Determine how much of your portfolio will be the “core”
Core investments are generally stable, consistent investments with a mix of equities and fixed income, weighted according to the investor’s risk tolerance. “The core is globally spread across countries and regions – Canada, the US and international markets,” explains Himesh Patel, an ETF strategist for Fidelity Investments Canada.
If you’re younger and have a longer time horizon, you probably have a portfolio that’s more focused on stocks, Patel says. On the other hand, if you have a shorter time horizon, you may want to have more in the core than in “any satellite positioning,” he says.
Choose your “explore” investments
Once you’ve determined the “core” portion of your investment portfolio, you can add a range of “explore” investments, from initial public offerings (IPOs), special acquisition companies (SPACs), thematic funds and venture capital funds. to cryptocurrencies.
Other popular exploration options are sustainable investments. These are aimed at investors who want to play a role in protecting the environment or have a social or managerial impact. And two more options — for those who want the potential for aggressive growth — are technology stocks and healthcare stocks, Patel says.
Outside the “core” of your portfolio, “you must be willing to take more risk,” he warns. “These funds are more volatile than the more stable, defensive stocks in the market.” For example, many companies at the forefront of innovation have “great upside potential, but it comes with a lot of volatility,” Patel says.
How Fidelity All-in-One ETFs Are Different
For core and explore investors, Fidelity’s All-in-One ETFs provide one-ticket solutions that are diversified across regions, market caps and investment factors. “With these portfolios, we’re targeting well-known investment style factors such as value, momentum, quality and low volatility on the stock side,” said Patel. The fixed income portions of the portfolios also have an active component – seeking to reduce risk, be diversified and maximize returns – without being affected by short-term fluctuations, such as interest rate hikes.
In addition to professional management, strategic asset allocation and consistent portfolio rebalancing, these ETFs offer lower management fees: FBAL’s indirect management fee is estimated at 0.35%, FGRO 0.37%, FCNS 0.34% and FEQT 0.38%, although their fees will vary from time to time depending on their portfolio composition, rebalancing events and performance. Less money spent on fees means more money you can spend on your future goals.
For important information about Fidelity All-in-One ETFs, click here.
This post Building a core and explore portfolio with an all-in-one ETF
was original published at “https://www.moneysense.ca/save/investing/building-a-core-and-explore-portfolio-with-an-all-in-one-etf/”
