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The 2018 edition of the MoneySense ETF All-Stars has just been published: you can read the whole article by clicking on the highlighted headline: The Best ETFs for 2018.
The “All-Star” portfolio consists of a 7-person expert panel plus myself. While the number of ETFs trading in Canada have reached 583, the All-Star list is now at 20, up from 14 a year ago. We added one to each existing category (except international equity) and
created a new category: the panel was unanimous in declaring the three new Vanguard Asset Allocation ETFs as All-Stars. See the Hub’s February 1st commentary on the launch of those three new products: Gamechanger.
In addition to adding the new category we call “One Decision” Packages, the panel added a single new ETF in three of the four existing categories: Canadian equities, US Equities and Fixed Income. We stood pat on the three international equity ETFs, although that asset class is also covered by the new Vanguard products.
Canadian equities
New in Canadian equities is the BMO S&P TSX Capped Composite IDX ETF (ticker ZCN), which expands the list from the returning three picks: Vanguard FTSE Canada ;All-cap Index ETF (VCN/TSX) XIC: the iShares Core S&P/TSX Capped Composite Index ETF; and HXT: Horizons S&P/TSX 60 ETF.
The panel was unanimous in retaining all three of these picks, since the trio maintain the lowest management fees among the segment, and HXT is particularly tax efficient and low cost for non-registered portfolios. But the panel agreed with Forstrong’s recommendation to add ZCN, which has the same rock-bottom annual fee of 0.05% as VCN and XIC. ZCN now has more assets than VCN.
US Equities
The panel agreed to add a fourth pick to the US all-cap space, again from BMO: BMO S&P500 Index ETF (CAD), ticker ZSP. As the Forstrong team observed, ZSP’s fee of 0.08 is the same as VFV’s and the fund now has the most assets of the four core US ETFs.
Two of our returning US equity picks are the hedged and unhedged versions of Vanguard Canada’s S&P 500 ETFs: VSP and VFV respectively, plus the iShares Core S&P US Total Market ETF (XUU.)
Fixed Income
The panel added a sixth ETF to the existing lineup of fixed-income ETFs: the iShares Core Canadian Short Term Bond Index ETF (XSB).
The new category of One-Decision Packages
And finally, the three new Vanguard Asset Allocation ETFs are now MoneySense ETF All-stars, a unanimous decision by the panel. They are of course the Vanguard Growth ETF portfolio (VGRO/TSX), which is 80% in equities and 20% in fixed income, and which is the biggest seller of the trio. The US and foreign equity exposure is not currency hedged but foreign fixed income is hedged back into the Canadian dollar. The equity mix is 29.9% US, 23.8% Canada, 19.9% global developed markets ex North America, and 6.1% Emerging Markets. The fixed income is 11.9% Canada, 3.6% US and 4.8% outside North America.
The balanced version, VBAL/TSX, is 60% in equities, so raises the proportion of fixed income to 40%. And the conservative version, VCNS, is only 40% in equities and thus has the highest proportion of fixed income (60%).
We will provide a mid-year progress on the 2018 All-Stars this summer.
