If you’re just starting or are looking to switch to a low-medium risk portfolio, a balanced ETF portfolio is worth considering.
Due to the volatility of the stock market, diversifying your portfolio across different assets is one of the smart ways to reduce risk without sacrificing your investment objective.
With different ETF portfolios out there, balanced ETF portfolios are a smart way to get exposure to stocks while minimizing the volatility with some fixed income securities (i.e. bonds).
So if you have a low-medium risk tolerance and want to invest in a low-cost and convenient portfolio, then you should know about the best balanced ETFs in Canada covered in the post.
At the end of this article, you should be able to determine which balanced ETF in Canada is perfect for you.
What is a Balanced ETF?
A balanced ETF is simply a hybrid portfolio consisting of equity and fixed income. Usually, the asset allocation of a balanced ETF portfolio consists of more equities, moderate fixed income, and some short-term cash reserves.
While different balanced ETF portfolios have varying allocations, their common objective is to provide long-term capital growth and income.
Instead of investing all your money in bonds or equity, a balanced ETF portfolio helps you invest in both assets in one place. This not only reduces your investment costs but also lowers your risk.
Whether you are a beginner or expert investor with low-medium risk tolerance, you may find a balanced ETF portfolio ideal depending on your investment goals.
The challenge is that there are different balanced ETF portfolios out there offered by different fund managers. These portfolios vary by their allocations, fees, MERs, returns, dividend yields and distribution frequencies.
Below, we’ll cover the best balanced ETFs in Canada and the factors to consider when narrowing your selection.
Overview of the Best Balanced ETFs in Canada
The table below highlights the current best balanced ETFs in Canada with their varying management fees, MERs, dividend yields, and distribution frequency.
| Balanced ETF | Management Fee | MER |
|---|---|---|
| Vanguard Balanced ETF Portfolio (VBAL) | 0.22% | 0.24% |
| iShares Core Balanced ETF Portfolio (XBAL) | 0.18% | 0.20% |
| BMO Balanced ETF (ZBAL) | 0.18% | 0.20% |
| Horizons Balanced Tri ETF Portfolio (HBAL) | Variable | 0.16% |
| Fidelity All-in-One Balanced ETF Portfolio | Variable | 0.40% |
| BMO Balanced ESG ETF (ZESG) | 0.18% | 0.20% |
| iShares ESG Balanced ETF Portfolio (GBAL) | 0.22% | 0.25% |
Looking at the above table, you can see how the best balanced ETFs in Canada differ. But we’ll take a detailed look at each one below:
1. Vanguard Balanced ETF Portfolio (VBAL)
| Launched | January 25, 2018 |
| Target Asset allocation | 60.55% equities, 39.41% bonds and 0.04% short-term reserves |
| Management fee | 0.22% |
| Management expense ratio | 0.24% |
| Number of underlying holdings | 31,691 |
| Dividend yield | 2.38% |
| Distribution frequency | Quarterly |
| Risk level | Low to medium |
The Vanguard Balanced ETF Portfolio (VBAL) is the balanced ETF portfolio of Vanguard Investments Canada Inc.
Traded on the Toronto Stock Exchange, the portfolio was designed to offer long-term capital growth and a moderate income by investing in equity and fixed income.
As of the time of writing this review, VBAL invests in more than 31,000 individual stocks and bonds that are diversified worldwide.
VBAL has a 3-year average return of +3.67% as of January 31, 20223 which is comparable to the returns of the other balanced ETF portfolios in Canada.
Though the difference is immaterial (0.02%), VBAL has a slightly higher management fee and management expense ratio than similar portfolios in Canada.
Learn more: VBAL Review
| Launched | June 21, 2007 |
| Target Asset allocation | 61.13% equities, 38.51% fixed income and 0.36% cash/derivatives |
| Management fee | 0.18% |
| Management expense ratio | 0.20% |
| Number of underlying holdings | 20,560 |
| Dividend yield | 1.90% |
| Distribution frequency | Quarterly |
| Risk level | Low to medium |
iShares Core Balanced ETF Portfolio (XBAL) is BlackRock’s balanced ETF portfolio that’s also traded on the Toronto Stock Exchange.
