The Best Balanced ETFs of January 2024
Best Global Balanced ETF
Cambria Global Asset Allocation ETF (GAA)
Expense Ratio
0.43%
Dividend Yield
3.72%
Avg. Ann. Return Since Inception (Dec. 2014)
4.84%
0.43%
3.72%
4.84%
Why We Picked It
You’d need to look far and wide to uncover a balanced fund featuring as broad a diversification of assets as the Cambria Global Asset Allocation ETF. This actively managed fund owns more than a score of ETFs that span a wide range of geographical regions and asset classes.
GAA is a buy-and-hold option that’s designed to cover the entire investable universe, featuring domestic and international equities, bonds, real estate, commodities and currencies. The portfolio includes both proprietary Cambria ETFs and third-party funds.
The fund has a 45% allocation to stocks, a 45% allocation to bonds, and a 10% allocation to other assets such as commodities, real estate and currencies. It’s periodically rebalanced to maintain this preferred asset mix. Taxes are considered when rebalancing, which is a benefit for those who own GAA in a taxable brokerage account.
Best Multi-Asset Balanced ETF
SPDR SSGA Multi-Asset Real Return ETF (RLY)
Expense Ratio
0.50%
Dividend Yield
3.72%
10-Year Avg. Ann. Return
3.11%
0.50%
3.72%
3.11%
Why We Picked It
The goal of the SPDR SSGA Multi-Asset Real Return ETF is to preserve capital and generate income, ultimately delivering a real return that’s higher than the rate of inflation. This also helped RLY earn a spot on our list of the best ETFs to beat inflation.
RLY is an actively managed ETF that invests in domestic and international inflation-protected securities, real estate and commodities. A pronounced focus on agriculture, energy, and metals and mining companies is designed to perform well during an inflationary climate.
The portfolio holds 12 ETFs, led by a 10% allocation to the SPDR Global Natural Resources ETF (GNR). After natural resources, RLY’s biggest allocations are to the global infrastructure and commodities sectors. Next comes its allocation to inflation hedging securities, mainly Treasury Inflation Protected Securities (TIPS). The tiny remainder includes real estate and cash.
Best Strategy Balanced ETF
WisdomTree U.S. Efficient Core Fund (NTSX)
Expense Ratio
0.20%
Dividend Yield
1.23%
Avg. Ann. Return Since Inception (Aug. 2018)
9.10%
0.20%
1.23%
9.10%
Why We Picked It
Formerly known as the 90/60 U.S. Balanced ETF, the WisdomTree U.S. Efficient Core Fund pursues a different strategy than other entries on our list. NTSX is not a fund-of-funds, opting instead to invest in individual large-cap stocks and U.S. Treasury futures contracts.
WisdomTree has chosen to invest in fixed income futures since they have a lower correlation with stocks than bonds. This approach offers the benefits of capital growth plus income and lower portfolio volatility.
Currently, NTSX has a pretty conservative asset allocation of about 60% treasury futures of varying maturities and 40% large-cap stocks. But the fund has a variable asset allocation, and this ratio of stocks to bonds could change, depending on market conditions.
Best Active Balanced ETF
Pacer WealthShield ETF (PWS)
Expense Ratio
0.60%
Dividend Yield
2.25%
Avg. Ann. Return Since Inception (Dec. 2017)
2.20%
0.60%
2.25%
2.20%
Why We Picked It
The Pacer WealthShield ETF employs a rules-based strategy to invest in high-yield corporate bonds, U.S. Treasury securities and U.S. stocks.
The fund’s approach is to identify and invest in the strongest equity sectors of the moment, together with the highest yielding corporate and treasury fixed income securities. PWS’s three-year average annual return has easily outperformed the 20-year Treasury. Its current dividend yield beats the S&P 500 Index’s, measured by the Vanguard 500 Index Fund (VFIAX), a hugely popular proxy for the benchmark. Just remember that past performance is no guarantee of future returns.
*All data sourced from Morningstar Direct, current as of January 8, 2024, unless noted otherwise.
