XBAL and VBAL are among the best all-in-one ETFs in Canada under the balanced allocation category.
These ETFs have stood the test of time in providing competitive yields and returns based on their asset allocations.
But when looking to choose between the two, it’s essential to consider several factors in order to make a perfect choice.
This XBAL vs VBAL comparison provides an in-depth view of the two ETFs with a side-by-side comparison of their key characteristics.
After reading this article, you should be able to decide yourself whether to go with XBAL, VBAL or an alternative.
Let’s get started.
Table of Contents
About XBAL
XBAL is the ticker symbol of the iShares Core Balanced ETF Portfolio that’s traded on the Toronto Stock Exchange.
As a balanced ETF, XBAL was launched in 2007 to provide Investors with long-term capital growth and income by investing in equity and fixed income assets. The current assets allocation of the ETF are highlighted below:
- Stocks: 59.14%
- Bonds: 40.77%
- Short-term reserves: 0.09%
Like other ETFs, XBAL administers its asset allocation through the underlying ETFs of its fund manager (BlackRock Canada). That way, the ETF provides low-cost exposure to equity and fixed income assets.
XBAL distributes dividends quarterly and has administered 1-year to 10-year returns to investors since its inception in 2007.
As of the time of writing, the ETF has 8 holdings, 20362 underlying holdings and CAD 823+ million net assets.
Pros and Cons of XBAL
The following are the main pros and cons of the iShares Core Balanced ETF Portfolio (XBAL).
Pros
- Low fees: With a 0.18% management fee and 0.20% MER, XBAL is one of the low-cost balanced ETFs in Canada.
- Competitive returns: The ETF has provided competitive 1-year to 10-year returns since its inception in 2007.
- Greater diversification: XBAL invests across different assets, sectors and markets to provide investors with greater diversification.
Cons
- Low dividend: If you’re looking for a high-yield-paying balanced ETF, XBAL may not be ideal for you due to its low dividend yields.
- Home bias: The ETF invests more in the Canadian market than other markets. This can limit your portfolio growth potential should the Canadian market underperform.
About VBAL
VBAL is Vanguard Investments Canada’s equivalent of XBAL. VBAL is the ticker used to trade the Vanguard Balanced ETF Portfolio at the Toronto Stock Exchange.
The ETF was launched in 2018 to offer investors long-term capital growth and moderate income. Looking at its previous returns, we can say that VBAL has the potential to achieve its investment objective.
To achieve its investment objective, VBAL also allocates funds primarily on equity and fixed income securities. The current allocations are highlighted below:
- Stocks: 59.14%
- Bonds: 40.77%
- Short-term reserves: 0.09%
Compared to the benchmark allocation of the ETF (approximately 60% on equity and 40% on fixed income), it’s obvious that VBAL is slightly up to its target allocation.
Like XBAL, VBAL seeks to achieve equity and fixed income exposure by investing across the index ETFs of its fund manager (Vanguard Investments Canada).
Based on its index allocations, VBAL is more weighted towards the US market than XBAL. Little wonder the ETF has $2.137 billion in assets under management as of October 28, 2022.
Pros and Cons of VBAL
The following are the main pros and cons of the Vanguard Balanced ETF (VBAL):
Pros
- Broader exposure: The ETF invests in over 31k underlying holdings across different markets. With this, VBAL provides greater exposure than other ETFs in Canada.
- Competitive yields: VBAL’s previous dividend yields are higher than those of similar portfolios in Canada.
Cons
- Lower returns: Compared with the returns of similar balanced ETFs in Canada, VBAL has low returns.
- High fees: With a 0.22% management fee and 0.24% MER, VBAL has above-average fees.
XBAL vs VBAL: Similarities and Differences
With the above overview of XBAL and VBAL, it’s obvious to notice the key similarities and differences between the two ETFs as highlighted under the following table:
| Profile | XBAL | VBAL |
| Portfolio manager | BlackRock | Vanguard Investments Canada Inc. |
| Date of inception | Jun 21, 2007 | January 25, 2018 |
| Exchange | Toronto Stock Exchange | Toronto Stock Exchange |
| # underlying holdings | 20,362 | 31,815 |
| Management fee | 0.18% | 0.22% |
| MER | 0.20% | 0.24% |
| Price to Earnings | 12.94% | 13.1% x |
| Price to Book Ratio | 1.79% | 2.0% x |
| Average returns since inception | 4.27% | +3.35% |
| Dividend yield | 1.87% | 2.29% |
| Distribution frequency | Quarterly | Quarterly |
| Risk level | Low to medium | Low to medium |
With the exception of their trading exchange, dividend distribution frequency and risk level, we can see that XBAL and VBAL differ on various grounds.
By understanding the key differences between the two ETFs, you can easily determine the one that suits your needs.
Let us now take an in-depth view of the key differences between XBAL and VBAL.
XBAL vs VBAL: Allocations
Both XBAL and VBAL are balanced ETFs that seek to provide long-term capital growth and income by investing in equity and fixed income securities.
