Best Long Term ETFs for a Strong Investment Portfolio

Building a strong investment portfolio takes time and research, but one strategy is to invest in long-term ETFs. These funds offer a low-cost and diversified way to invest in various asset classes.

For a stable long-term investment, consider the Vanguard Total Stock Market ETF (VTI), which has consistently delivered strong returns over the past decade. This ETF tracks the CRSP US Total Market Index, giving you exposure to the entire US stock market.

Investing in a mix of asset classes can help reduce risk and increase potential returns. A good starting point is to allocate 40% to 60% of your portfolio to stocks, 20% to 40% to bonds, and 10% to 20% to other asset classes, such as real estate or commodities.

The Schwab US Broad Market ETF (SCHB) is another popular long-term ETF that tracks the Dow Jones US Broad Stock Market Index, providing broad exposure to the US stock market.

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Building wealth via ETF investing is a great way to achieve your long-term financial goals. Investing in passive broad market ETFs can be a smart move, as they have extremely low MERs and provide instant diversification.

One of the key benefits of ETFs is that they can be easily purchased with a discount broker like Wealthsimple or Questrade. This is very different from mutual funds, which often have higher fees and less flexibility.

To reduce any confusion when selecting ETFs, focus on equity ETFs, as they are the most straightforward and easy to understand. You can further diversify your portfolio by adding other asset classes or subasset classes, but a portfolio made of core holdings can stand on its own.

Core investments should be broadly diversified, low-cost funds that cover the major asset classes, such as US stocks, foreign stocks, and high-quality bonds. A fund's long-term returns are a good gauge of its potential future performance, so look for funds with 10-year returns around 12 percent annually.

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Here are some of the best long-term ETFs that meet these criteria:

Remember, past results are not an indication of future returns, but winners have a tendency to keep on winning. Avoiding what's caught the market's short-term fancy is important, and investing in a fund with high long-term returns that has done poorly over the last year or so can be a good idea.

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For Canadian investors, there are several excellent options for building wealth through index ETFs. If you're not holding individual stocks, one of the best Canadian equity ETFs is the Vanguard FTSE Canada All Cap Index ETF, VCN.

This ETF holds 185 Canadian stocks, with 80% in large cap, 13% in medium cap, and the rest in small cap. It's a great way to gain broad exposure to the Canadian market.

Here are some top Canadian equity ETFs to consider:

For dividend-focused investors, the iShares S&P/TSX 60 Index ETF, XIU, is a solid choice, holding about 60 holdings.

All-in-One Funds in Canada can be a great option for investors looking for simplicity and diversification. These funds hold a mix of stocks and bonds, making it easier to manage your portfolio.

One of the benefits of all-in-one funds is that they can save you time and headaches by rebalancing for you. This means you can buy one fund, hold it, and add more over time, making it a straightforward investment strategy.

For younger investors, all-in-one funds like VEQT, XEQT, or HGRO are good options. These funds offer long-term growth and are suitable for investors with a higher risk tolerance. If you're not a Canadian resident, HGRO might be a better choice due to its tax efficiency.

If you're not comfortable investing 100% in stocks, you can consider funds like VGRO or XGRO, which hold 80% equities and 20% bonds. These funds are similar and can't go wrong with either one.

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Here are some of the best all-in-one funds in Canada, as recommended by an investor who likes to keep things simple:

Remember, it's essential to choose a fund that fits your risk tolerance and investing goals. By considering your asset allocation and investing timeline, you can make an informed decision and build a diversified portfolio.

Canadian Equity is a great way to build wealth passively, especially if you're not holding individual stocks. For a broad Canadian ETF, Vanguard TFSE Canada All Cap Index ETF (VCN) is a great choice, holding 185 Canadian stocks with 80% in large cap, 13% in medium cap, and the rest in small cap.

The MER (Management Expense Ratio) of VCN is 0.05%, which is slightly lower than XIC and ZCN's 0.06%. However, the difference isn't huge, and a $500,000 portfolio would only pay $50 more by holding XIC or ZCN.