Methodology
Our search for the best balanced ETFs started with an initial list of roughly 50 funds. We screened out small funds and those with fees greater than 0.70% AUM, and any with a negative Morningstar rating. In addition, we eliminated funds launched within the prior three years, without a sufficient track record of management excellence to support inclusion.
This resulted in a final list of 22 balanced ETFs. From this list we selected several passively managed fixed versus equity portfolios with risk levels for conservative through aggressive investors.
Several funds include global diversification, while others are domestically focused. We added one alternative asset class balanced ETF, RLY, which is less correlated with a typical stock and bond portfolio.
Finally we selected three actively managed funds. Investors will find both diversifiers for a traditional stock and bond portfolio and several ETFs to reduce risk and correlation with traditional stock-bond portfolios.
What Is a Balanced Fund?
A balanced ETF—also known as an asset allocation ETF—is a fund of funds that owns two or more different types of assets. Most commonly they hold a selection of stock and bond funds, with fixed allocations to each asset class.
A conservative balanced fund might allocate 35% to bond ETFs and 65% to stock ETFs, for example. Some may also invest in other asset classes or deploy a variable allocation that changes over time.
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Balanced ETFs
A balanced ETF, also known as an asset allocation ETF, is a fund that owns two or more different types of assets, typically stocks and bonds. These funds aim to provide investors with a diversified portfolio by allocating fixed percentages to each asset class. The specific allocation may vary depending on the fund's investment strategy and risk profile. Some balanced ETFs may also invest in other asset classes or adjust their allocation over time based on market conditions.
Cambria Global Asset Allocation ETF (GAA)
The Cambria Global Asset Allocation ETF (GAA) is an actively managed balanced fund that offers broad diversification across various asset classes and geographical regions. It aims to cover the entire investable universe by investing in domestic and international equities, bonds, real estate, commodities, and currencies. GAA holds a portfolio of more than 20 ETFs, including both proprietary Cambria ETFs and third-party funds. The fund has a 45% allocation to stocks, a 45% allocation to bonds, and a 10% allocation to other assets such as commodities, real estate, and currencies. It is periodically rebalanced to maintain this preferred asset mix.
SPDR SSGA Multi-Asset Real Return ETF (RLY)
The SPDR SSGA Multi-Asset Real Return ETF (RLY) is an actively managed balanced fund that aims to preserve capital, generate income, and deliver a real return higher than the rate of inflation. RLY invests in domestic and international inflation-protected securities, real estate, and commodities. It has a pronounced focus on agriculture, energy, metals and mining companies, which are expected to perform well during an inflationary climate. The portfolio holds 12 ETFs, with a 10% allocation to the SPDR Global Natural Resources ETF (GNR) and significant allocations to global infrastructure and commodities sectors. RLY also includes inflation hedging securities, mainly Treasury Inflation Protected Securities (TIPS), as well as real estate and cash.
WisdomTree U.S. Efficient Core Fund (NTSX)
Formerly known as the 90/60 U.S. Balanced ETF, the WisdomTree U.S. Efficient Core Fund (NTSX) pursues a different strategy compared to other balanced ETFs. NTSX is not a fund-of-funds; instead, it invests in individual large-cap stocks and U.S. Treasury futures contracts. WisdomTree has chosen to invest in fixed income futures because they have a lower correlation with stocks than bonds, offering the benefits of capital growth, income, and lower portfolio volatility. Currently, NTSX has a conservative asset allocation of about 60% treasury futures of varying maturities and 40% large-cap stocks. However, the fund's asset allocation can change depending on market conditions.
Pacer WealthShield ETF (PWS)
The Pacer WealthShield ETF (PWS) is an actively managed balanced fund that employs a rules-based strategy to invest in high-yield corporate bonds, U.S. Treasury securities, and U.S. stocks. The fund aims to identify and invest in the strongest equity sectors of the moment, along with the highest-yielding corporate and treasury fixed-income securities. PWS has outperformed the 20-year Treasury in terms of average annual return over the past three years. It also offers a dividend yield that beats the S&P 500 Index, as measured by the Vanguard 500 Index Fund (VFIAX).
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