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

ETFs already have a reputation for being a simple and cost-effective way to obtain a diversified portfolio. They are usually actively managed, and they generally invest in passive ETFs, which can keep fees low, and investors can choose from a range of options, such as conservative, balanced or growth products.

ETFs have surged in popularity among DIY investors. While the performance of ETFs is often similar to that of mutual funds, ETFs are easy to buy and sell.

All-in-one ETFs go one step further. Essentially, they are collections of lower-cost 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 the portfolio back to the strategic allocation, when necessary and if part of the ETF’s investment mandate.

How all-in-one ETFs work

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

Fidelity’s All-in-One ETFs program, for example, has four options. Its All-in-One Balanced ETF (FBAL) has a mix of approximately 59% global equity, 39% global fixed income and 2% cryptocurrencies (as at Oct. 31, 2023), and it has a low-to-medium level of risk. FBAL has an approximate indirect management fee of 0.36%.

Fidelity’s All-in-One Growth ETF (FGRO) has a higher equity weighting, with approximately 82% global equity, 15% global fixed income, and 3% cryptocurrencies (as at Oct. 31, 2023). It has a medium level of risk. With an indirect management fee of approximately 0.38%, it’s better suited for the investor with a greater appetite for risk and a longer time horizon. Both FBAL and FGRO were launched in 2021.

Two more funds, Fidelity’s 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% global equity, 59% global fixed income and 1% cryptocurrencies (as at Oct. 31, 2023). FCNS has a low-to-medium level of risk. FEQT has a neutral mix of approximately 97% global equity and 3% cryptocurrencies (as at Oct. 31, 2023) and has a medium level of risk.

Fidelity All-in-One ETFs Conservative Balanced Growth Equity
Risk classification Low to medium Low to medium Medium Medium
Global equity 40% 59% 82% 97%
Global fixed income 59% 39% 15% 0%
Cryptocurrencies 1% 2% 3% 3%
Source: Fidelity Investments Canada ULC

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This is a paid post that is informative but also may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers and approved by the client.

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. The indicated rates of return do not take into account sales, redemption, distribution or option charges or income taxes payable by any unitholder 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 other 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 will be approximately 0.36%, Fidelity All-in-One Growth ETF will be approximately 0.38% and Fidelity All-in-One Equity ETF will be approximately 0.39%. The actual effective, indirect fees may be higher or lower than the estimated rates shown above based on the performance of the underlying Fidelity ETFs, rebalancing events initiated by the portfolio management team of the Fidelity All-in-One ETFs and changes to the strategic allocation, which may include the removal or addition of underlying Fidelity ETFs. Actual indirect fees will be reflected in the management expense ratio (in addition to sales tax, fixed administration fees, commissions, portfolio transaction costs and other expenses, as applicable, of each Fidelity All-in-One ETF and mutual fund version), posted semi-annually.

Each of the Fidelity All-in-One ETFs has a neutral mix, which includes a small allocation to Fidelity Advantage Bitcoin ETF™ ranging between 1% and 3%. If each portfolio deviates from its neutral mix by greater than 5% between annual rebalances, it will also be rebalanced. Such rebalancing activity may not occur immediately upon crossing that threshold but will occur shortly thereafter.

The statements contained herein are based on information believed to be reliable and are provided for information purposes only. Where such information is based in whole or in part on information provided by third parties, we cannot guarantee that it is accurate, complete or current at all times. It does not provide investment, tax or legal advice, and is not an offer or solicitation to buy. Graphs and charts are used for illustrative purposes only and do not reflect future values or returns on investment of any fund or portfolio. Particular investment strategies should be evaluated according to an investor’s investment objectives and tolerance for risk. Fidelity Investments Canada ULC and its affiliates and related entities are not liable for any errors or omissions in the information or for any loss or damage suffered.

Portions © 2024 Fidelity Investments Canada ULC. All rights reserved. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC.

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