ETFs already have a reputation for being a simple, more cost-effective way to acquire a diversified portfolio. They are usually passively managed, keeping costs low, and investors can choose from a range of options, such as conservative, balanced or growth products.

ETFs have become extremely popular among DIY investors. According to the Canadian ETF Association, Canadians invested a record $53 billion in ETFs in 2021. While the performance of ETFs is often comparable to mutual funds, ETFs are easier to buy and sell and have lower costs.

All-in-one ETFs go one step further. Essentially, they are collections of cheap ETFs. Investors don’t have to select, track or manage them – the pros take care of that. All-in-one ETFs can be passively or actively managed, and fund managers will rebalance your portfolio towards the strategic allocation as needed.

How all-in-one ETFs work

All-in-one ETFs consist of a group of globally diversified funds that are balanced to minimize risk.

Fidelity’s All-in-One ETFs program has four options, with a mix of equity factor, fixed income and crypto ETFs. The All-in-One Balanced ETF (FBAL) has a mix of approximately 59% equity, 39% fixed income, and 2% cryptocurrencies. With an indirect management fee of approximately 0.35%, FBAL is aimed at the investor seeking long-term growth.

Fidelity’s All-in-One Growth ETF (FGRO) has a higher equity weighting, with approximately 82% equity, 15% fixed income and 3% cryptocurrencies. With an indirect management fee of around 0.37%, it is better suited to the investor with a higher risk appetite and longer time horizon. Both FBAL and FGRO were launched in 2021 and have a one-year history.

Two new funds, All-in-One Conservative ETF (FCNS) and All-in-One Equity ETF (FEQT), joined the program in 2022. The more conservative of the two, FCNS, offers a global multi-asset strategy with a neutral mix of approximately 40% equity factor ETFs, 59% systematic and actively managed fixed income ETFs, and 1% cryptocurrency ETFs. FEQT has a neutral mix of approximately 97% equity factor ETFs and 3% cryptocurrency ETFs.

Why is there a higher fee?

Passively managed portfolios are just that: passive. They usually “follow” or mimic a stock index, using it as a benchmark and aiming to duplicate its performance. But Fidelity’s All-in-One ETFs are designed with built-in strategic asset allocation and consistent portfolio rebalancing, said Himesh Patel, an ETF strategist for Fidelity Investments Canada. “We do the work behind the scenes for you and rebalance every year. It also rebalances if the neutral mix drifts by a certain amount.” Fidelity’s All-in-One ETFs have a slightly higher cost than other all-in-one products — just 10 to 15 basis points to be exact.

This post What’s under the hood? A look at what goes into all-in-one ETFs — and how they work

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