This article provides a comprehensive review of VBAL ETF. It consists of everything you need to know about the ETF including its allocation, returns, dividends, fees, and more.
I also went further to compare VBAL with other balanced ETFs out there to help you make informed choices.
At the end of this VBAL review, you should know whether it’s a perfect fit for your portfolio or not.
Photo credit: Vanguard Canada
Table of Contents
What is VBAL?
VBAL is the all-in-one balanced ETF of Vanguard Investments Canada.
The full name of the ETF is Vanguard Balanced ETF Portfolio and it’s traded with the ticker symbol “VBAL” on the Toronto Stock Exchange.
VBAL is managed and rebalanced quarterly by the Vanguard Equity Index Group, one of the world’s largest fund managers.
Launched in 2018, VBAL seeks to provide long-term capital growth and moderate income by investing in equity and fixed income securities.
As of March 31, 2023, VBAL has 13,666 underlying stocks and 18,334 underlying bonds.
With this and multi-geography and multi-sectoral allocations, the ETF competes significantly with its peers in terms of providing greater diversification.
VBAL ETF Objective
The investment objective of VBAL is to provide Investors with long-term capital growth and moderate income. This is common with other balanced ETFs out there.
To this end, VBAL invests predominantly in equity and fixed income securities. The target allocation is approximately 60% equity and approximately 40% fixed income under normal market conditions.
Based on prevailing market conditions, the portfolio manager may discretionally reconstitute the asset mix and rebalance the portfolio from time to time.
VBAL ETF Allocations
As a multi-asset class ETF, VBAL has varying allocations that help in achieving its investment objective.
In this section, we’re going to look at the assets, sector, and geographic allocations of the ETF to have a better understanding of where it invests its funds.
Assets Allocation
As a balanced portfolio, VBAL reduces risk by investing largely in equity and fixed income securities.
The target assets allocation of the ETF is approximately 60% on equity and 40% on fixed income securities.
However, the following were the actual assets allocation of the fund as of the time of writing:
- 60.41% stocks
- 39.51% bonds
- 0.08% short-term reserves
It’s obvious that VBAL is slightly below its target asset allocation. The difference is negligible even as the portfolio manager rebalances the portfolio regularly to achieve better results.
As with other balanced ETFs, VBAL also allocates a small portfolio of its fund to short-term reserves to further reduce risk.
Sector Allocation
VBAL invests more in large-cap companies and less in small-cap companies. As of the time of writing, the ETF invests 100% of its funds in the following sectors.
| Sector | Allocation |
| Financials | 20.49% |
| Technology | 15.96% |
| Industrials | 13.24% |
| Consumer Discretionary | 11.72% |
| Health Care | 8.51% |
| Energy | 8.49% |
| Basic Materials | 6.38% |
| Consumer Staples | 5.18% |
| Utilities | 3.77% |
| Telecommunications | 3.18% |
| Real Estate | 3.07% |
It’s needless to mention that the ETF invests more in the Financial and Technology sectors and less in Real Estate and Telecommunication.
Geographic Allocation
VBAL allocates funds to over 10 countries to provide a broader diversification to investors. Below were the geographic allocations of the fund as of March 31, 2023:
| Country | Allocation |
| United States of America | 42.80% |
| Canada | 30.10% |
| Japan | 4.50% |
| United Kingdom | 3.00% |
| China | 2.50% |
| France | 2.00% |
| Switzerland | 1.70% |
| Germany | 1.50% |
| Australia | 1.50% |
| Taiwan | 1.30% |
The above 10 countries account for 90.90% of the ETF assets. And as you can see, VBAL invests more in the US than in Canada.
VBAL ETF Holdings
As noted earlier, VBAL invests in 13,666 stocks and 18,334 bonds as of March 31, 2023, which sums up to 32,000 holdings The investment is done indirectly through Vanguard Index ETFs.
Below are the top underlying holdings and their allocations of VBAL as of the time of writing.
| Holding | Allocation |
| Vanguard U.S. Total Market Index ETF | 25.92% |
| Vanguard Canadian Aggregate Bond Index ETF | 23.15% |
| Vanguard FTSE Canada All Cap Index ETF | 18.08% |
| Vanguard FTSE Developed All Cap ex North America Index ETF | 12.08% |
| Vanguard Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged) | 8.37% |
| Vanguard U.S. Aggregate Bond Index ETF (CAD-hedged) | 8.02% |
| Vanguard FTSE Emerging Markets All Cap Index ETF | 4.38% |
From the above table, it can be seen that the ETF allocates most of its funds to US stocks and more to Canadian bonds.
VBAL Performance
VBAL has provided up to 5-year returns since its inception. This is sufficient to judge and compare it with similar portfolios.
