All-in-One ETFs Battle: Vanguard vs iShares vs BMO

All-in-One ETFs Battle: Vanguard vs iShares vs BMO



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Up until January 2019, Vanguard had the “all-in-one” ETF market cornered offering globally indexed portfolios that automatically rebalance to maintain a set ratio of equity/bonds.  All of this through a single ETF that only charges a very low management expense ratio (MER) of 0.25%.  Genius right?

With good products that have high demand, competition will follow.  Next came Blackrock iShares that has come out with their own version of all-in-one ETFs. They are just as good and even slightly cheaper!  They have some subtle differences as explained in a recent article dedicated to comparing Vanguard vs iShares all in one ETFs.

The battle has intensified further into a royal-rumble match with newcomer BMO entering the ring with all three fighters offering similar products.  But which should you choose for your portfolio?  Let’s take a look at each product in a little more detail.

Vanguard All-in-One ETFs

Here are the three Vanguard ETFs straight from the Vanguard website.   They each have a MER of 0.25%.  For more details, my post about the Vanguard all-in-one products here.

Vanguard ETF Investment objective Ticker Strategic asset allocation
Vanguard Conservative ETF Portfolio Seeks to provide a combination of income and moderate long-term capital growth. VCNS 40% equity/
60% fixed income
Vanguard Balanced ETF Portfolio Seeks to provide long-term capital growth with a moderate level of income. VBAL 60% equity/
40% fixed income
Vanguard Growth ETF Portfolio Seeks to provide long-term capital growth. VGRO 80% equity/
20% fixed income

iShares All-in-One ETFs

The iShares ETFs are a little cheaper with an estimated MER of 0.21% (official MER not posted yet).  It’s a great time to be an investor where you can build a completely hands-off indexed portfolio by purchasing a single ETF and paying only 0.21% in fees.  It can get even cheaper if you go with a discount brokerage that offers commission-free ETF purchases.

The biggest difference that I can see right now is that iShares does not offer a conservative portfolio (like Vanguard above), but they go head to head in the balanced and growth portfolios.

iShares ETF Investment objective Ticker Strategic asset allocation
iShares Core Balanced ETF Portfolio The Fund seeks to provide long-term capital growth and income by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate that provide exposure to equity and/or fixed income securities. XBAL 60% equity/
40% fixed income
iShares Core Growth ETF Portfolio The Fund seeks to provide long-term capital growth by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate that provide exposure to equity and/or fixed income securities. XGRO 80% equity/
20% fixed income

BMO All-in-One ETFs

The BMO products are a welcomed surprise with a very competitive MER (similar to iShares), but they also a differentiator in their asset allocation.  For one, they are more aggressive than their counterparts.  For the balanced portfolios, both iShares and Vanguard go with the traditional 60/40 equity/fixed income allocation.

BMO’s balanced portfolio bucks the trend with a more aggressive stance allocating 68% equity/32% fixed income.

For those already in retirement, I’m a fan of the 50/50 asset allocation which is offered by BMO in their ZCON ETF.  The Vanguard VCNS ETF has a bit too much fixed-income for my liking.

BMO ETF Investment objective Ticker Strategic asset allocation
BMO Conservative ETF  The BMO Conservative ETF is designed to provide income and moderate long-term capital appreciation by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs.  ZCON 52% equity/
48% fixed income
BMO Balanced ETF  The BMO Balanced ETF is designed to provide moderate long-term capital appreciation and income by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs.  ZBAL 68% equity/
32% fixed income
BMO Growth ETF  The BMO Growth ETF is designed to provide long-term capital appreciation by investing in global equity and fixed income ETFs. The ETF will rebalance quarterly to strategic index asset allocation weights. The ETF will invest in broad indexed equity and fixed income ETFs. ZGRO 84% equity/
16% fixed income

Comparing Holdings

XBAL vs. VBAL vs ZBAL

Comparing the holdings of XBAL, VBAL and ZBAL show that there is little difference in the exposure and holdings.  With XBAL and ZBAL, you’ll get slightly more exposure to the US market and slightly less exposure to Canada.  In the grand scheme of things, that may not be a bad thing since Canadians have a tendency to have a home bias (myself included).

