The "Narrow Down the Choices" ETF List
Canadian Equity ETFs
"Equity" means "stocks"
iShares Core S&P/TSX Composite Index ETF (XIC)
BMO S&P/TSX Capped Composite Index ETF (ZCN)
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These funds are straight-up investments that gives you exposure to the Canadian stock market index.
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​iShares S&P/TSX Composite High Dividend ETF (XEI)
FTSE Vanguard Canadian High Dividend Yield Index ETF (VDY)
​BMO Canadian Dividend ETF (ZDV)
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If you're looking for dividends, these fund will give you that. In Canada, high-dividend funds are dominated by banks. Some dividend ETFs are better diversified than others. XIC has fairly good diversification with "just" 30% exposure to banks, versus other dividend ETFs at 40% (ZDV) to 55% (VDY).
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U.S. Equity ETFs
"Equity" means "stocks"
​Vanguard S&P 500 ETF (VFV) - Canadian dollars
BMO S&P 500 Index ETF (ZSP) - Canadian dollars
iShares Core S&P 500 Index ETF (XSP) - Canadian dollars
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Vanguard S&P 500 ETF (VOO) - US dollars
iShares Core S&P 500 Index ETF (IVV) - US dollars
These funds are straight-up investments that gives you exposure to the biggest 500 stocks in the US. Whether you hold the ETFs in Canadian or US dollars depends on whether you want to take on currency risk and whether you already have US dollars in your account. If you are a dual US-Canadian citizen, you'll want to choose ETFs listed in the US.
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iShares Core S&P US Total Market ETF (XUU) - Canadian dollars​
Vanguard US Total Market ETF (VUN) - Canadian dollars
iShares Core S&P US Total Market ETF (ITOT) - US dollars
Vanguard US Total Market ETF (VTI) - US dollars
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These funds holds a wider variety of stock - in fact, they give you exposure to over 3,350 stocks instead of the 500. Does that make it better? Hard to say. You're getting the same sector exposure - like technology, health care and so on - but with more companies.
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International Equity ETFs
"Equity" means "stocks"
Vanguard FTSE Developed All Cap Ex North America Index ETF (VIU) - Canadian dollars
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This fund gives you broad exposure to stocks from developed countries around the world except North America, which is great because you've already chosen one Canadian and one U.S. ETF.
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Vanguard FTSE All-World ex-US ETF (VEU) - Canadian dollars​
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This fund has a broader geographic exposure (more countries) and includes emerging markets. It does have some Canadian exposure so you'll get some overlap with your Canadian ETFs, but it's not a deal-breaker. The fee on this fund is a lot lower than the Developed market ETF above.
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iShares MSCI EAFE ETF (EFA) - US Dollars
BMO MSCI EAFE ETF (ZEA) - Canadian dollars
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These funds track a basket of stocks in the Europe, Asia and Far East index. This means they exclude the US and Canada.
Vanguard FTSE Emerging Markets Index ETF (VEE) - Canadian dollars
BMO MSCI Emerging Markets Index ETF (ZEM) - Canadian dollars
​iShares MSCI Emerging Markets ETF (EEM) - US dollars
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Emerging markets are more volatile than developed markets so this fund should be considered for only a small part of your overall portfolio. The top three countries in this fund are China, Taiwan and India, followed by Brazil, Saudi Arabia and South Africa.
Fixed Income ETFs
In this context, "fixed income" means "bonds"
Vanguard Total World Bond ETF (BNDW) - US dollars
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A super broad-based bond ETF, giving you exposure to bonds in Europe, North America, and Asia-Pacific.
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BMO Aggregate Bond Index (ZAG) - Canadian dollars
iShares Core US Aggregate Bond ETF (AGG) - US dollars
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These funds have exposure to a variety of types of bonds: government and corporate with long and short maturities. ​
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Cash ETFs
Funds that are safe and secure
Horizons High Interest Savings ETF (CASH)
Evolve High Interest Savings Account Fund (HISA)
Purpose High Interest Savings ETF (PSA)
These ETFs invest in high interest savings accounts in Canada and are all in Canadian dollars. They offer a nice rate of interest while keeping your money safe and accessible.
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Evolve US High Interest Savings Account Fund (HISU)
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US dollar version of the above.
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Cash ETFs
Funds that are safe and secure
All-in-one ETFs
Equities and bonds with one investment (all funds are in Canadian dollars)
Vanguard Growth ETF Portfolio (VGRO)
BMO Growth ETF Portfolio (ZGRO)
iShares Growth ETF Portfolio (XGRO)
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These portfolios are made up of 80% stocks and 20% bonds. You get exposure mainly to the U.S. and Canada with a smattering of other countries.
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Vanguard All-Equity ETF Portfolio (VEQT)
BMO All-Equity ETF (ZEQT)
iShares Core Equity ETF Portfolio (XEQT)
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These portfolios are all equities, all the time. You get exposure mainly to the U.S. and Canada with a smattering of other countries.
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Vanguard Balanced ETF Portfolio (VBAL)
iShares Balanced ETF Portfolio (XBAL)
These balanced portfolios have about 40% invested in bonds and the rest in stocks, with heavy exposure to the U.S. and Canada.
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Investing should be simple. Choose a few ETFs, buy them and hold them. It's a simple strategy once you have it set up - but how do you choose which ETFs to own?
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There are a lot of options - too many - so to help you narrow the choices I've compiled a short list of ETFs that cover off the main asset classes: Canadian equities, U.S. equities, International equities, bonds and cash. There is also a list of all-in-one ETFs, which can take the place of these individual ETFs.
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There's nothing complicated about my methodology for choosing these funds: they do the job for a low price. Which you choose depends on qualities like the fees (MER), sector allocation and geographic allocation. You also want to choose which currency you want to hold your investments in - Canadian or US dollars. ​
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To get an overview of each of these ETFs, you can use the Morningstar ETF screener tool, which you can find here.
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Disclaimer: These are not investment recommendations but rather a list of available funds that, in my opinion, are appropriate for each asset class. You need to decide what to invest in, understanding the implications of market volatility and the risk involved. It is essential that make sure you are choosing the right asset allocation, which depends in part on your investment time horizon and tolerance for volatility.