Why Gen Z investors should consider All-in-One ETFs

“Kids have it easy these days,” is a phrase just about everyone hears when they’re growing up. If you are Gen Z, the first generation never to know the world without the internet, you may have a long list of reasons to disagree. For young professionals from this age group, high inflation, soaring home prices, piles of student debt and an uncertain job market may feel anything but “easy.”

Still, as part of Gen Z, you have at least one advantage over your parents when they were at this same stage of their lives: more access to a wider selection of wealth-building tools to help you reach your goals. The All-in-One Exchange-Traded Fund (ETF) is a prime example.

First, in case you're wondering what an exchange-traded fund (ETF) is, it’s a type of investment that can provide exposure to many different securities through a single purchase. ETFs trade on an exchange like a stock and can offer diversification, flexibility and cost efficiency. 

All-in-One ETFs are cost-effective, diversified and liquid investments that hold, in many cases, both stocks and bonds. These types of securities were only introduced to Canada in 2018, but there is now a wide selection of funds to choose from. With low fees, active management, and exposure to alternative asset classes such as cryptocurrency, there’s at least one All-in-One ETF to meet your needs.

These investments won’t just give you the kind of instantly diversified portfolio you need to grow your money, they’re also easy to use.

Accessible diversification with All-in-One ETFs

While All-in-One ETFs can be a great fit for any investor, they are especially well suited to beginners with smaller portfolios. Why? Because they solve one of the biggest challenges for young investors just starting out on their investing journey: diversification.

When you only have a small amount to invest, how do you assemble a well-diversified portfolio that can allow you to navigate the market upswings and downturns? All-in-One funds provide a professionally diversified mix of equities and fixed income investments, offering a simple and convenient way to build a balanced portfolio through a bank or online brokerage account. 

With a single ETF purchase, you gain access to a professionally diversified portfolio. There's no need to select individual investments or manage portfolio rebalancing yourself, making it easy to stay invested as you continue contributing. 

Because these are diversified investments, they may help moderate risk while giving you the opportunity to earn more consistent returns. As a young investor, it can be hard to see how a small investment today will make a difference ten, 20 or even 40 years down the road, but when you consider the power of compounding, a little can go a long way. 

What are the benefits of All-in-One ETFs?

All-in-One ETFs are a great solution for a wide variety of investor types but have several attributes that make them uniquely suited to Gen Z investors:

• Diversification. Regardless of how much you're investing, buying an All-in-One ETF gives you exposure, through several other ETFs, to hundreds of stocks, bonds and other asset classes from around the globe. Such diversification lowers your risk while potentially generating returns greater than a savings accounts can provide.
• Liquidity. There’s no commitment, no wait times and no paperwork regarding buying or selling ETFs. If you need the money that’s in your All-in-One fund any weekday when the stock market is open, you can easily get it. Just be aware of any rules about tax-advantaged registered accounts, such as a Tax-Free Savings Account (TFSA), to which you can’t recontribute what you remove until January of the year after the withdrawal.
• Simplicity.  Whether you're new to investing or simply looking for a more convenient approach, All-in-One ETFs can help simplify the investment process. There’s no need to revisit or rebalance your portfolio year after year. Just find a fund that matches your investing temperament, from conservative to aggressive, keep contributing to your account as savings allow, and watch your wealth grow.

Fidelity All-in-One ETFs aim to outperform

Fidelity Investments offers a unique family of six All-in-One ETFs in Canada, ranging from conservative (FFIX, 100% fixed income, FCIP, 80% fixed income, FCNS, 59% fixed income), balanced (FBAL, 59% equity) and growth (FGRO, 82% equity) to equity (FEQT, 97% equity), all designed to take advantage of market opportunities. Unlike passive model ETF portfolios, Fidelity All-in-One ETFs have some active management.

On the equity side, investors get exposure to style factors that can lead to outperformance. All of them [except Fidelity All-in-One Fixed Income ETF (FFIX)], offer some exposure to crypto, which could provide additional diversification benefits. Indirect management fees range from 0.33% to 0.39%, regardless of the size of your account. Why the higher fees? Passively managed portfolios only track an index. For just a little more, the Gen Z investor can leverage Fidelity's expertise in systematic and active investing to build a protfolio with potential to outperform the broader market instead of one that follows it. With access to strategic multi-asset allocation and consistent portfolio rebalancing, Fidelity All-in-One ETFs give you both performance potential and simplicity.

Active vs. passive asset-allocation ETFs

Not all All-in-One ETFs are built the same. Some use a passive approach that tracks market indexes, while others include active management, where investment professionals make decisions about asset mix, security selection and factor tilts. One of the goals of active management is to deliver returns that differ from, and potentially outperform, a broad market index.

In recent years, the ETF landscape has been shifting. While passive ETFs still account for a larger share of total assets, a growing number of new ETF launches are actively managed. This reflects increasing demand from investors looking for a balance between low-cost investing and the potential for added returns through active decision-making.

Flows into active ETFs have also been rising steadily, with assets growing at a faster pace than passive ETFs from a smaller base. This trend highlights a broader shift: investors are becoming more open to strategies that go beyond simple index tracking, especially in uncertain or rapidly changing markets.

Of course, this comes with a trade-off. Active ETFs typically charge higher fees than passive ones on average, around 0.60% to 0.70% versus roughly 0.05% to 0.15% for passive ETFs. For some investors, the potential for outperformance and the convenience of professional portfolio management may make the added cost worthwhile.

The bottom line

Whether you prefer an active or passive approach, the right All-in-One ETF can help simplify portfolio management while keeping you focused on your long-term goals. As big as the challenges facing young investors may seem, you have the tools to get ahead. Now the next time someone says Gen Z has it easy, there’s one good reason they may be right.