If you're looking for a dividend-focused Canadian equity ETF, iShares S&P/TSX 60 Index ETF (XIU) is a solid choice, holding only about 60 holdings. It's worth noting that XIU's MER is not mentioned in the article section.

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Here are some top Canadian equity ETFs to consider:

US Equity ETFs are a great way to tap into the US market, and there are many options to choose from. The Vanguard S&P 500 Index ETF (VFV) is a top pick, tracking the S&P 500 index and offering a low MER of 0.01%.

Canadian investors may also want to consider the Vanguard US Total Market Index ETF (VUN), which invests in the entire US market and holds over 4,000 stocks. This ETF is ideal for those looking for broad market exposure.

The Schwab US Dividend Equity ETF (SCHD) is another excellent option, offering a dividend yield of 3.3% and a low expense ratio of 0.06%. It tracks the Dow Jones U.S. Dividend 100 Index, which includes 100 high-yielding stocks with a history of dividend payments.

Overall, US equity ETFs offer a convenient and cost-effective way to invest in the US market, and there are many high-quality options to choose from.

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If you're looking to tap into the US equity market, there are many options available. You can consider owning some US equity ETFs, which can provide you with exposure to the US market.

The Vanguard S&P 500 Index ETF (VFV) is a popular choice, as it tracks the S&P 500 index and has a low MER of 0.10%. Another option is the Vanguard US Total Market Index ETF (VUN), which invests in the entire US market and holds over 4,000 stocks.

If you're looking for a more focused approach, you can consider sector-specific ETFs. For example, the SPDR S&P 500 Select Sector ETFs offer exposure to 11 individual sectors, including financials, utilities, and healthcare.

Here are some of the best US equity ETFs to consider:

Keep in mind that tax efficiency is also an important consideration when investing in US equity ETFs. Canadian-listed US equity ETFs are subject to a 15% withholding tax on dividends, which can impact your returns.

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US Small- and Mid-Cap Stocks can be a great way to supplement your domestic stock allocation.

These funds can provide exposure to domestic small- or mid-cap stocks, but they shouldn't be a core piece of your portfolio.

You may already have sufficient exposure to these areas through your large-blend fund.

The real estate ETFs can be helpful long-term diversifiers due to the low correlation between REITs and the stock market.

You can consider adding them to your portfolio to reduce risk and increase potential returns.

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Developed markets, like those in Europe and Japan, offer a way to diversify your portfolio beyond the US. These markets are often considered more stable, but they can be less liquid than the US market.

If you're looking to invest in developed market stocks, there are several ETF options available. The iShares MSCI EAFE ETF (EFA) and the iShares Core MSCI EAFE ETF (IEFA) are two popular choices. They focus on developed markets in Europe, Australasia, and the Far East, excluding Canada and South Korea.

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The Vanguard Developed Markets ETF (VEA) and the Schwab International Equity ETF (SCHF) also offer developed market exposure, but they include Canada and South Korea in their portfolios. This is because FTSE, the index provider used by Vanguard and Schwab, considers South Korea a developed market, whereas MSCI, the index provider used by iShares, does not.

Here are some key differences between these ETFs:

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Consider your investment goals and risk tolerance before choosing an ETF. If you're a trader, the EFA ETF may be a good choice due to its high liquidity. However, if you're a buy-and-hold investor, the IEFA ETF may be a better option due to its lower expense ratio and larger number of holdings.

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Long-term investments in US equity can be a great way to grow your wealth over time. If you're willing to take on some risk, you can expect higher returns, but be aware that it's not without its challenges.

A good starting point is to look at funds with a long-term record of success. According to Example 4, a fund's long-term returns are the best gauge of what it could return in the future, although past results are not an indication of future returns. You can check a fund's 10-year returns to get a clear indication of how it can perform over the long term.

When choosing a fund, consider its core holdings, which should be broadly diversified, low-cost funds that cover the major asset classes. According to Example 6, these core holdings should include US stocks, foreign stocks, and high-quality bonds.

