Is This One ETF All You Need?

ETF investing is supposed to be simple, yet many people overcomplicate the process. They do silly things like switch between competing products to save 0.02% in management fees and overanalyze virtually identical ETFs.

This leads to the same kind of analysis paralysis that plagues many investors who go to all the work of picking stocks. It’s the exact opposite of what’s supposed to happen.

Besides, many investors look at the 100+ ETFs available in Canada today and can’t figure out which one to buy.

There’s a simple solution. Investors can gain worldwide exposure via just one ETF, the iShares MSCI World Index ETF (TSX:XWD).

The ETF has two main underlying holdings. The first is an S&P 500 ETF, with a weighting of just under 60% of assets. Since many S&P 500 constituents have assets around the world, that index already serves as a decent way to get exposure to other nations.

The other big position is the MSCI EAFE ETF, which has exposure to nations such as Japan, the United Kingdom, France, Germany, and Canada.

The MSCI World Index has a market cap of $432 million while charging investors a reasonable management expense ratio of 0.47%. It pays a trailing yield of approximately 2.1%, which is distributed annually.

The only downfall of this ETF is the strong U.S. exposure. It’s easy to argue that 60% of assets tracking the S&P 500 is a little much. But other than that, it’s a very decent one fund option for a simple portfolio.