Balanced exchange-traded funds are simple all-in-one investments for those willing to pay somewhat more in fees to avoid managing allocations to different funds. We screened the balanced fund categories for those with Gold, Silver, or Bronze Medalist Ratings, meaning our analysts expect them to outperform their category index or median over the long term.
We looked for funds with ratings 100% assigned by our analysts, rather than indirectly or quantitatively assigned. We’ve highlighted the four best balanced ETFs for Canadian investors:
- Vanguard Growth ETF Portfolio VGRO
- Vanguard Balanced ETF Portfolio VBAL
- Vanguard Conservative ETF Portfolio VCNS
- Vanguard Conservative Income ETF Portfolio VCIP
Balanced ETFs from Vanguard
All of the ETFs that passed the screen come from a series of allocation funds from Vanguard, which offers portfolios with different levels of stock and bond allocations. The Vanguard series has five funds: Conservative Income, Conservative, Balanced, Growth, and All-Equity, starting with a 20% stock allocation and rising in increments of 20 percentage points to 100%.
Each fund holds seven Vanguard ETF index funds, except the All-Equity fund, which holds four. The funds each have a management expense ratio of 0.24%, except for the Conservative and Conservative Income funds, which each have a ratio of 0.25%. The All Equity, Growth, and Balanced ETFs are rated Silver, while Conservative and Conservative Income are rated Gold. As it is not a balanced ETF, the C$11.7 billion Vanguard All-Equity ETF VEQT is discussed in our roundup of the best global stock ETFs for Canadian investors.
“Vanguard’s Allocation ETFs deliver a set of compelling global portfolios that are efficiently managed and effectively constructed,” writes Morningstar manager research analyst Michael Dobson. “Multiple groups combine to add value beyond the series’ significant cost advantage.” Here’s a closer look at the best balanced ETFs. A table with their recent performance is at the end of this article.
Vanguard Growth ETF Portfolio
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★★
The C$9 billion Vanguard growth ETF Portfolio has an 80% allocation to stocks and 20% to fixed income.
Out of its equity sleeve, 30% is in Canadian stocks, 45% is in US stocks, and 25% is in stocks from other countries. Its fixed-income allocation is 66% in government bonds, compared with the category average of 34%, and 21% is in corporate bonds, compared with the category average of 34%.
The fund ranks in the top quintile of the global equity balanced fund category for both the three-year and five-year trailing periods, and it is in the 17th percentile for the one-year trailing period.
Vanguard Balanced ETF Portfolio
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
The C$4.8 billion Vanguard Balanced Portfolio ETF represents the traditional 60% stock/40% bond portfolio. The fund’s stock allocation currently skews very slightly higher at 61%, while its allocation to bonds sits at 38%.
The fund’s stock allocation is 45% to US stocks and 30% to Canadian stocks, both within 5 points of the category average. Its bond portfolio skews further from the average, with a 67% allocation to government bonds, compared with 36% for the category average, and 21% to corporate bonds, compared with a 41% category average.
The fund ranks in the top quintile of the global neutral balanced category based on three- and five-year trailing performance and lands in the 13th percentile for one-year trailing returns.
Vanguard Conservative ETF Portfolio
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★
The C$800 million Vanguard Conservative Portfolio is a 60% bond/40% stock fund. It has 44% of its equity holdings in US stocks, 30% in Canadian stocks—both roughly in line with the average for the category.
The fund has 67% of its assets in government bonds, significantly higher than the 35% average for its category. Its 21% allocation to corporate bonds is just over half that of the category average.
The fund’s five-year trailing performance puts it in the 14th percentile of the global fixed income balanced category, while its three-year performance places it in the 7th percentile.
Vanguard Conservative Income ETF Portfolio
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★
With a 20% stock and 80% bond allocation, the C$260 million Vanguard Conservative Income ETF Portfolio is the most conservative, risk-averse name in the series. The equity section of its portfolio is 44% in US stocks and 29% in Canadian stocks, in line with the averages for the category.
The fund has a 67% allocation to government bonds, significantly above the 36% category average and also has a corporate bond allocation of 21%, a bit over half the average for funds in its category.
This is the only fund in its series to underperform its category, ranking in the bottom quartile of the global fixed income balanced category based on both three- and five-year trailing performance. It ranks in the 65th percentile based on one-year trailing performance.
