All-in-one ETFs are one of the easiest ways to invest in Canada.
They don’t require any rebalancing, usually have very low fees (especially compared to mutual funds), and provides ample diversification.
Read this BMO ZBAL review to see if this balanced all-in-one ETF portfolio is right for you.
ETF portfolio
The BMO Balanced ETF Portfolio (ZBAL) is an all-in-one ETF portfolio that can provide you with a relatively balanced exposure to a diverse basket of fixed-income and equity securities.
- One-fund solution with automatic rebalancing.
- Low MER.
- Easy to purchase.
- May be too heavily Canadian weighted
What is BMO ZBAL ETF Portfolio?
BMO ZBAL is an ETF that invests in several underlying ETFs issued by BMO Global Asset Management.
BMO ZBAL came along as one of its three one-ticket solutions to provide investors with further diversity.
ZBAL is the balanced one-ticket ETF portfolio that provide investors with exposure to a broad range of geographically diversified stocks by investing in multiple BMO ETF products.
ZBAL.TO is currently trading at close to $35.68.
ZBAL Key Facts
As of July 15, 2022:
- Ticker Symbol: ZBAL.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $112.81 Million (as of July 26, 2022)
- MER: 0.20%
- Annualized Distribution Yield: 2.78%
- Currency Traded: CAD
- Eligible Accounts: Most registered (TFSA, RRSP, etc) and non-registered available
How do All-In-One Portfolios Work?
All-in-one ETFs are essentially a portfolio of several ETFs designed to make diversified and passive investing easier for investors.
Making an ETF portfolio offers you a lot of diversity in terms of equity and fixed-income securities. However, manually rebalancing your ETF portfolio can be a significant problem, especially if you are new to investing or you do not have the time.
You would have to purchase several ETFs yourself and keep rebalancing them to align with your investment goals and risk tolerance based on each ETF’s performance.
ETF portfolios like BMO ZBAL eliminate the need to manually rebalance your ETF portfolio by doing the task for you. All you need to do to align with your investment goal is remain invested in the ETF portfolio until your investment goals change.
You can find out more details about all-in-one ETFs in my list of the best all-in-one ETFs in Canada.
BMO ZBAL MER and Fees
BMO ZBAL has a Management Expense Ratio (MER) of 0.20% and a Maximum Annual Management Fee of 0.18%. It may be slightly higher than the likes of Horizons HBAL but is lower than many other ETF portfolios.
Considering the charges for mutual fund products being over 2% on average, it is easy to see why many Canadians choose all-in-one ETF portfolios like BMO ZBAL over mutual funds.
BMO ZBAL Dividend Yield
BMO ZBALs dividend yield as of July 15, 2022:
- Annualized Distribution Yield: 2.78%
- Dividend schedule: Quarterly
BMO ZBAL Performance and Returns
BMO ZBAL is a balanced ETF portfolio that veers slightly more aggressively than a conservative portfolio that is geared towards providing investors with long-term capital growth.
Hypothetical growth of $10,000 of BMO ZBAL since inception:
As of June 30, 2022:
| 1 Year | 2 Year | 3 Year | 5 Year | 10 Year | Since Inception | |
|---|---|---|---|---|---|---|
| NAV | -10.51% | 1.47% | 2.79% | – | – | 3.91% |
What does BMO ZBAL Invest in?
BMO ZBAL Asset Allocation
BMO ZBAL is called a balanced portfolio by BMO Global Assets. Typically, a balanced ETF portfolio might provide investors with a 50/50 split between equity and fixed-income securities. However, BMO ZBAL focuses on long-term capital growth with a 60/40 equity to fixed-income security split.
The result is growth and performance that enjoys stability through exposure to fixed-income securities, but it can grow or decline based on the performance of stock markets because of its inclination towards equity securities.
BMO ZBAL Geographic Allocation
BMO Global Asset Management’s BMO ZBAL offers investors exposure to a geographically diversified portfolio of underlying securities. However, ZBAL veers heavily towards Canadian securities.
As of June 30, 2022, 51.73% of its exposure is towards Canadian securities. Its second-most significant exposure is towards the US market, with 28.87% of its funds allocated to US securities. The remaining funds are diversified broadly across several countries in both emerging and developed economies.