Below are the annualized portfolio returns of VBAL from inception (January 25, 2018) to March 31, 2023.
| Period | Return |
| Year-to-date | +4.92% |
| 1-year | −2.30% |
| 3-year | +8.07% |
| 5-year | +4.87% |
| Since inception | +4.39% |
Even though the ETF didn’t set a performance benchmark, a comparative analysis shows that the returns are above average.
As always, you should not rely on past returns alone as they don’t guarantee future returns.
VBAL ETF Dividends
VBAL is a dividend-paying ETF that provides quarterly distribution to investors.
As of March 31, 2023, the ETF has provided a 2.38% dividend and a 1.73% 12-month trailing yield. This is one of the highest yields among other balanced ETFs out there.
But as with returns, past dividends don’t guarantee future yields. Notwithstanding, a past dividend yield can be used to forecast the potential of an ETF.
VBAL Fees
The Vanguard Balanced ETF Portfolio or VBAL comes with a management fee and management expense ratio. These fees are expressed below:
- Management fee: 0.22%
- MER: 0.24%
Compared to mutual funds, VBAL has low fees. However, the fees are among the highest when compared with similar portfolios such as XBAL ZBAL.
Pros and Cons of VBAL
Based on the foregoing review, we can identify the following pros and cons of VBAL:
Pros
- Greater exposure: If you’re looking to diversify your portfolio at a low cost, VBAL provides exposure to multiple assets, companies, sectors, and countries. Its 32,000 underlying holdings constitute one of the highest collections out there.
- Competitive returns: While VBAL doesn’t provide the highest returns, its past performance over the last 5 years is above average.
- Competitive dividend yields: VBAL also had competitive dividend yields over the last distributions.
Cons
- Higher fees: VBAL’s 0.22% management fee and 0.24% MER are higher compared to the fees of other balanced ETFs.
- Limited information: There is no data to determine whether VBAL is eligible for registered plans and investment programs like DRIP, PACC, and SWP.
How to Invest in VBAL ETF
There are two major ways to invest in VBAL: DIY or robo-advisor.
With DIY, you will be in charge of the entire investing process including the selection, investing, and rebalancing of the fund.
This requires you to register with an online brokerage like Qtrade, Wealthsimple Trade, or Questrade.
The advantage of DIY investing is that you will have more control of your investment and save cost. But if you don’t have the knowledge or time to invest yourself, a DIY approach may be costly for you.
In that case, you may want to delegate the task to someone else. The temptation could be a mutual fund or your financial advisor. But these are costly.
Currently, robo-advisors appear to be the cost-effective alternative to DIY investing. A robo-advisor will handle everything on your behalf automatically using the information and funds you provide it with.
The drawback here is that you will have less control of your portfolio and you will be charged management fees by the robo-advisor.
Examples of robo-advisors in Canada include Wealthsimple Invest, Questwealth Portfolios, Justwealth, and Virtualwealth.
How VBAL Compares
In this section, we’re going to look at how VBAL compares with XBAL and ZBAL which are all ranked among the best all-in-one ETFs in Canada.
VBAL vs XBAL vs ZBAL
| Profile | VBAL | XBAL | ZBAL |
| ETF name | Vanguard Balanced ETF Portfolio | iShares Core Balanced ETF | BMO Balanced ETF |
| Date of inception | January 25, 2018 | Jun 21, 2007 | February 15, 2019 |
| Portfolio manager | Vanguard Investments Canada Inc. | BlackRock | BMO Assets Management Inc. |
| Exchange | Toronto Stock Exchange | Toronto Stock Exchange | Toronto Stock Exchange |
| Asset allocation | 60.41% stocks, 39.51% bonds, and 0.80% short-term reserves. | 61.08% equities, 38.58% fixed income, and 0.35% cash/derivatives | 61.44% stocks, 38.58% fixed income, -0.02% cash and cash equivalents |
| Number of underlying holdings | 32,000 | 20677 | 11 |
| Management fee | 0.22% | 0.18% | 0.18% |
| MER | 0.24% | 0.20% | 0.20% |
| Annualized return since inception | +4.39% | 4.79% | 5.51% |
| Dividend yield | 2.38% | 1.49% | 2.60% |
| Dividend distribution frequency | Quarterly | Quarterly | Quarterly |
Data is valid as of March 31, 2023
All the three ETFs seek to provide long-term capital growth and income to investors by investing approximately 60% in stocks and 40% in fixed income.
But from the above table, you can see how the ETFs differ in terms of their actual asset allocations. This partly explains the reason behind their varying portfolio performance.
In all of this, VBAL distinguishes itself with higher underlying holdings that boost diversification.
While VBAL has the lowest annualized return since inception, it had a higher dividend yield in the last distribution than XBAL.
On the other hand, XBAL and ZBAL outshine VBAL by having lower fees and competitive returns since inception (the competitive returns reflect their higher stock allocations).
Learn more about XBAL vs VBAL and ZBAL in this review.