This portfolio was also designed to offer long-term capital growth and income appreciation. As of January 31, 2023, it has provided a 3-year average return of 4.15%.
Like VBAL, XBAL assigns a significant portion of its assets to the US and Canadian markets.
With multiple underlying holdings and competitive dividend yield, XBAL is worth considering when comparing the best balanced ETFs in Canada.
Learn more: XBAL vs VBAL
3. BMO Balanced ETF (ZBAL)
| Launched | February 15, 2019 |
| Target Asset allocation | 61.97% equities and 38.08% fixed income |
| Management fee | 0.18% |
| Management expense ratio | 0.20% |
| Dividend yield | 2.61% |
| Distribution frequency | Quarterly |
| Risk level | Low to medium |
BMO Balanced ETF (ZBAL) is another best balanced ETF in Canada that’s traded on the Toronto Stock Exchange.
The ETF was founded in 2019 to offer long-term capital growth and income appreciation by investing in equity and fixed income securities.
Besides a low management fee and MER, ZBAL also distinguishes itself with a competitive dividend yield. As of January 31, 2023, ZBAL has provided a 3.79% 3-year return.
Learn more: ZBAL Review
4. Horizons Balanced Tri ETF Portfolio (HBAL)
| Launched | August 01, 2018 |
| Target Asset allocation | 70% to equities and 30% fixed income |
| Management fee | Varies |
| Management expense ratio | 0.16% (estimated) |
| Dividend yield | 0.03% |
| Distribution frequency | Annually |
| Risk level | Low to medium |
The Horizons Balanced Tri ETF Portfolio (HBAL) is a bit riskier balanced ETF because of its target equity allocation that’s slightly higher than the allocations of other balanced ETFs in Canada
By investing approximately 70% of funds in equities and 30% in fixed income securities, HBAL aims to offer investors long-term capital growth.
With this allocation, HBAL was able to offer a competitive 3-year average return of 4.49% as of January 31, 2023.
If you’re comfortable with the higher allocation to Equities, you can’t make the wrong choice with HBAL due to its low MER and competitive returns.
5. Fidelity All-in-One Balanced ETF (FBAL)
| Launched | January 21, 2021 |
| Target Asset allocation | 59.4% equity, 38.3% fixed income and 2.3% crypto |
| Management fee | Variable |
| Management expense ratio | 0.40% |
| Number of underlying holdings | – |
| Dividend yield | N/A |
| Distribution frequency | Annually |
| Risk level | Low to medium |
If you are looking to invest in a balanced ETF portfolio that holds some cryptocurrencies, the Fidelity All-in-One Balanced ETF Portfolio (FBAL) is currently your only option.
Traded on the NEO Exchange, FBAL seeks to invest in global equity, fixed income and cryptocurrencies in order to provide medium-long-term capital growth.
With FBAL’s 2.3% crypto allocation, it appears to be slightly riskier than the other balanced ETFs in Canada. However, the crypto exposure is small enough that any wide volatility in the crypto market would have little impact on FBAL’s performance.
FBAL is a relatively new ETF so it is difficult to compare its performance. But it has offered a 1-year return of -2.56% as of January 31, 2023.
The major downside of FBAL lies in its higher MER and low dividend yield.
Best ESG Balanced ETFs in Canada
If you’re interested in investing in a value-oriented balanced ETF portfolio, there are balanced ESG ETF portfolios designed for investors like you.
Balanced ESG ETFs provide you exposure to companies that adhere to environmental, social, or governance standards.
With a balanced ESG ETF, you can achieve similar investment objectives as that of a standard balanced ETF portfolio but using different underlying companies.
Below are the two major best balanced ESG ETFs in Canada.
1. BMO Balanced ESG ETF (ZESG)
| Launched | January 16, 2020 |
| Target Asset allocation | 62.49% stock, 37.48% fixed income and 0.03% cash and cash equivalents |
| Management fee | 0.18% |
| Management expense ratio | 0.20% |
| Number of underlying holdings | 7 |
| Dividend yield | 2.72% |
| Distribution frequency | Quarterly |
| Risk level | Low to medium |
The BMO Balanced ESG ETF (ZESG) was launched in 2020 to provide long-term moderate capital appreciation and income.
