The all-in-one or asset allocation ETFs are a simple and effective way to DIY invest. I am not a certified investment advisor and cannot make specific recommendations for you. However, I will present information that you may find helpful in deciding or seeking out more information first. If you have decided that you want to invest using one of these funds, there are two main steps.
First, figure out the asset allocation that you are looking for to balance risk and return for your risk tolerance. Each company that makes these ETFs has a flavor to match that. The next step is to pick which of the ETF families to use. This post will compare the big four in Canada: Vanguard, Blackrock iShares, and BMO ETFs. Global X (formerly Horizons) also has some managed all-in-one ETFs. The pros/cons of mixing and matching ETFs from different companies will also be touched upon. In the end, the differences are minor. What matters is just picking something that matches your risk tolerance and getting invested.
This post also has embedded fee & tax drag calculators (2025 tax rates) for the different ETFs in a TFSA, RRSP, personal taxable account, and corporate account that you can use with your own income numbers to compare.
In The Wrong Spot?
The Big Four All-In-One ETF Providers
The main concern with picking an ETF provider is if they are a small player and at high risk of shutting down. That doesn’t mean that you lose your money. An ETF holds underlying assets that have value. However, it could mean that the ETF is liquidated, you get your money, but also have an impending tax bill if you realized gains. The good news is that the big providers are huge and unlikely to go anywhere.
ETFs close all the time. However, the reason that they close is usually due to a lack of interest or high costs. That risk is highest with a niche ETF focusing on a small market segment. Fortunately, asset allocation ETFs are very popular and cover large liquid markets that are easily traded. I did put trading volume, but it is important to note that the liquidity of ETFs is due to the underlying markets covered and not volume.
How I interpret the above table comparing providers.
Blackrock and Vanguard are both behemoths. Neither they nor their ETFs are likely to close. They also have a huge daily price-volume. So, buying or selling large sums is unlikely to influence the price or lose much to the market makers that grease the wheels when you buy/sell.
BMO is a major bank and the largest Canadian-owned ETF provider. They are committed to asset allocation ETFs, and the underlying ETFs used are large and liquid. They have almost quadrupled in size since they started a few years ago.
Horizon is also a major Canadian ETF provider and niche ETFs are the focus of their business. So, these ETFs are likely to remain important to them. The size and volume of these ETFs are pretty good, given that they are niche. However, they are nowhere near the behemoths.
Matching Your Target Asset Allocation
Each of the providers has its offerings to emulate commonly used stock:bond target asset allocations. As mentioned elsewhere, choosing an asset allocation is a best guess rather than a precise science. However, if you want to pick something in between, you can blend two options. Being that precise with asset allocation by mixing is of questionable benefit and would add complexity. The ETF stock:bond allocations are summarized in the table below.
Differences in Equity Exposure Under the Hood
Each of the companies has some slight variations in the way that they subdivide their stock exposure around the world. There are also some differences in the structure of some of the underlying ETFs. I honestly think that, for the most part, it is hair-splitting. Further, no one can predict which little nuance here and there will be better or worse in the future. Stocks around the world are very strongly correlated. So, any performance differences are likely to be minuscule.
The one exception is the Global X ETF family. Until this past year, they held corporate-class ETFs. Those are not expected to make distributions but accrue capital gains instead. In 2024, the switched most of the ETFs to a conventional structure and started making distributions as a mix of dividends and capital gains.
Bottom Line: Don’t get hung up on minute differences. I think that it doesn’t matter much except, for the Global X option. I am providing the information below and some commentary for you to decide for yourself if it matters to you.
How I interpret the above table comparing providers.
Why are they all overweight in Canadian equity?
Canada is about 3% of the global market. However, Canadian investors generally overweight Canada. That has the advantage of tax-efficient eligible dividends. Canada and global markets are also closely linked, but the correlation is not perfect and rebalancing two assets with similar risk/expected returns, but imperfect correlation can be helpful to smooth volatility without reducing return. No one knows the perfect Canadian overweighting, but 20-30% is a reasonable guess. So, I don’t see a significant difference between the three conventional ETFs. The Global X ETF is on the low end.
What are the main differences between the Blackrock iShares, BMO, and Vanguard allocations?
Blackrock is slightly more spread out around the developed world with a bit lower emerging markets exposure. The BMO version has a bit more emerging markets at the expense of Canadian exposure. The Vanguard version has a bit more Canadian exposure at the expense of Non-North American developed markets. Does any of that matter? Probably not much, and no one can predict which minor variation will perform better.
Nuances of the Global X Special Brew.
Corporate Class Structure & Some Synthetic ETFs
The Global ETF has some big differences from the other convention ETFs. A couple of the underlying funds are corporate class. That means they are organized together as a company and expenses in one fund can be used to offset income in another. The index-tracking Horizon funds, plus their more expensive trader-oriented funds, are bundled. The net effect (if managed well) is that the index funds should accrue capital gains rather than pay out dividends/interest. That means tax deferral (until you sell) and tax reduction because capital gains are taxed at half the usual rate.
Tax advantages of the Global X ETFs
The Global X product was originally designed to be more tax-efficient for high-income investors. There is still slightly less tax drag, but it is much closer now that they’ve switched to largely conventional ETFs.
Global X Active Management
Instead of tracking the whole market, Global got creative with their asset allocation. They also change this based on some tactical active decisions. In summary, they have more Nasdq100 exposure (large cap growth) and are also overweighting the US small cap (Russell 2000).
Differences in Bond Exposure Under the Hood [Yawn]
Again, this is likely hair-splitting. Any potential impact of differences is likely to be small and unpredictable. However, below is a table comparing how the different fund families get their bond exposure. Again, the one outlier is Global X, which uses a corporate-class bond fund. That corporate class fund doesn’t pay interest but accrues capital gains. This adds a tax-efficiency edge compared to its competitors at higher bond allocations.
How I interpret the above table comparing providers.
Blackrock has mostly Canadian bonds with slight short-term corporate tilt. BMO has mostly Canadian bonds that are government-dominated and some US corporate exposure. Vanguard has 60% Canadian and then a broad global exposure. Horizon is 2/3 Canadian and 1/3 Unhedged US Treasuries. I am skeptical that the small differences translate into any meaning or predictable performance differences. However, I will provide some theoretical commentary.
How effectively should the different bonds smooth volatility?
The role of bonds in a portfolio is to stabilize and lower volatility. Government bonds tend to work better for that, but some people like that corporate bonds pay slightly more income. The issue with corporate bonds is that they are more correlated to the stock market and less of a volatility dampener.
With the exception of Horizon’s US Treasury holding, the other foreign bonds are CAD-hedged. That helps to dampen volatility.
The Vanguard version is the only one with non-North American bonds. That is more diverse. However, I am not sure how much of a difference that makes with bonds since they have low volatility and are still correlated globally.
Comparing Fee & Tax Drag
If we assume that the slight differences in asset hair-splitting don’t make a meaningful, predictable difference, then perhaps fees and taxes will. They are at least pretty predictable! If an ETF tracks an index, the annual growth in your portfolio would be expected to trail it by the annual fee & tax drag. For example, if the market returns 7%/yr and you have 0.2% fees and 0.8%/yr in taxes, then your portfolio would grow by 6%/yr.
I will compare the different ETFs in different account types. For personal taxable accounts, you can adjust your income information to get a personalized tax drag comparison. Tax calculations start with the gross yield of a holding. That is the income paid divided by the price. Because prices are very volatile, yields can fluctuate significantly. So, I used the average yield over the preceding 8 to11-year period for the fund or its index, depending on data availability.
Fee & Tax Drag in a TFSA
The main drag on growth in a TFSA is the fees of the funds and foreign withholding taxes (FWT). A TFSA is not recognized by some countries, making the FWT on foreign dividends non-recoverable. The calculation of FWT is complex, but I applied the methodology of this paper to the asset allocation ETFs. It is mind-bending. So, don’t fret about it. I just want to be transparent.
Fee & Tax Drag in an RRSP
Like a TFSA, the drags on growth in an RRSP are the fees and FWT. An RRSP is FWT-exempt when the foreign stocks are held directly and can have a punitive layer of FWT when held indirectly. I accounted for those fund structure differences in the comparison below.