With VBAL, you’ll get slightly better diversification with your bonds portfolio with exposure to the US and global bonds.  However, XBAL and ZBAL gives you more exposure to corporate bonds.

Allocation XBAL VBAL ZBAL
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 15.21% VCN Vanguard FTSE Canada All Cap Index ETF 17.1% BMO S&P/TSX CAPPED COMPOSITE INDEX ETF 15.21%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 26.56% VUN Vanguard US Total Market Index ETF 23.0% BMO S&P 500 INDEX ETF 24.29%
International XEF ISHARES MSCI EAFE IMI INDEX 14.93%

IEMG ISHARES CORE MSCI EMERGING MARKETS 3.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 13.7%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 4.2%

BMO MSCI EAFE INDEX ETF 14.97%

BMO MSCI EMERGING MARKETS INDEX ETF 5.29%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 25.56%

XSH ISHARES CANADIAN SHORT TERM CORPOR 6.40%

VAB Vanguard Canadian Aggregate Bond Index ETF 24.8% BMO AGGREGATE BOND INDEX ETF 27.94%

BMO GOVERNMENT BOND INDEX ET ETP 8.18%

US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 4.04%

GOVT ISHARES US TREASURY BOND ETF 3.99%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 9.7%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 7.5%

BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF 3.94%

XGRO vs. VGRO vs ZGRO

Comparing the iShares, Vanguard and BMO all-in-one growth ETFs, again, there are slight differences.  iShares  and BMO give you slightly more US equity exposure (36.5% vs 31% vs 32.35%) and slightly less Canadian equity (20.51% vs 23.2% vs 20.3%). 

Vanguard, on the other hand, gives you better global exposure to bonds.  However, this is less important as bonds are only 20% of these portfolios.

ZGRO will give you more international equity exposure, which I appreciate!

Allocation XGRO VGRO ZGRO
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 20.51% VCN Vanguard FTSE Canada All Cap Index ETF 23.2% BMO S&P/TSX CAPPED COMPOSITE INDEX ETF 20.3%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 36.52% VUN Vanguard US Total Market Index ETF 31.0% BMO S&P 500 INDEX ETF 32.35%
International XEF ISHARES MSCI EAFE IMI INDEX 19.71%

IEMG ISHARES CORE MSCI EMERGING MARKETS 4.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 18.6%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 5.7%

BMO MSCI EAFE INDEX ETF 20.13%

BMO MSCI EMERGING MARKETS INDEX ETF 7.10%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 12.22%

XSH ISHARES CANADIAN SHORT TERM CORPOR 3.06%

VAB Vanguard Canadian Aggregate Bond Index ETF 12.5% BMO AGGREGATE BOND INDEX ETF 13.96%

BMO GOVERNMENT BOND INDEX ET ETP 4.05%

US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 1.92%

GOVT ISHARES US TREASURY BOND ETF 1.89%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 4.9%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 3.8%

BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF 1.97%

Final Thoughts

Comparing all three products,  the biggest difference is the more aggressive asset allocation of the BMO products. In terms of which I like better, it’s a toss-up between iShares and BMO due to their slightly lower fees.  If you’ve already started a portfolio using Vanguard all-in-one products, I’d say to stay the course.  As previously mentioned, I like 50% equity/50% fixed income during retirement, so it’s nice to see BMO offering this product.

If you’re new to investing, then I think the iShares and BMO all-in-one ETF line will serve you well with a slightly lower MER and slightly more equity exposure outside of Canada.  Either way, investors win with the low fees and ease of use.  As mentioned earlier, combine it with a discount broker that offers commission-free ETFs, and you’ll save even more!

You decide, which product do you like better?

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