To achieve its investment objective, ZESG invests in equities, fixed income and cash/cash derivatives like a standard balanced portfolio.
ZESG is weighted towards the Canadian market and has a competitive dividend yield, low management fees and MER.
What also sets ZESG apart is its competitive performance as it has provided a 3-year return of 3.59% as of January 31, 2023.
The major downside of this portfolio lies in its low underlying holdings which limits its exposure.
| Launched | September 2, 2020 |
| Target Asset allocation | 60.90% equity, 38.76% fixed income and 0.34% cash/derivatives |
| Management fee | 0.22% |
| Management expense ratio | 0.25% |
| Number of underlying holdings | 1,508 |
| Dividend yield | 1.50% |
| Distribution frequency | Quarterly |
| Risk level | Low to medium |
iShares ESG Balanced ETF Portfolio is another balanced ESG ETF that’s traded on the Toronto Stock Exchange with the ticker symbol “GBAL”.
Using ESG-oriented investment strategies, GBAL also invests in equity, fixed income and cash/cash derivatives in order to provide capital growth and income for a long-term horizon.
As of January 31, 2023, the portfolio has provided a 1-year return of -4.20% to investors.
In addition, GBAL has a lower dividend yield and higher management fee and MER.
How to Choose the Best Balanced ETFs in Canada
You’re probably looking for a balanced ETF portfolio in order to minimize your risk in the stock market.
You need to consider the following factors when determining which of the above best balanced ETFs in Canada is perfect for you.
- ETF type: Evaluate your investment needs and determine whether to go with a standard balanced ETF portfolio or a value-oriented balanced ETF.
- Costs: Consider the management fees, MER and any underlying fees related to your preferred portfolio. As always, the lower the costs, the better.
- Allocations: Understanding the assets allocation of the ETF will give you an idea of how risky the portfolio will be.
- The number of holdings: The number of the portfolio’s underlying holdings signals how diversified it is. Generally, the higher the underlying ETFs, the wider the exposure and diversification.
- Distribution yield and frequency: Go for a balanced ETF portfolio that offers a competitive dividend with a schedule that suits your situation.
- Returns: Consider the monthly, annual and cumulative performance of your preferred balanced ETF to gain insights into your possible investment returns.
How to Buy a Balanced ETF in Canada
Have you determined your best balanced ETF in Canada? Now is the time to purchase it. There are two major ways you can purchase a balanced ETF in Canada as follows:
1. Self-directed Brokerages
If you have enough knowledge about the stock market and can execute trade independently, a self-directed brokerage could be your best option for buying a balanced ETF.
A self-directed brokerage gives you access to trading your favourite securities yourself. How do you go about it? Follow the steps below:
- Open an account with one of the best discount brokerages in Canada (like Qtrade, Wealthsimple Trade or Questrade).
- Fund your account
- Place an order for your favourite balanced ETF
That’s all!
2. Financial Advisors
You may also be able to buy a balanced ETF portfolio through a financial advisor if you have one.
While it may be relatively expensive to invest through your financial advisor, you can avoid some costly mistakes especially if you’re a beginner investor.
If you don’t have a financial advisor, ask for recommendations from your family members, colleagues or friends.
Balance ETFs Alternatives
Robo-advisors are one of the best alternatives to Balanced ETFs. Instead of worrying about the right ETF portfolio for your situation and then placing the trades and managing the portfolio yourself, a robo-advisor will handle everything for you.
Luckily, there are several top robo-advisors in Canada to choose from including Wealthsimple Invest and Questrade’s Questwealth Portfolios.
Mutual Funds are another alternative, but they’re generally more expensive. For the vast majority of Canadians looking for an hands-off investment portfolio, a robo-advisor is more than enough to meet their needs.
Verdict on the Best Balanced ETFs in Canada
Balanced ETF portfolios give you access to capital growth while minimizing your risk. But like other asset classes, a balanced ETF’s performance depends to a large extent on its allocations, underlying holdings and management.
And this is where the best balanced ETF portfolios come in. With different options to choose from, hopefully, now you can make an informed decision on selecting the perfect balanced ETF portfolio for you.
If you have any other questions or need some clarification, please leave a comment below. And if you liked this review, you’ll probably like our other related posts such as:
