Wondering if the Vanguard Balanced ETF Portfolio is right for you? Then this VBAL Review is for you.
Investing across different countries, sectors and asset types is an excellent way to diversify your portfolio and reduce volatility.
With asset allocation ETFs like VBAL, you get the benefit of instant diversification with a single buy and at a fraction of the cost of building your own diversified portfolio. But there are several ETFs out there, with varying risk levels so choosing the right one for your situation can be difficult.
VBAL is one of the best balanced ETF portfolios in Canada. It is a low-cost diversified portfolio, with lower risk and exposure to different asset types. But how do you know if the Vanguard Balanced ETF Portfolio (VBAL) is perfect for you?
This VBAL review covers everything you need to know about the all-in-one ETF, its holdings, performance and how it compares to similar asset allocation ETFs.
Let’s get started!
What is VBAL ETF?
VBAL is an all-in-one balanced ETF from Vanguard Canada. The portfolio is built using investments from different sectors, countries, and asset types and designed for investors who seek growth and income over the long term.
Investing in this ETF is an easy way to diversify your portfolio and reduce your investment risk.
The Vanguard Balanced ETF Portfolio (VBAL) allocates 60% of your funds to stocks and 40% to bonds. This helps reduce high volatility and generate stable long-term returns.
VBAL is perfect for you if you have a low-risk profile and are looking for long-term growth objectives.
VBAL Key Features
As of February 25, 2022, the following are some of the key features of Vanguard Balanced ETF (VBAL):
- Date of inception: January 25, 2018
- AUM: $2,2 Billion
- MER: 0.24%
- Management fee: 0.22%
- 12-month yield: 2.01%
- Return on Equity: 11.2%
- Price/Earnings Ratio: 16.7x
- Price/Book Ratio: 1.9x
- Listing currency: CAD
- Eligible accounts: TFSA, RRSP, RESP, RRIF, DPSP and non-reg accounts
What Does VBAL Invest In?
The Vanguard Balanced ETF Portfolio invests primarily in equity and fixed income securities, with an asset allocation of approximately 60% equity and 40% fixed income.
The equity and fixed income allocations have underlying assets across global markets.
VBAL invests in other Vanguard ETFs to achieve its target asset allocations, but not directly in individual companies.
Therefore, VBAL is a “fund of funds” that invests across sectors and geographies, with financial and Technology making up the largest sectors.
VBAL ETF Objective
The investment objective is to seek long-term capital growth and income by investing in underlying funds managed by Vanguard.
VBAL may do so directly or indirectly through investment in one or more exchange-traded funds managed by Vanguard or an affiliate.
As an investor in Vanguard Balanced ETF Portfolio, you can expect your portfolio to be well-diversified across various assets.
Each underlying fund is managed with a long-term growth and income approach to achieve the portfolio’s objective.
Overall, VBAL ETF aims to provide a low-cost diversified portfolio with an appropriate blend of assets.
VBAL ETF Asset Allocation
The following are Vanguard Balanced ETF asset allocations as of January 31, 2022:
- Stocks: 60.55%
- Bonds: 39.41%
- Short-term reserves: 0.04%
The Vanguard Balanced ETF seeks to achieve this asset allocation target by investing in seven underlying Vanguard exchange-traded funds. The underlying ETFs are as follows:
|Vanguard’s ETFs||Allocated Funds|
|Vanguard’s FTSE Emerging Markets All Cap Index ETF||4.50%|
|Vanguard’s U.S. Aggregate Bond Index ETF (CAD-hedged)||7.41%|
|Vanguard’s Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged)||8.78%|
|Vanguard’s FTSE Developed All Cap ex North America Index ETF||11.65%|
|Vanguard’s FTSE Canada All Cap Index ETF||18.47%|
|Vanguard’s Canadian Aggregate Bond Index ETF||23.24%|
|Vanguard’s U.S. Total Market Index ETF||25.95%|
VBAL ETF Market Allocation
Funds in Vanguard All-Equity ETF Portfolio are allocated to various markets across the world. The top market allocations are:
|United States of America||42.9%|
The Top 10 countries make up 90% of VBAL’s fund. The remaining 10% is invested in several other countries around the world.
VBAL Allocation by Sector
VBAL’s portfolio is well-diversified across industries. The following table illustrates the composition of VBAL’s allocation by the industry as of January 31, 2022.
VBAL Top Holdings
VBAL currently invests in more than 30,000 individual stocks and bonds – a big testament to the kind of diversification investors get through all-in-one ETFs and ETFs in general.
But as a market-weighted ETF, a higher percentage of VBAL’s assets under management is allocated to large global companies.
The table below shows the top 10 holdings of VBAL as of January 31, 2022.
|Royal Bank of Canada||1.16%|
|Shopify Inc. Class A||0.77%|
|Bank of Nova Scotia||0.62%|
|Brookfield Asset Management Inc. Class A||0.52%|
|Bank of Montreal||0.52%|
There is a 0.22% management charge on VBAL’s earnings, and the annual Management Expense Ratio (MER) is 0.24%. That is, you’ll pay just $2.4 on every $1,000 invested in VBAL.
With this low fee, investing in VBAL will save you a lot of money compared to buying a mutual fund via your bank or building your own diversified portfolio from scratch.
In addition o the MER charged by VBAL, you may also have to pay additional trading fees when you trade VBAL at your brokerage.
Luckily, Canadians have several options to buy and sell ETFs for free. We’ll cover the best places to buy VBAL later in this review.
Who Should Buy VBAL Stock?
VBAL fits into the investment needs of most investors – whether they’re saving for retirement or shorter term goals.
Specifically, VBAL is for anyone looking to invest in a well-diversified balanced fund that can be maintained in an hands-off manner and held in tax-efficient investment accounts including RRSP, TFSA, RRIF, and non-registered accounts.
Any investor can buy VBAL stock, but it might not be a good option for everyone. VBAL is a better investment for investors:
- Seeking long-term investment returns with some dividends
- Looking for a portfolio that is less risky and aggressive
- Looking for a balanced ETF portfolio that includes both stock and bonds investments
- Who want their portfolios to be rebalanced on an automated basis
Pros and Cons of VBAL
While VBAL is a balanced ETF fund that gives you exposure to diversified assets, you need to know its pros and cons before investing.
- Global diversification
- Lower risk level compared to all-equity ETFs
- Low maintenance and Easier portfolio management
- Low fees compared to high-cost mutual funds
- Immaterial but slightly higher fees compared to other all-in-one ETFs
- Low returns compared to other ETFs (e.g. all equity ETFs like VEQT or XEQT)
How To Buy VBAL in Canada
DIY investing through a commission-free trading platform is the most cost-effective way to buy VBAL in Canada.
If you’re a hands-on investor focussed on long-term investing, you can choose your investments and rebalance them yourself with one of the best online discount brokerages for ETFs. Some of them include Questrade and Wealthsimple Trade.
Both online brokerages allow you to buy ETFs without commission, which means you keep more of your money invested.
Unlike Questrade, Wealthsimple Trade doesn’t charge a commission on selling ETFs and trading stocks.
How to Buy VBAL on Questrade
Questrade does not charge fees for ETF purchases but charges $4.95 – $9.95 for each trade when you sell your ETFs.
If you are an existing client, log into your account. Select “Buy” and then enter the ticker symbol or the name of the VBAL ETF.
If you don’t have an account already, you can sign up here to get a $50 trade rebate. After that, log in to your account and search for the VBAL ETF symbol to make your order.
How to Buy VBAL on Wealthsimple Trade
Wealthsimple Trade is another commission-free website for buying and selling ETFs. It’s easy to open an account and start buying VBAL.
Like Questrade, to purchase VBAL, you’ll first need to open a Wealthsimple Trade account if you don’t have one. Use this link to get a $50 welcome bonus.
Once your account is verified and funded, search for “VBAL” and place an order to buy it.
Is VBAL a Good Investment?
For investors looking for a mix of long-term capital growth and moderate-income over the long term, VBAL may be right for you.
VBAL is a great way to build a long-term portfolio of exchange-traded funds (ETFs) that can stay focused on growth while also providing a reliable stream of income.
With its moderate exposure to shares, this ETF is expected to display more growth potential than corporate bond ETFs.
Because of this, however, returns are also expected to fluctuate more than what we’ve seen with other ETFs.
The fund’s portfolio is built from the underlying Vanguard passive ETFs. The VBAL ETF is also less aggressive and risky.
Therefore, if you’re looking for long-term portfolio growth that is not risky or aggressive, Vanguard Balanced Index ETF (VBAL) might be a good investment for you.
This VBAL review won’t be complete without covering some of its alternatives.
If you decide that VBAL is not right for you or just want to know about some of the other asset allocation ETFs in Canada, the following sections will help you make up your mind.