Fee & Tax Drag in a Personal Taxable Account
The main drag on growth in a personal taxable account is the personal income taxes. The fees are usually small in comparison. Most FWT is recoverable. However, there are a few cases where one layer may not be, depending on fund structure. I accounted for those fund structure differences in the comparison below. You can adjust your income to see what the comparable tax drag is for your situation.
Fee & Tax Drag in a Corporate Account
Tax drag on investment income is quite variable.
Canadian private companies can invest using a corporate account. How money is taxed as it flows through a corporation and how corporate investment income is taxed is complex. The tax drag on investment income in a corporate account is quite variable. Ideally, it can be quite tax-efficient. However, there are ways that it can become very tax-inefficient compared to personal investing. There are two main ways that can happen.
Corporations become tax-inefficient by not paying out enough dividends.
To discourage corporations from being used as massive tax-deferred passive-income pools, interest, and dividends paid to a corporate account are subject to a high upfront tax rate close to the top personal rate. Some, or all, of that tax is refundable when you pay dividends out of the corporation to owners (and they pay personal tax). That is called refundable dividend tax on hand (RDTOH). So, if your corporation is not paying enough dividends to release the RDTOH, the investment income in the corporation will have a high tax drag. If in a low personal tax bracket, it sometimes makes sense to pay extra dividends to release the RDTOH and then invest that extra money personally.
Eligible dividends have fully refundable corporate tax. Interest is partially refundable (~20% net) and foreign dividends have less of the corporate tax as RDTOH due to an interaction with foreign withholding taxes. I account for all of this in the calculator.
Corporations become tax-inefficient if they have too much active & passive income.
In 2018, another rule aimed at limiting the utility of small corporations for investing was introduced. If you earn more than $50K in passive income, then the amount of active income (from operations) that is taxed at the lower small business deduction rate is reduced. That occurs at a rate of 5:1 so that all active income is taxed at the general corporate rate when there is $150K/yr of passive income. So, high levels of active and passive income are when this may kick in.
The difference between the small and general tax rates is ~15%, and the 5:1 impact makes that a ~75% tax rate on the investment income in the $50-150K range. That can be attenuated if you are paying out a lot of dividends to meet personal cash flow needs (and paying personal tax), but it is still a ~38% tax rate on the investment income.
Asset Allocation ETF in a Corporation Comparison Calculator
Given the variable efficiency, I created the calculator below. It is pre-populated with numbers, but you can change the ones in the cream fields for your own situation. If there is a tax inefficiency, a comment about it will appear. The fees, FWT, and Canadian taxes adjust accordingly. You can enter the investment income already received if you are keeping those investments. You can enter how much you plan to invest to see how that impacts efficiency for new investments bought moving forward.
In Summary: Pick Something.
The most important thing is to build a portfolio with holdings that suit your risk tolerance. That can be efficiently and effectively done as a DIY investor using All-In-One Asset-Allocation ETFs. The differences between the Blackrock, BMO, and Vanguard asset allocation ETFs are minuscule.
All things being equal, Blackrock’s XEQT, XGRO, and XBAL are on the list of commission-free ETFs at Qtrade.
The Global X ETFs have a slight tax-efficiency advantage at higher personal income levels. In a corporate account, the Global X ETFs have a clear tax drag advantage when the corporation is functioning efficiently. They pay small dividends and more capital gains instead. If the corporation becomes less efficient due to retained RDTOH or a bump over the active-passive income limits, then the Horizon tax advantage is huge. Despite these tax advantages, one would need to be comfortable with the unique structure and nuances of the Global X products before considering using them. It is also important to realize that Global X actively manages these ETFs, and tweaking could result in higher phantom distributions than expected. The had a massive one for 2024 when they did their restructuring. We’ll have to see if it is a recurrent problem or not.
I cannot and will not advise you on what is suitable for you. However, the information on this page has hopefully helped you learn about some possible options. The differences are small. The most important thing is time in the market. So, pick something and get invested.