Desert Island picks Archives - Financial Independence Hub

MoneySense has just published the 9th edition of the ETF All Stars, 2021 edition. As you can read in the overview, this amounts to the Pandemic Recovery edition. The full package is available online here. Below we summarize the main picks by category: click on the highlighted headline [in red] for each category to go to the full MoneySense commentary as well as the accompanying charts showing ETF names, ticker symbols, fees and general description.

We again had eight panelists: the same as last year, except that regular Hub contributor Mark Seed of My Own Advisor replaced departing Dave Nugent. The format consists of the eight experts “voting” on which funds to retain and which to replace, with five out of eight votes carrying the day. (I get involved only if there is a 4-4 tie.)

Since our philosophy is to retain as many earlier picks as possible — provided they still meet our criteria of broad diversification and low cost — we ended up with 52 picks this year, just two more than in 2020: 44 selections were agreed-upon winners, plus there were 8 Desert Island picks (see below).

However, there were more new additions than that might suggest, since we also dropped a few ETFs from last year, notably in the ESG and Low Volatility categories.

Canadian Equities

All five Canadian equity ETFs return: VCN, XIC, HXT, ZCN and ZLB (see the chart at MoneySense for full ETF names). However, no new funds were added: We considered adding five new names but none attracted the five-vote majority necessary.

Remember that Canadian stocks are also amply represented in the One-Decision Asset Allocation ETFs discussed below.

US equities

The panel opted to retain all seven of our 2020 U.S.-equity ETF picks, while (finally!) adding two technology ETFs and a Vanguard all-cap total market fund (VUN), for a total of ten. That makes for a crowded category but after all the US is the biggest single geographic market in the world and investors have certainly been rewarded for being there in recent years: especially in 2020.

Returning picks are XUU, iShares’ US Total Market ETF; and three low-cost plays on the S&P500 index: VFV and VSP from Vanguard, and BMO’s ZSP. There was also the returning Desert Island pick from PWL’s Cameron Passmore: Avantis US Small Cap Value ETF [AVUV.]

International and Global equities

The panel retained six of the eight international or global ETF All-stars from 2020: two from iShares (XAW and XEF), three from Vanguard (VXC, VEE and VIU) and BMO’s low-volatility pick ZLI. Two other new picks introduced in the 2020 edition didn’t make the cut this time: iShares Edge MSCI Min Vol Global Index ETF (XMW, 0.48%), and CI First Asset MSCI World Low Risk Weighted ETF (Unhedged, ticker: RWW/B). There was also a new international Desert Island pick from PWL’s Ben Felix: Avantis International Small Cap Index Fund (AVDV).

Fixed Income

While our panel as a whole continues to take a “stay with the program” approach to its fixed-income All-Star picks, we did cut back slightly on the number of Bond ETFs this year. Only six of the eight previous fixed-income All-star picks returned: ZAG, VAB, VSB, ZDB, XSB and VGAB. One added last year, TLT, did not return, and long-time pick BXF also did not make the cut in 2021. Continue Reading…

A new feature this year is Desert Island picks: the 9 MoneySense panelists each pick the one ETF they’d be happy to buy and hold while stranded on a desert island.

By Dale Roberts, CutTheCrapInvesting

Special to the Financial Independence Hub

I was a panelist for the Best ETFs in Canada. That was an incredible experience and I thank Jonathan Chevreau and MoneySense for the opportunity. When you land on that page you can have a look at the full panelist list, and the bios. It’s an incredible list of ETF experts and of course I am humbled to be included.

From that main landing page simply hit those buttons to have a look at the ‘Best’ Canadian, US, International and Fixed Income offerings. The all-in-one ETFs page includes those popular asset allocation ETFs that deliver ‘complete’ and well diversified and re-balanced portfolios with annual fees in the range of .20%. As Robb Engen of Boomer and Echo offered ‘those ETFs are a game changer’.

Do you really even need to get into the minutia of each individual assets for each region and each fixed income offering? We know that our basic asset allocation; the overall mix of Canadian to US to International stocks plus the ratio of stocks to fixed income will take care of the bulk of our returns and risk characteristics. Many investors are embracing these one ticket solutions, they’ve pulled in considerable assets in quick order. Here’s a little help on how to select the ‘right one’. Please have a read of Which Vanguard All-In-One, One-Ticket Portfolio Should You Invest In?

Vanguard got the nod from the MoneySense panel. That said, the offerings from iShares and BMO are all great. They have some slight differences with respect to asset allocation. Here’s BMO Keeps It Simple With Their One-Ticket Solutions.

But of course the self-directed investor will often want to shape their own portfolio. They may be able to order and arrange assets for greater tax efficiency. We can select ETFs that allow us to avoid US withholding taxes. We can create portfolios with greater growth potential. Many self-directed investors want control.

Not a lot of change, but change is a coming

As Jonathan Chevreau notes in the overview “Despite some major changes in our panel of experts, this year’s ranking has in the main affirmed most of our “All-star” picks from previous years and in particular 2018.” This is plain vanilla, couch potato investing for the most part. It’s supposed to be boring. The lists include broad-based market indices and many core bond offerings. There is nothing ‘too exotic’ going on here. With fees at a rock bottom level, it’s difficult to replace the core large cap or total market index funds.

But what about that change that might be on its way?

Indexing does not have to be plain vanilla. We might be able to arrange our portfolios to deliver greater returns or better risk adjusted returns. Retirees might be able to create a wonderful mix of income and growth that delivers more generous and more reliable retirement funding. Indexing can deliver on that factor-based investing that can include the size premium (small and mid cap and equal weight), lower volatility, value, quality and more. For now, those types of funds are not on the lists but I would not be surprised to see new categories created to cover the spectrum.

I would also like to see REITs and foreign bonds included in the mix.