However, the two ETFs allocate their funds across different assets and sectors in trying to achieve their common investment objective.
The following are the assets allocations and sector allocations of XBAL and VBAL.
- Assets Allocations
As of November 3, 2022, XBAL has the following assets allocation:
- Equity: 60.37%
- Fixed income: 39.52%
- Cash/derivatives: 0.11%
On the other hand, VBAL has the following assets allocation as of January 30, 2023:
- Stocks: 59.14%
- Bonds: 40.77%
- Short-term reserves: 0.09%
Going with the above allocations, it is obvious that XBAL has a slightly higher allocation of equity than VBAL. This explains why most of the XBAL returns outperformed those of VBAL. More on this later.
But even though both ETFs have low-medium risk ratings, XBAL appears to be riskier with its higher asset allocation.
- Sector Allocations
The sector allocations of an ETF also inform its potential. As of the time of writing, XBAL invests more in the following sectors:
- Information Technology
- Financials
- Energy
- Consumer Discretionary
- Industrials
- Communication
- Health Care
- Federal
- Materials
- Consumer Staples
- Treasuries
On the other hand, VBAL had the following sector allocations as of January 30, 2023:
| Sector | Fund |
| Financials | 19.90% |
| Technology | 15.60% |
| Industrials | 12.50% |
| Consumer Discretionary | 11.90% |
| Health Care | 9.00% |
| Energy | 8.70% |
| Basic Materials | 6.30% |
| Consumer Staples | 5.40% |
| Utilities | 4.20% |
| Real Estate | 3.20% |
| Telecommunications | 3.20% |
XBAL vs VBAL: Holdings
To determine the level of an ETF exposure, we must look at its holdings. XBAL and VBAL also differ in terms of their number of holdings.
As of January 30, 2023, XBAL had 8 holdings and 20362 underlying holdings. The top holdings are demonstrated below:
| Holding | Allocation |
| ISHARES CORE S&P TOTAL U.S. STOCK | 27.58% |
| ISHS CORE CAD UNIV BND IDX ETF (CA | 24.64% |
| ISHARES S&P/TSX CAPPED COMPOSITE | 15.65% |
| ISHARES MSCI EAFE IMI INDEX | 14.45% |
| iShares Core CAD ST Cor Bd Index | 6.51% |
| ISHARES US TREASURY BOND ETF | 4.09% |
| ISHARES BROAD USD INVESTMENT G | 3.88% |
| ISHARES CORE MSCI EMERGING MARKETS | 2.97% |
| USD CASH | 0.14% |
| USD/CAD | 0.06% |
On the other hand, VBAL had the following top holdings as of January 30, 2023:
| Holding | Allocation |
| U.S. Total Market Index ETF | 26.08% |
| Canadian Aggregate Bond Index ETF | 24.38% |
| FTSE Canada All Cap Index ETF | 17.75% |
| FTSE Developed All Cap ex North America Index ETF | 10.99% |
| Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged) | 8.45% |
| U.S. Aggregate Bond Index ETF (CAD-hedged) | 7.98% |
| FTSE Emerging Markets All Cap Index ETF | 4.37% |
Based on its underlying holdings, XBAL has a home bias as it invests more in the Canadian market. However, VBAL currently invests 43.9% in the US market and 30.2% in the Canadian market.
That being said, the two ETFs also have different underlying holding allocations. The following are the XBAL aggregate underlying holdings as of January 30, 2023:
| Company | Allocation |
| APPLE INC | 1.53% |
| MICROSOFT CORP | 1.21% |
| ROYAL BANK OF CANADA | 0.98% |
| TORONTO DOMINION | 0.88% |
| ENBRIDGE INC | 0.6% |
| AMAZON COM INC | 0.59% |
| CANADIAN NATIONAL RAILWAY | 0.55% |
| CANADIAN PACIFIC RAILWAY LTD | 0.53% |
| CANADIAN NATURAL RESOURCES LTD | 0.51% |
| BANK OF MONTREAL | 0.47% |
As of January 30, 2023, VBAL has the following aggregate underlying holdings.
| Holding | Allocation |
| Apple Inc. | 1.35% |
| Microsoft Corp. | 1.11% |
| Royal Bank of Canada | 1.07% |
| Toronto-Dominion Bank | 0.95% |
| Enbridge Inc. | 0.64% |
| Amazon.com Inc. | 0.63% |
| Canadian National Railway Co. | 0.56% |
| Canadian Pacific Railway Ltd. | 0.53% |
| Bank of Montreal | 0.50% |
| Bank of Nova Scotia | 0.49% |
XBAL vs VBAL: Dividend Yields
Both XBAL and VBAL pay dividends quarterly. However, their dividend yields differ considerably.
As of September 30, 2022, XBAL had a dividend yield of 1.87% while VBAL had a 2.29% yield. This clearly shows that VBAL had a better dividend yield than XBAL in their last distributions.
