To understand these ETFs and what they offer, it’s helpful to understand the basics of asset allocation first. In short, asset allocation is how you decide to invest your money into different asset classes – such as stocks, bonds, and cash. The idea is to achieve the balance of risk and return based on your unique personal circumstances, including investment goals, time horizon and tolerance for risk.
ALL-IN-ONE ETF PORTFOLIOS
Asset allocation ETFs: What you need to know
Asset allocation ETFs, or all-in-one ETFs, are a low-cost, diversified way of investing. In this article we talk about what asset allocation means, some investing decision considerations and more about our suite of iShares asset allocation ETFs.
ASSET ALLOCATION EXPLAINED
HOW CAN I FIND MY RISK TOLERANCE WHEN IT COMES TO INVESTING?
When deciding on your target asset allocation, here are a few questions to consider:
- How much do you have to invest?
- When do you need the money and what do you need it for?
- What is your risk tolerance when it comes to investing?
These questions help to determine your overall risk tolerance. A more risk-averse investor that prioritizes capital preservation over maximizing return may prefer allocating a significant portion of their portfolio to bonds, which tend to provide steadier returns. On the other hand, a more risk-tolerant investor that can stomach some investment loss may allocate more to stocks, which are more volatile but tend to deliver higher returns over the long term.
WHAT IS AN ASSET ALLOCATION ETF?
An asset allocation ETF (exchange-traded fund) offers a fully diversified portfolio mix of global stocks and bonds – all in a single fund. The single fund is made up of several ETFs – targeting various geographical exposures and a mix of stocks and bonds.
BENEFITS OF ASSET ALLOCATION ETFS
1.Simple and efficient: Asset allocation ETFs give investors a way to build a whole portfolio in one convenient package.
2.Diversification: Asset exposures are diversified across Canadian, U.S., international, developed, and emerging markets.
3.Rebalancing: The asset allocation ETFs are continually monitored, and rebalanced as needed, to maintain asset class target weights.
4.Low cost: With low management fees they can help investors keep more of what they earn.
TARGET ASSET ALLOCATIONS
Our suite of iShares asset allocation ETFs in Canada ranges from conservative to more growth oriented, and investors can choose based on their investing goals and risk profiles.
iShares Core Equity ETF Portfolio (XEQT)
For investors who are looking for the potential of long-term growth.
iShares Core Growth ETF Portfolio (XGRO)
For investors who are looking for the potential of long-term growth and a moderate level of income.
iShares Core Balanced ETF Portfolio (XBAL)
For investors who are looking for the potential of long-term growth and a moderate level of income.
iShares Core Conservative Balanced ETF Portfolio (XCNS)
For investors who are looking for more income, security, and moderate long-term growth.
iShares Core Income Balanced ETF Portfolio (XINC)
For investors who are looking for more income, security, and moderate long-term growth.
