The One Fund Portfolio is Here!

It has been a long time in the making that an ETF product would be created to match the balanced index mutual fund. Vanguard Funds has finally provided investors with an alternative as of 25 Jan 2018.

If you are looking for simple and despise picking individual dividend stocks then these funds deserve your attention. Diversification and the efficient market theory play a big part into why Vanguard designed these funds.

You have to keep in mind that this is a product and not a replacement for your portfolio. Investing is first and foremost a process, I know I've been trying to get it right for over 30 years.

Continue to save, not do dumb shit with your money and buy what you know.

Meet The New Kids

Vanguard has created 3 new funds for investors. VCNS - Vanguard Conservative ETF Portfolio, 40% stocks and 60% bonds. VBAL - Vanguard Balanced ETF Portfolio, 40% bonds and 60% stocks. VGRO - Vanguard Growth ETF Portfolio, 30% bonds and 70% stocks.
These new kids have been welcomed with open arms by investors and scooped up in droves. Investor have been starving for a one fund solution for decades. Let's see what's here.

Popping The Hood

They all hold 4 equity ETFs and 3 on the bond side. I encourage you to google the website and check out the exact components on your own.

Basically Vanguard has decided to use it's core asset classes with cap weighted indexes and a traditional long term asset mix. Nothing fancy or sexy products here. You won't find any high yield products or REITs. That just adds cost and Vanguard has decide to stick to the basics so they could charge a measly 0.22 % for all these funds. That's outstanding!

You get a breakdown of VCN,VUN,VIU and VEE on the equity side. This covers the whole world. The bond side is comprised of, VAB, VAU and VBG. This is a great way to get access to U.S. and International Bonds that you wouldn't try and purchase on your own. Well, I wouldn't.

What's The Appeal?

• your whole portfolio in a single fund
• no more decisions on where to re-balance every year
• you are more likely to hold and focus on the long term
• cheaper than mutual funds

What to Watch Out For

• cost to trade is usually $10 a trade
• have to make a trade every time you want to add money
• always wondering and waiting for the right time to add money
• no need to switch if what you have works for you

Up until now the new kid on the block have been robo-advisers. You are paying a fee to own the funds and pay a fee to your robo guy/gal. They take care of the rebalancing problem for you. With the one fund solution this takes care of those problems and cheaper.

The main advantage for index funds like those offered by Tangerine or TD e-series funds is that you can contribute monthly with no extra trading fees like the ETFs from Vanguard. They cost a little more but they have more flexibility. 

The cheapest balanced fund I know and one of the top ten best is the Mawer Balanced Fund MAW104. It costs 0.92% a year to own.

As an example if you owned a 100K portfolio of VBAL your yearly cost would be a paltry $240 per year subtracted from your account monthly. So at the end of the month Vanguard would suck out $20. That's pretty cheap to be diversified, balanced and globally invested in stocks and bonds.

You ultimately have to decide whether the one fund solution is for you. I am going to give this a serious look for my wife's RRSP and her LIRA. More on what I decide later.

Do you think this is something you would think of buying?

Related Post: The 60/40 Balanced Portfolio - Is It Right For You?

Recommended Reading: The Essential Retirement Guide