Building a set-and-forget portfolio is a perfect solution for busy investors who rarely, if ever, have time to follow the market. Keeping up with multiple companies in a portfolio can quickly become another task on an already crowded calendar.
That’s why investing in exchange-traded funds (ETFs) can help. It removes most of that research from the equation. Even better, with three different funds, investors can own a broad slice of businesses stretching across Canada, the U.S., and international markets.
That’s truly a set-and-forget portfolio, and there are more than a few options for investors to consider. Here’s a look at three to begin with.
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Start with a portfolio of Canadian stocks
The first option for investors looking to create a set-and-forget portfolio is Vanguard FTSE Canada All Cap Index ETF (TSX: VCN). This ETF provides exposure to Canadian companies of different sizes. That gives investors a wide net of companies to start with.
Included in that mix are some of the best names in Canada. Specifically, the big banks, energy stocks, mining, industrials, retail and even high-tech growth names.
In short, it’s a great cross-section of the major parts of the Canadian market.
Adding to that appeal, the fund also provides a small income through a quarterly distribution. As of the time of writing, the fund offers a yield of 2%. That’s not the highest yield, but it does provide a small boost to long-term growth when opting to reinvest that payout.
While VCN does offer a great foundation for this set-and-forget portfolio, investors can, and should, look outside of Canada’s borders for additional options.
Expand into the U.S. market
That’s where iShares Core S&P U.S. Total Market Index ETF (TSX: XUU) comes in as the second of three set-and-forget portfolio options. As its name suggests, this fund tracks the broader U.S. stock market.
The appeal is straightforward. Investors gain access to U.S. businesses without having to choose individual winners. Even better, as the underlying index changes, the fund adjusts its holdings to follow it.
The fund includes the largest names in the U.S. market, including large tech-sector names, consumer defensive, financial and healthcare leaders, to name just a few.
And like VCN, this fund also offers investors a small quarterly payout. As of the time of writing, XUU offers a yield of 1%.
Finish with some international exposure
The third holding in our set-and-forget portfolio is iShares Core MSCI EAFE IMI Index ETF (TSX: XEF). This fund adds exposure to developed markets outside of Canada and the U.S. and avoids higher-risk emerging markets.
Specifically, the fund includes some of the largest companies in Japan, Europe, and Australia. This means that investors can get exposure to multiple international investments without needing to research and pick individual holdings.
Markets outside North America won’t always move in step with Canadian and U.S. stocks. Holding XEF alongside the other two funds mentioned above helps to diversify the portfolio across a larger range of economies.
As of the time of writing, XEF offers a semi-annual distribution that pays a yield of 2.3%. Like the other funds, it’s not a huge yield but it can help the portfolio compound over longer periods.
Build your set-and-forget portfolio
These ETFs spread your investment across many businesses, but they can still lose value. That same principle applies to economies, which is why the three ETFs mentioned above can offer a diversified approach to investing.
In my opinion, these three ETFs could work well together in a long-term set-and-forget portfolio.
