Desert island ETF picks for 2019

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Overview Canadian U.S. International Fixed-Income All-in-one ETFs Desert island picks

As we said in the overview, the 2019 edition of the All-stars has a new feature we call “Desert Island Picks.” We asked each panelist to suggest a single ETF they’d be comfortable holding for the long run if they were stranded on a desert island and couldn’t reach the mainland to contact their brokerage. Admittedly, we cribbed the idea from Motley Fool but their version involves individual stocks, while ours is focused on much more diversified single ETFs. Not surprisingly, the All-in-One category dominated. I didn’t get to vote myself but personally would have chosen VBAL because it’s more of a classic balanced fund, with 60% stocks to 40% fixed income mix. Fortunately, one of our panelists chose the same fund.

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Which ETF would you hold for the long run if stranded on a desert island

ETF Name	Ticker	Management Fee	MER	# of Holdings	Description
Mark Yamada: Horizons Nasdaq 100 Index ETF	HXQ.U	0.25	0.28	100	Technology a key driver next 20 years and TRI structure minimizes tax
Yves Rebetez: Horizons Robotics and Automation ETF	RBOT	0.68	0.9	35	Robots are subsegment of industrials and ultimately about reaching higher efficiencies
Ioulia Tretiakova: BMO Low Volatility Canadian Equity ETF	ZLB	0.35	0.39	46	Low volatility allows gains to compound more efficiently
Ben Felix: iShares S&P 600 Small Cap Value ETF	IJS: NYSEARCA	0.25	0.25	472	Small cap & value stocks have exposure to priced risks, leading to higher expected returns
Cameron Passmore: iShares Core S&P U.S. Value ETF	IUSV: NASDAQ	0.04	0.04	680	Exposure to US market with significant tilt toward value stocks
Dave Nugent: Vanguard Total World Stock	VT, NYSE Arca	0.07	0.09	8,125	Low cost, globally diversified, all cap in US$
Robb Engen: Vanguard All-Equity ETF Portfolio Fund	VEQT	0.22	N/A	26,995	100% equities, global diversification with a low-cost, one-ticket solution
Alan Fustey: Vanguard Balanced Portfolio ETF	VBAL	0.22	N/A	26,995	Balanced asset allocation combined with global diversification at low cost
Dale Roberts: Vanguard Canadian High Dividend Yield Index ETF	VDY	0.2	0.22	59	Concentrated in the big Canadian banks, a few pipelines and telcos

Alan Fustey: Vanguard Balanced Portfolio ETF (VBAL). VBAL is an ideal product to manage risk through balanced asset allocation combined with global diversification and at a low cost. It is designed for an investor seeking long-term capital growth and moderate income. The internal asset mix rebalancing will maintain an ongoing consistent risk profile. Yves Rebetez: Horizons Robotics and Automation ETF (RBOT). Robots could be seen as subsegment of industrials with emphasis on companies leading on the robotization front, which ultimately is about reaching higher efficiencies. Mark Yamada: Horizons Nasdaq 100 Index ETF (HXQ.U). Technology will be a key driver for the next 20 years and the TRI structure means no tax will be incurred while I’m on that island: no CRA penalties! Unhedged is always better for the long run to avoid costs. Ioulia Tretiakova: BMO Low Volatility Canadian Equity ETF (ZLB). Low volatility allows gains to compound more efficiently (it’s about the arithmetic) and exploits the investing “anomaly” that lower risk leads to higher returns. ZLB offers a better diversified take than others in the space.

Ben Felix: iShares S&P 600 Small Cap Value ETF (IJS: NYSEARCA). Buying an ETF based on what we think is going to do well in the future makes the assumption that the market is wrong. For example, investing in a tech-focused ETF with the expectation of beating the market inherently assumes that the market today has underestimated how well tech will do in the future. I believe markets are right most of the time. The best way to take advantage of a market that is usually right is by taking on risks that the market has priced into stocks. Small cap and value stocks both have exposure to priced risks, leading to higher expected returns. Cameron Passmore: iShares Core S&P U.S. Value ETF (IUSV: NASDAQ). Everyone wants higher returns, but most people try to get them by attempting to predict what is going to perform well in the future. Differences in expected returns are identified by company size (small stocks vs. larger stocks), relative price (value stocks vs. growth stocks), and gross profitability (more profitable stocks vs. less profitable stocks). IUSV offers exposure to the US market with a significant tilt toward value stocks. Adding this exposure to a portfolio increases expected returns and diversification. Dave Nugent: Vanguard Total World Stock (VT, NYSE Arca). Low cost, globally diversified, all cap in US$ … buy, hold and add to it consistently over time and you’ll do just fine. Robb Engen: Vanguard All-Equity ETF Portfolio Fund (VEQT). Many investors in the accumulation stages prefer to push the risk envelope and tilt their portfolios to 100% equities. VEQT provides global diversification with a low-cost, one-ticket solution. The 30% Canadian allocation gives me some pause, but it’s not out of line with most model ETF portfolio weightings and certainly less volatile to the movement of foreign currencies. Dale Roberts: Vanguard Canadian High Dividend Yield Index ETF (VDY). If I can only hold one fund I want Canadian Dollars. I buy my beer in Canadian dollars. This fund is concentrated in the big Canadian banks, a few pipelines and telcos. Many of the Canadian banks have been paying dividends since, well, before Canada was Canada. I’ll take the wide-moat oligopoly thing, thank you very much.

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About Jonathan Chevreau

As MoneySense’s Investing-Editor-at-Large, he is also author of Findependence Day and co-author of Victory Lap Retirement. Reach him at [email protected], where he is the founder of Financial Independence Hub.