Investing, Stock Market

XBAL ETF Review 2023: iShares Core Balanced ETF

XBAL ETF is one of the top-rated balanced ETFs in Canada that stands out on various fronts. 

In this XBAL review, you will learn what the ETF entails — ranging from its objective, assets allocation, holdings, performance, and dividend yield. 

You will also learn about XBAL fees, how the ETF compares, and how to buy it.

By knowing the pros and cons of XBAL, you should be able to decide if the ETF is for you or not.

Photo credit: Tima Miroshnichenko

What is XBAL ETF?

XBAL is the balanced ETF portfolio of iShares that was launched on June 21, 2007. The full name of the ETF is “iShares Core Balanced ETF Portfolio” and it’s traded with the ticker “XBAL” on the Toronto Stock Exchange.

The aim of launching XBAL is to provide long-term capital growth and income to investors through equity and fixed income securities.

As of April 20, 2023, XBAL had $967,408,176 net assets and 20677 underlying holdings. 

XBAL invests across different countries and sectors to provide broader diversification to investors at a low price. 

The ETF is managed by BlackRock Canada and it has competitive fees and returns compared to similar balanced ETFs. 

Read on to learn more about the iShares Core Balanced ETF Portfolio (XBAL).

XBAL Objective 

The investment objective of XBAL is to provide long-term capital growth and income by allocating funds to equity and fixed income securities through BlackRock or affiliate ETFs. 

To achieve its investment objective, the portfolio manager (BlackRock) rebalances the fund and reconstructs the allocation in line with market realities.

Based on the past returns of XBAL, it can be argued that the ETF has made significant efforts in achieving its investment objective.

XBAL Assets Allocation 

XBAL allocates funds to multiple assets to minimize risk and achieve its objective. While the ETF seeks to invest in equity and fixed income securities on achieving its objective, it sometimes invests in cash and derivatives.

This is reflected in the April 19, 2023 assets allocation of the ETF as follows: 

  • 61.08% stocks
  • 38.58% bonds
  • 0.35% cash and/or derivatives

The above assets allocation is slightly similar to the assets allocation of other balanced ETF portfolios.

XBAL Holdings 

As of April 19, 2023, XBAL has 8 holdings and 20677 underlying holdings.

However, below are the top 10 holdings of the ETF as of the time of writing this review: 

Holding Ticker Symbol Allocation 
ISHARES CORE S&P TOTAL U.S. STOCKITOT27.45%
ISHS CORE CAD UNIV BND IDX ETF (CAXBB24.68%
ISHARES MSCI EAFE IMI INDEXXEF15.44%
ISHARES S&P/TSX CAPPED COMPOSITEXIC15.33%
iShares Core CAD ST Cor Bd IndexXSH6.18%
ISHARES US TREASURY BOND ETFGOVT3.86%
ISHARES BROAD USD INVESTMENT GUSIG3.86%
ISHARES CORE MSCI EMERGING MARKETSIEMG2.86%
USD CASHUSD0.24%
USD/CADUSD0.05%

The above 10 holdings constitute 99.95% of the fund assets. From the above table, we can see that XBAL invests more in US stocks and more in Canadian bonds.

XBAL Performance  

Performance is the key factor you have to consider if you want to make an informed ETF selection.

Even though the past performance of an ETF doesn’t guarantee future returns, it signals the potential of the ETF.

XBAL has been in existence for over a decade and we have sufficient data to judge its performance. 

As of March 31, 2023, the following were the average annual return of the ETF since inception.

PeriodReturn 
1-year-1.34%
3-year8.44%
5-year5.68%
10-year5.06%
Since inception (June 21, 2007)4.79%

XBAL ETF Dividends 

XBAL distributes dividends quarterly with the last dividend being 1.49% (as of Apr 19, 2023). This translates to $0.10 per share as of Mar 16, 2023.

The XBAL’s last dividend distribution is low compared with the dividend you will get with an individual stock like the RBC stock (RI).

But because it’s an ETF that is cheaper than individual stocks, you can easily buy many ETF shares and gain more dividends.

That being said, the last dividend of XBAL is also among the lowest when compared with the dividends of similar portfolios.

XBAL ETF Fees 

The two fees that come with XBAL are management fee and management expense ratio (MER). These are the common fees with ETFs.

But XBAL has a relatively low fee schedule by charging a 0.18% management fee and a 0.20% MER annually.

The management fee is paid to BlackRock for acting as a trustee and fund manager. 

As the portfolio manager, BlackRock is responsible for monitoring and rebalancing the fund in order to maintain its asset class targets.