VBAL vs VGRO
VBAL is Vanguard’s Balanced Portfolio ETF. It consists of other Vanguard ETFs that are self-allocating. VGRO is similarly constructed but is more catered towards growth.
VGRO and VBAL are roughly the same prices, and both have low management fees, and MERs compared to mutual funds.
Like VBAL, VGRO invests in a diversified portfolio of equities and fixed income – but with a different balance of the two.
VGRO is more aggressive; it aims for around 80% equity and 20% fixed income, whereas VBAL aims for approximately 60% equity and 40% fixed income. This means that VGRO will be more volatile than VBAL
VGRO is designed for investors who want to grow the value of their portfolio over the long term and are willing to accept greater short-term volatility to achieve that.
However, while VBAL has a low-risk level, VGRO has a low-to-medium risk level.
READ: VGRO Review
VBAL vs XBAL
XBAL, iShares Core Balanced ETF Portfolio, is another popular balanced all-in-one ETF offering from iShares.
Like VBAL, it also invests 60% in equities and 40% in bonds. In addition, both ETFs share several similarities including asset diversification across countries and sectors.
A little point of differentiation between VBAL and XBAL is in their management fees. XBAL’s management fees and MER are 4 basis points ( or 0.04%) lower than VBAL’s.
The difference isn’t that material, but you save some dollars with XBAL. More importantly, both VBAL and XBAL have comparable performance and returns.
Finally, XBAL is a much smaller ETF portfolio with an AUM that is half of Vanguard’s ETF.
Learn more: XBAL vs VBAL
VBAL vs VEQT
For investors with high risk tolerance, an ETF with 60% allocation to equities like VBAL may not meet their objectives.
And that’s where Vanguard All-Equity Portfolio, VEQT, comes in because it invests 100% in equities . Like VBAL, VEQT is also diversified across different sectors and worldwide.
They also have the same management fees and MER.
As expected, VEQT has better performance, but also higher volatility than VBAL. But if you can deal with the increased volatility and an all-equity portfolio fits into your investment objectives, then VEQT may be right for you.
Learn more: VEQT Review
VBAL vs Robo-Advisors
Though VBAL provides a low-maintenance investing option, you can still go a step further with hands-off investing by signing up with a robo-advisor.
Robo-advisors use technology to automate your investment. They let you choose an ideal investment portfolio and then take care of the entire investing process for you.
To get started, you will first tell the robo-advisor your risk profile and investment goals. The robo-advisor will then invest your money in ETFs that match your risk profile and goals.
Some of the best robo-advisors in Canada are:
FAQs on VBAL Review
VBAL is a good ETF because of its 60% equity and 40% fixed income allocation. Because of that, the portfolio has a low-risk level.
In addition, VBAL diversifies your portfolio across different underlying assets, markets, companies and sectors.
Unlike mutual funds, VBAL has a low management fee of 0.22% and 0.24% MER.
Overall, VBAL is a good ETF portfolio for investors with low-risk profiles looking for long-term capital growth and income.
VBAL is a balanced ETF portfolio that provides broad diversification like index funds. However, it is not an index fund since it does not track a particular index.
Yes. VBAL is Vanguard’s balanced portfolio that invests 60% on equity and 40% on a fixed income in order to long-term capital growth and income.
It’s up to you. The important thing is to hold a portfolio that is well diversified and one that mirrors your risk appetite and financial goals. With asset allocation ETFs like VBAL, XBAL, VEQT and so on, investors only need to buy one ETF.
Like most other ETFs, you can’t convert a Vanguard ETF to a mutual fund because they’re different investment products.
If you want to switch to mutual funds, you need to sell your Vanguard ETF to purchase your favourite mutual fund.
It is recommended that you rebalance your portfolio every three to six months and only if it deviates by more than a set target. For example, if you set a target of 5%, only asset classes that have deviated by more than 5% are rebalanced when the time comes.
According to Vanguard, VBAL is rebalanced at the discretion of the funds sub-advisors.
Conclusion on VBAL Review
VBAL may be your perfect option if you seek to balance your portfolio with a mix of both stock and bond holdings. It is a balanced ETF portfolio that is ideal for investors that want low to medium risk.
If VBAL doesn’t suit your investment profile, kindly consider its alternatives, such as VGRO or other ETF portfolios.
I hope my VBAL review has touched on all of the points you wanted to know about the ETF.
If you have any further questions, feel free to drop them in the comment.
VBAL is a balanced ETF portfolio that is perfect for those with a low-risk profile that want long-term growth.