BMO ZBAL Top Holdings
As of July 25, 2022, BMO ZBAL’s most significant investments are in the BMO Aggregate Bond Index ETF at 27.89% and the BMO S&P 500 Index ETF at 25.38%. It holds 0.02% of its funds in cash or cash equivalents.
| Weight (%) | Name | Bloomberg Ticker |
|---|---|---|
| 27.89% | BMO AGGREGATE BOND INDEX ETF | ZAG |
| 25.38% | BMO S&P 500 INDEX ETF | ZSP |
| 15.90% | BMO S&P/TSX CAPPED COMPOSITE INDEX ETF | ZCN |
| 12.00% | BMO MSCI EAFE INDEX ETF | ZEA |
| 7.87% | BMO GOVERNMENT BOND INDEX ETF | ZGB |
| 4.78% | BMO MSCI EMERGING MARKETS INDEX ETF | ZEM |
| 3.89% | BMO MID-TERM US IG CORPORATE BOND HEDGED TO CAD INDEX ETF | ZMU |
| 1.61% | BMO S&P US MID CAP INDEX ETF | ZMID |
| 0.69% | BMO S&P US SMALL CAP INDEX ETF | ZSML |
| -0.02% | CASH | – |
BMO ZBAL Sector Weighting
BMO ZBAL diversifies its funds across several industries but focuses more on financial services, technology, and healthcare sectors. As of May 31, 2022, it has allocated 19.69% of its portfolio towards the financial services sector. It has allocated 15.54% of its funds to the technology sector and 10.58% to the industrials sector. Its least significant allocation is towards the real estate sector at 3.13%.
| Sectors | Investment % | Cat % |
|---|---|---|
| Basic Materials | 7.16 | 5.23 |
| Consumer Cyclical | 9.45 | 8.86 |
| Financial Services | 19.69 | 20.21 |
| Real Estate | 3.13 | 3.95 |
| Communication Services | 6.92 | 6.20 |
| Energy | 8.01 | 7.55 |
| Industrials | 10.58 | 12.14 |
| Technology | 15.54 | 14.34 |
| Consumer Defensive | 6.58 | 7.45 |
| Healthcare | 9.44 | 10.58 |
| Utilities | 3.50 | 3.48 |
BMO ZBAL Risk Rating
BMO ZBAL has a low-to-medium risk rating.
BMO ZBAL vs. Other ETFs
BMO ZBAL vs. Vanguard VBAL
Vanguard VBAL is Vanguard’s Balanced All-In-One ETF portfolio that is comparable to BMO ZBAL in terms of what it invests in and its investment goals. VBAL provides investors with greater exposure to US stocks than BMO ZBAL. VBAL has a higher MER of 0.24% compared to ZBAL’s 0.20%.
Read my full Vanguard VBAL Review here to find out more.
BMO ZBAL vs. Horizons HBAL
Horizons HBAL is Horizon’s one-ticket balanced ETF portfolio that is comparable to BMO ZBAL in terms of its investment goals. HBAL tends to take a more aggressive approach to investing, with a 70/30 split between equity and fixed-income securities.
It also offers a significantly lower exposure to Canadian securities than ZBAL. Horizons HBAL offers more substantial growth to its investors but comes with a slightly greater risk to your capital.
Read my full Horizons HBAL Review here to find out more.
Is BMO ZBAL a Good Investment For You?
Balanced ETF portfolios like BMO ZBAL are suitable for investors who have moderate risk tolerance. It means that the ETF portfolio can provide you with capital growth but involves more risk to your capital than a conservative portfolio during turbulent markets.
BMO ZBAL is considered a balanced portfolio but has a slightly higher focus on equity securities.
Its 60/40 split between stocks and bonds means that its performance and returns will more likely follow the growth and decline of the equity market, but its exposure to fixed-income securities will provide a certain measure of stability.
BMO ZBAL could be suitable for you if:
- You are seeking long-term capital growth.
- Can tolerate moderate risk to your capital.
- Do not want to rebalance your ETF portfolio manually.
- Have a long-term investment horizon.
How to Buy BMO ZBAL ETF in Canada
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Conclusion
Many new or passive investors try their hand at investing in a portfolio of stocks and bonds but feel overwhelmed by everything they need to track so they can align the portfolio with their financial goals.
ETFs provide diversified exposure to securities but are also liable to changing economic conditions. Depending on your changing investment goals, you might have to rebalance your ETF portfolio as well manually.
One-ticket solutions like the BMO Balanced ETF Portfolio can eliminate the hassle of tracking individual securities or ETFs by automatically rebalancing the portfolio for you. BMO ZBAL gets a Wealth Awesome stamp of approval for investors with moderate risk tolerance.