Here are some of the best long-term ETFs from Example 7:

These ETFs have delivered outstanding returns at low cost, making them a great option for long-term investors.

International investments can be a great way to diversify your portfolio and potentially increase returns. Home bias is a real factor to consider for Canadian investors, as the TSX is heavily made up of the financial and energy sectors.

To have proper asset diversification, Canadian investors must consider international equities. Virtually all the research indicates that Canadian investors have a very strong home bias. The US market is significant, but it doesn't contain all the companies in the world.

Some global companies like Toyota, Samsung, BYD, and Meituan are not traded on the US exchanges. Therefore, for diversification purposes, it makes sense to own international equity ETFs. Two of the best international equity ETFs are the Vanguard FTSE All-World ex Canada Index ETF (VXC) and the iShares Core MSCI AC World ex Canada Index ETF (XAW).

These ETFs offer broad international exposure with low MER fees. VXC tracks 11,344 international stocks, while XAW has slightly lower US exposure. Both ETFs are winners in my eyes, and you can't go wrong with either one.

If you're new to ETF investing, consider investing in one of the all-in-one ETFs for a simple and straightforward investment strategy. Alternatively, a combination of Canadian, US, and emerging markets ETFs may be a good idea if you don't mind rebalancing regularly.

For those who own both Canadian and US dividend stocks, owning an international ETF to increase global diversification makes a lot of sense. The Vanguard International Dividend Appreciation ETF (VIGI) is a great option, as it tracks the S&P Global Ex-U.S. Dividend Growers Index and has a dividend yield of 2.0%.

This ETF has roughly 355 holdings and tilts heavily toward large-cap stocks. It's a great choice for those looking for a high-quality, dividend-focused international ETF.

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Bonds can help reduce the risk in your portfolio, which is helpful as your investing timeline gets shorter and your goal shifts from maximizing your potential return to maintaining your accumulated wealth.

Low expenses are an even bigger performance differentiator for safer, low-returning assets like bonds than they are for higher-returning assets like stocks.

If short-term cash needs aren’t a concern, high-quality intermediate-term bond funds are good options for fixed-income exposure.

One ETF in the intermediate core bond category can be enough to fill a relatively small bond allocation.

High-quality municipal-bond ETFs are worth considering for taxable accounts, as they can offer a Gold rating from Morningstar.

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Technology and Healthcare has been a game-changer in the medical field, with advancements in telemedicine and remote monitoring allowing patients to receive care from anywhere.

The use of AI in healthcare has improved diagnosis accuracy, with AI-assisted systems able to analyze medical images and identify potential health issues more quickly and accurately than human doctors.

This has led to better patient outcomes and more efficient use of hospital resources, freeing up doctors to focus on more complex cases.

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Vanguard Technology is a great option for those looking to invest in the tech sector.

The Vanguard Information Technology ETF (VGT) is a popular choice, using a passive investment strategy to track the MSCI US Investable Market Information Technology 25/50 Index.

This ETF includes information technology stocks and has a 1-year return of 35.0%.

Its 10-year returns are also impressive, coming in at 20.2%.

One of the standout features of VGT is its low expense ratio of 0.10%.

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The iShares US Healthcare Providers ETF (IHF) is a solid investment option for those looking to tap into the healthcare industry. It tracks the Dow Jones U.S. Select Health Care Providers Index, which includes companies of all sizes that are owners and operators of hospitals and clinics, health maintenance organizations and rehabilitation and retirement centers.

With a 1-year return of 14.1%, IHF has been a top performer in the healthcare sector. This is a significant increase from the previous year, making it an attractive option for investors.

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One thing to keep in mind is the expense ratio, which is 0.40%. While this may seem high, it's essential to consider the overall performance of the fund when making an investment decision.

Here's a quick comparison of IHF's performance over the past decade:

Overall, IHF is a reliable choice for investors looking to invest in the healthcare industry.

Understanding your asset allocation is key to finding the best ETFs for your portfolio. This means determining the mix of stocks, bonds, cash, and other investments in your portfolio, taking into account your investing timeline, risk tolerance and capacity, and investing goals.

