Asset allocation ETFs built for Canadians by Canadians

Asset allocation (AA) ETFs have been a helpful addition to the investment world, providing instant diversification, typically at a low cost. If you’re not familiar with them, an AA ETF is an ETF that holds other ETFs, usually providing exposures to different countries and asset classes for you. Typically, they are categorized by risk and provide automatic rebalancing.

For example, the most common options are the following:

Advisors may use AA ETFs as a very efficient way to get instant diversified exposure for even the smallest accounts. We also often see advisors using these for RESPs or as a transition vehicle as they rotate a portfolio.

Though Mackenzie was not the pioneers in popularizing these popular investments, we saw there was room for innovation.

Lower cost

Mackenzie’s suite of AA ETFs are not only the lowest cost options among our biggest competitors, but they have often provided better performance. 

Source: Morningstar Direct as at January 31, 2025. “Since common inception” date range of for MGRW, MBAL and MCON is October 1, 2020 to January 31, 2025; for MEQT, it is December 1, 2023, to January 31, 2025.

Built for Canadians

First things first: we always advise investors to seek tax advice from a tax professional.

The main source of innovation we’ve provided was to create a suite of ETFs that are efficient for the Canadian investor, specifically regarding foreign withholding taxes (FWT). Foreign withholding taxes are something many Canadians have simply grown accustomed to, because of our frequent investments in US stocks. But we shouldn’t be complacent.

When investing in any foreign market, there may be tax withheld on any dividends paid. The impact often goes unnoticed, because distributions to end investors are usually paid net of FWT.

I’ll go out on a limb and assume no one wants to be taxed twice —especially if the first round is paid to a foreign government. Yet this often happens when an investor chooses a foreign investment vehicle to access to foreign markets. This commonly occurs when an investor:

1. Buys a US-listed ETF that holds foreign investments.
2. Buys a Canadian-listed ETF that holds a US-listed ETF (or ETFs), which in turn holds foreign investments.

In both scenarios, it’s possible that FWT may be withheld on distributions paid by the foreign investments to the US-listed ETF — with another layer of FWT withheld on distributions by the US-listed ETF to the Canadian investor.

Buying a Canadian-listed ETF that holds the foreign securities directly can help reduce unnecessary FWT. Keep in mind that this could change based a variety of factors, including the type of account the ETF is held in, the investment type and the foreign jurisdiction. Since every situation is different, you may wish to consult a tax advisor about the tax implications for your specific situation.

As a Canadian company, Mackenzie puts Canadian investors first. In the Mackenzie AA ETFs, our holdings are Canadian-listed and do not hold US-listed ETFs. This can help us limit our clients’ exposure to unexpected FWT.

It is always best to do your homework and look at the underlying holdings of any AA ETF you are considering. If you are not able to figure it out, seek advice from a financial or tax professional.

TIP: If an ETF has only one holding, this could be a good indicator that it holds a US-listed ETF to get its desired exposures.

Here at Mackenzie, we make ETFs for Canadians by Canadians. That includes our robust suite of asset allocation ETFs. We were recently honoured to receive three FundGrade A+® Awards for the Mackenzie Balanced Allocation ETF (MBAL), Mackenzie Conservative Allocation ETF (MCON) and Mackenzie Growth Allocation ETF (MGRW).

To learn more about our suite of asset allocation ETFs, see our Mackenzie Asset Allocation ETF Brochure.

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About the Fundata FundGrade A+ Rating

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

Mackenzie Balanced Allocation ETF (MBAL) was recognized for outstanding fund performance at the 2024 Fundata FundGrade A+ Awards in the Global Neutral Balanced category out of a total of 224 funds.  Performance for the fund for the period ended December 31, 2024 is as follows: 16.72% (1 year), 5.42% (3 years) and 7.88% (since inception- September 2020).

Mackenzie Conservative Allocation ETF (MCON) was recognized for outstanding fund performance at the 2024 Fundata FundGrade A+ Awards in the Global Fixed Income Balanced category out of a total of 126 funds.  Performance for the fund for the period ended December 31, 2024 is as follows: 12.10% (1 year), 3.26% (3 years) and 4.86% (since inception- September 2020).

Mackenzie Growth Allocation ETF (MGRW) was recognized for outstanding fund performance at the 2024 Fundata FundGrade A+ Awards in the Global Equity Balanced category out of a total of 187 funds.  Performance for the fund for the period ended December 31, 2024 is as follows: 21.32% (1 year), 7.59% (3 years) and 10.92% (since inception- September 2020).