Pros and Cons of XBAL ETF

Below are the main pros and cons of XBAL based on the above review: 

Pros

  • Low fees: XBAL management fee and MER are relatively low compared to the fees of similar ETFs and mutual funds.
  • Competitive returns: XBAL returns since inception are among the best compared to the returns of other balanced ETFs.
  • Broader diversification: XBAL provides low-cost diversification to multiple assets, companies, sectors, and geographies.
  • Eligibility: XBAL is eligible for registered plans, DRIP, SWP, and PACC

Cons 

  • Low dividend yield: XBAL has a history of providing one of the lowest dividend yields among balanced ETFs in Canada.

How to Buy XBAL ETF

The current price of XBAL is $25.60. This is way cheaper than the price of an individual stock. For example, RBC stock (RY) is priced at $134.64 (all data as of April 21, 2023).

So how do you buy XBAL ETF? It depends on your investment experience and time commitment.

If you’ve sufficient investing knowledge and have the time to handle the entire process, you can buy the XBAL ETF yourself using one of the best online discount brokerages in Canada such as:

Signing Up for XBAL ETF

When you sign-up with any of the above brokerages, you can fund your account and start trading any security of your choice including XBAL.

By investing yourself, you will save on management fees and have more control of your investment.

What if you’re just getting started or don’t have the time to invest yourself? That’s where a robo-advisor comes in. 

Before now, mutual funds and financial advisors were the main alternatives to DIY or automated investing.

With the coming of robo-advisors, you can now have a robot invest on your behalf automatically — minimizing errors and risk.

Some of the best robo-advisors in Canada to consider include: 

Here’s how a robo-advisor works: You describe your personal situation, risk tolerance, and investment objective and provide funds to the robo-advisor. In turn, the robo-advisor matches you with a predesigned portfolio of low-cost and diversified ETF portfolios. 

With this strategy, a robo-advisor saves you the stress of selecting security, investing, and rebalancing your portfolio.

The major drawback of robo-advisors is that they charge management fees to cover the cost of handling the investment on your behalf. The fee is usually higher for robo-advisors that use an active strategy.

Irrespective of the drawback, a robo-advisor could be the most efficient way for you to invest in a balanced ETF portfolio like XBAL.

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How XBAL Compares

XBAL, VBAL, and ZBAL are some of the best all-in-one ETFs in Canada. As I end this review, it’s essential to compare the three ETFs to understand how XBAL competes.

XBAL vs VBAL vs ZBAL 

The following table presents some of the characteristics of the three ETFs as of March 31, 2023.

ETF Characteristics XBALVBALZBAL
ETF nameiShares Core Balanced ETF Vanguard Balanced ETF Portfolio BMO Balanced ETF  
Portfolio managerBlackRockVanguard Investments Canada Inc.BMO Assets Management Inc.
ExchangeToronto Stock ExchangeToronto Stock ExchangeToronto Stock Exchange
Inception dateJune 21, 2007January 25, 2018February 15, 2019
Asset allocation 61.08% equities, 38.58% fixed income, and 0.35% cash/derivatives60.41% stocks, 39.51% bonds, and 0.80% short-term reserves.61.44% stocks, 38.58% fixed income, -0.02% cash and cash equivalents 
# of underlying holdings2067732,00011
Management fee0.18%0.22%0.18%
MER0.20%0.24%0.20%
Annualized return since inception 4.79%+4.39%5.51%
Dividend yield1.49%2.38%2.60%
Distribution frequencyQuarterlyQuarterlyQuarterly

There are three key takeaways we can draw from the above table:

  • All the three ETFs invest more in stocks, fixed income, and less on cash/equivalents
  • XBAL and ZBAL have the same fee schedule that’s relatively lower than that of VBAL
  • ZBAL has the highest annualized return since inception followed by XBAL
  • XBAL has the lowest dividend yield 
  • VBAL has the highest underlying holdings followed by XBAL

The bottom line is that you can’t go wrong with any of the ETFs depending on your preferences. 

For a detailed comparison of XBAL vs VBAL, check out our comprehensive article. You should also check out our ZBAL review to learn more about the ETF.

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About John Adebisi

John Adebisi is a CPA, FCCA and MBA holder with a Bachelor's degree in Accounting & Finance. He has over a decade of experience in writing personal and business finance content for audiences across North America, Europe, the UK and Africa. In addition to his writing experience, he also has a strong background in financial research and analysis, giving him a unique perspective of the financial markets. John derives pleasure in helping people make smart financial decisions, and he believes that knowledge and experience can be valuable resources for anyone who wants to learn how to manage their money.

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