Factors like your risk tolerance and investing goals make your asset-allocation mix unique to you, but Morningstar's Christine Benz recommends using the Morningstar Lifetime Allocation Indexes as a starting point.

A simple diversification strategy is to focus on core holdings that cover the major asset classes: US stocks, foreign stocks, and high-quality bonds. These low-cost funds can stand on their own as a portfolio, reducing the risk of all your investments losing value at the same time.

Here are the core investment asset classes to consider:

Portfolio Construction is a crucial step in creating a well-rounded investment portfolio. A portfolio can be made entirely from simple low-cost ETFs, which are basically mutual funds that are packaged as a security and traded on an exchange.

To build a portfolio, start by determining your asset allocation, which is the mix of stocks, bonds, cash, and other investments in your portfolio. Factors like your investing timeline, risk tolerance and capacity, and investing goals make your “right” asset-allocation mix unique to you.

You can use the Morningstar Lifetime Allocation Indexes as a starting point to determine your asset allocation. Once you have a sense of an appropriate asset-allocation mix, you can think of your investments as building blocks.

Core investments should be broadly diversified, low-cost funds that cover the major asset classes: US stocks, foreign stocks, and high-quality bonds. You can further diversify by adding other asset classes or subasset classes, but a portfolio made of core holdings can stand on its own.

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ETFs can easily increase or decrease their number of shares outstanding, making the price per share and the net asset value of that share nearly identical. The majority of ETFs are passively-managed index funds with fairly low fees.

Here are some simple ETF-only portfolios to consider:

You can also consider a combination of Canadian, US, and emerging markets ETFs, or an all-in-one ETF that covers a broad range of asset classes. For example, the Vanguard All-Equity ETF (VEQT) is a 100% stock ETF that is suitable for long-term growth.

Here are some all-in-one ETFs to consider:

Remember to consider your risk tolerance and investing goals when selecting an all-in-one ETF.

Morningstar uses a five-tier scale to rate funds, with Gold being the highest rating.

The rating is based on an assessment of the fund managers' approach to their investment strategy, the individuals who manage the fund, and the asset manager who offers the fund.

Morningstar's Medalist Rating is a forward-looking measure of their confidence in a fund's ability to beat its peers, after accounting for fees and risk, through a market cycle.

A fund's rating is influenced by factors such as its Process, People, and Parent assessments.

For passively managed funds, the Process Pillar is more important than the People assessment.

Low-cost, passively managed funds are more likely to receive a Gold rating, as they tightly track a reasonable index over a long time frame.

Few niche ETFs receive Gold ratings because they take on too much risk by targeting narrower themes.

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When choosing the best long-term ETFs, it's essential to consider your asset allocation and risk tolerance. A fund's long-term returns are a good gauge of its future potential, and looking at 10-year returns can help filter out short-term market fluctuations.

For a simple and straightforward investment strategy, all-in-one ETFs are a great option. These funds offer broad diversification and can be a core holding in your portfolio. According to Example 1, some of the best all-in-one ETFs in Canada include XEQT, VEQT, and HGRO, which offer 100% stock exposure and long-term growth.

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If you're looking for a more balanced approach, consider funds that hold a mix of equities and bonds. Example 1 suggests that VGRO and XGRO are good options, holding 80% equities and 20% bonds. However, if interest rates continue to rise, it may not be the best time to invest in bonds.

To determine the best ETF for your portfolio, start by understanding your asset allocation. Use the Morningstar Lifetime Allocation Indexes as a starting point, and consider your investing timeline, risk tolerance, and goals. Example 3 recommends using a core-satellite approach, where your core holdings are broadly diversified, low-cost funds that cover major asset classes.

Here are some of the best long-term ETFs, as identified by Example 6:

Remember to consider a fund's recent performance and use dollar-cost averaging to get in if it's running hot. And don't ignore a fund's one-year returns entirely, as they can offer a measure of how attractive a fund's near-term returns are likely to be.

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