So if you’re looking for a high-dividend-paying balanced ETF, you can’t go wrong with VBAL.
XBAL vs VBAL: Returns
The returns of XBAL and VBAL have also exposed another key difference between the two ETFs.
As of December 31, 2022, XBAL had the following average annual returns:
- 1-year: -11.08%
- 3-year: 2.98%
- 5-year: 4.17%
- 10-year: 4.89%
- Since inception: 4.54%
On the other hand, VBAL had the following returns as of December 31, 2022:
- 1-year: −4.21%
- 3-year: +3.69%
- Since inception: +4.51%
Note that VBAL is younger than XBAL as it was launched in 2018. As such, it has not yet provided 5-year and 10-year returns.
Notwithstanding, the previous returns of the two ETFs are sufficient to determine the one with the best rates. In that case, it’s obvious to see that XBAL outperformed VBAL on various grounds.
But that’s not surprising because XBAL allocates more funds in equity than VBAL.
XBAL vs VBAL: Fees
A low-cost ETF portfolio is usually defined as one with a low management fee and MER. The following table indicates how XBAL and VBAL differ in terms of fees:
| Fee | XBAL | VBAL |
| Management fee | 0.18% | 0.22% |
| MER | 0.20% | 0.24% |
All things being equal, you will earn and save more with XBAL because of its low-fee schedule. But you can save even more by trading through a discount brokerage such as Wealthsimple Trade.
With Wealthsimple Trade, you can Trade XBAL, VBAL or any of your favourite securities without worrying about commissions. This will save you a lot in your investment journey.
XBAL vs VBAL: Which to Choose?
If you read the above article carefully, you could have understood by now that XBAL and VBAL are not in the same class even though they have similar asset allocations and investment objectives.
So to make an informed selection, you must understand the key differences between the two balanced ETFs.
The key differences between XBAL and VBAL cut across asset allocations, holdings, returns, dividend yields and fees.
With these, you will find XBAL more suitable if you’re looking for:
- Low-cost balanced ETF
- High returns
- A balanced portfolio with home bias
On the other hand, you will find VBAL more suitable if you’re looking for:
- High-dividend-paying ETF
- Greater diversification
Overall, you can’t go wrong with XBAL or VBAL so long as you make your selection based on your investment needs.
READ ALSO:
XBAL vs VBAL vs ZBAL
| Profile | XBAL | VBAL | ZBAL |
| Portfolio manager | BlackRock | Vanguard Investments Canada Inc. | BMO Assets Management Inc. |
| Date of inception | Jun 21, 2007 | January 25, 2018 | February 15, 2019 |
| Exchange | Toronto Stock Exchange | Toronto Stock Exchange | Toronto Stock Exchange |
| # underlying holdings | 20,362 | 31,815 | 10 |
| Management fee | 0.18% | 0.22% | 0.18% |
| MER | 0.20% | 0.24% | 0.20% |
| Price to Earnings | 12.94% | 13.1% x | 0 |
| Price to Book Ratio | 1.79% | 2.0% x | 0 |
| Average returns since inception | 4.27% | +3.35% | 3.50% |
| Dividend yield | 1.87% | 2.29% | 2.75% |
| Distribution frequency | Quarterly | Quarterly | Quarterly |
| Risk level | Low to medium | Low to medium | Low to medium |
ZBAL is another best balanced ETF in Canada that is younger than XBAL and VBAL. ZBAL is the ticker symbol of the BMO Balanced ETF that is also traded on the Toronto Stock Exchange.
The ETF has the same investment objective as XBAL and VBAL. It also has a low-fee schedule and a home bias allocation as XBAL.
However, ZBAL allocates more funds in equity than XBAL and VBAL. The following are the current allocations of ZBAL:
- Equity: 61.71%
- Fixed income: 38.26%
- Cash and cash equivalents: 0.03%
Despite its higher equity allocation (and the attendant higher risk), ZBAL’s previous returns didn’t outperform most of the past returns of XBAL and VBAL. The previous returns of ZBAL as of October 31, 2022, are highlighted below:
- 1-year: -1.85%
- 2-year: -0.46%
- 3-year: 3.72%
- Since inception: 3.50%
Nevertheless, in terms of dividend yields, ZBAL outshines both XBAL and VBAL as the above table shows.
Learn more: ZBAL Review
The Bottom Line
The bottom line of this comparison is that you can’t go wrong with either XBAL or VBAL. The most important thing is to choose the ETF that suits your needs and risk level.
Although the two ETFs have similar low-medium risk ratings, in reality, they pose different levels of risk due to their equity allocation.
As always, the higher allocation on equity, the higher risk you’re taking. So you shouldn’t select an ETF by just looking at its previous returns.
Understanding the asset allocations, dividend yields, fees, and diversification of the ETF will broaden your judgment.
Hopefully, now you’re more informed about the key differences between XBAL and VBAL including how they compare with ZBAL.
Which are you going with? Let me know in the comment section.
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