financial plan—provided you size these positions appropriately and remain disciplined about rebalancing.
How Fidelity All-in-One ETFs are different
Fidelity’s All-in-One ETFs are designed as single-ticket core solutions that combine global diversification across regions, market capitalizations and investment factors. The funds include an active fixed income component that aims to diversify risk and pursue attractive yield opportunities while the equity components provide exposure to global growth. Professional management and systematic rebalancing help maintain each fund’s strategic allocation.
Management costs for these products are structured as indirect fees because the All-in-One ETFs invest in underlying Fidelity ETFs that charge their own management or administration fees. As of Oct. 31, 2023, estimated effective indirect management fees were approximately 0.36% for FBAL, 0.38% for FGRO, 0.35% for FCNS and 0.39% for FEQT. Actual indirect fees may vary over time depending on portfolio composition, rebalancing activity and the performance of underlying funds; the effective fees are reflected in the fund’s management expense ratio.
Read more about investing:
- Five ways to worry less about your investments with an all-in-one ETF
- Using ETFs to get the most out of your TFSA contribution room
- Taking an active approach to ETF investing in Canada
- ETFs and RESPs: It’s always a good time to invest in education
- The MoneySense Find a Qualified Advisor Tool
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Commissions, trailing commissions, management fees, brokerage fees and expenses may be associated with investments in ETFs. Please read the ETF’s prospectus, which contains detailed investment information, before investing. The indicated rates of return are historical annual compounded total returns for the period indicated, including changes in unit value and reinvestment of distributions. These returns do not take into account sales, redemption, distribution or option charges or income taxes payable by unitholders that would have reduced returns. ETFs are not guaranteed; their values change frequently and investors may experience a gain or a loss. Past performance may not be repeated.
The management fees directly payable by Fidelity All-in-One ETFs are nil. The Fidelity All-in-One ETFs invest in underlying Fidelity ETFs that charge a direct management fee and/or administration fee. Based on the weightings of underlying Fidelity ETFs, it is expected that the effective indirect management and/or administration fee for Fidelity All-in-One Conservative ETF will be approximately 0.35%, Fidelity All-in-One Balanced ETF approximately 0.36%, Fidelity All-in-One Growth ETF approximately 0.38% and Fidelity All-in-One Equity ETF approximately 0.39%. The actual effective indirect fees may be higher or lower than these estimates based on the performance of the underlying Fidelity ETFs, rebalancing events initiated by the portfolio management team, and changes to the strategic allocation. Actual indirect fees will be reflected in the management expense ratio and posted semi-annually.
Each Fidelity All-in-One ETF has a neutral mix that includes a small allocation to Fidelity Advantage Bitcoin ETF™ ranging between 1% and 3%. If a portfolio’s allocation deviates from its neutral mix by more than 5% between annual rebalances, it will be rebalanced. Rebalancing activity may not occur immediately upon crossing the threshold but will be completed shortly thereafter.
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