Are you an investor seeking exposure to a basket of securities without manually rebalancing your portfolio to align with your goals without too much risk to your capital?
Exchange-Traded Funds provide you with a low-cost opportunity to invest in a basket of securities aligned with particular investment goals.
All-in-one ETF portfolios are ETFs that consist of several underlying ETFs that offer further diversification to investors.
Balanced portfolios like the Horizons Balanced TRI ETF Portfolio (HBAL) are suitable for investors with moderate risk tolerance, provide you with capital preservation, and relatively lower volatility in a turbulent market. My Horizons HBAL review will help you decide whether this low-cost solution is the right fit for your investment portfolio.
Pros of Horizons HBAL
- Low MER.
- Easy to purchase.
- One-fund-solution with automatic rebalancing.
Cons of Horizons HBAL
- Asset allocation is geared heavily towards equity securities.
Table of Contents
What is Horizons HBAL ETF Portfolio?
Horizons HBAL is an ETF with several underlying ETFs issued by Horizons. An ETF portfolio is effectively designed to provide investors with long-term capital growth with a slightly growth-centric but safe asset allocation.
HBAL invests primarily in Horizons’ Total Return Index ETFs. Balanced twice a year to ensure that it represents a consistent level of balanced risk, HBAL uses currency forwards to hedge its non-Canadian dollar currency exposure to the Canadian dollar at all times.
Compared to most of its closest peers, Horizons HBAL is a lower-cost one-ticket solution for investors seeking long-term capital growth with a “new balanced” 70/30 asset allocation split.
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.
Before all-in-one ETFs came around, it was much more difficult to make an ETF portfolio. You would have to purchase several ETFs yourself and rebalance them to align with your investment goals and risk tolerance based on each ETF’s performance.
One-ticket solutions like Horizons HBAL 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 to 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.
What does Horizons HBAL Invest in?
Horizons HBAL is considered to be a balanced all-in-one ETF portfolio that invests in ETFs distributed by Horizons. The ETF portfolio targets a new balance between equity and fixed-income securities with a 70% allocation towards stocks and 30% allocation towards bonds.
In terms of geographical diversification, it allocates 48.5% of its funds to investments centered towards the US, 31.5% towards Canadian securities, and 20% towards various global securities, providing investors with an MER lower than other traditional Canadian balanced ETF portfolios like Vanguard VBAL and iShares XBAL.
Horizons HBAL Asset Allocation
Typically, balanced all-in-one ETF portfolios provide investors with a balanced exposure to fixed-income to equity securities. Horizons HBAL has an asset allocation that targets a 70/30 split between equity and fixed-income securities.
A traditional balanced ETF portfolio might go for an even 50/50 split or a 60/40 split between equity and fixed-income securities to significantly reduce the risk from turbulent markets. However, HBAL focuses 70% of its allocation on equity securities to provide its investors with greater exposure to stocks for more substantial growth.
Horizons HBAL Top Holdings
Horizons HBAL is a collection of various ETFs managed by Horizons.
HBAL invests primarily in Horizons’ Total Return Index ETFs, focusing on a wide variety of ETFs offered and managed by Horizons itself. As of January 12, 2021, HBAL’s top holding is the Horizons US Large Cap Index ETF comprising 22.69% of the entire portfolio. The Horizons Canadian Select Universe Bond ETF comes in second with a 19.27% asset allocation, and the Horizons NASDAQ-100 Index ETF is the portfolio’s third most significant ETF at 16.5%.
Horizons HBAL Sector Weighting
As of January 13, 2021, Horizons HBAL’s sector weighting veers heavily towards the technology sector, accounting for 24.40% of all its holdings. Its allocation toward the financial services sector comes in second at 13.61%. It has allocated 12.41% of its funds to the communication services sector. Horizons HBAL’s least significant investment is in the real estate sector at 1.99%.
Horizons HBAL MER and Fees
Horizons HBAL has a Management Expense Ratio (MER) that is significantly low at 0.16%.
Considering the charges for mutual fund products being over 2% on average, it is easy to see why many Canadians are choosing all-in-one ETF portfolios like Horizons HBAL over mutual funds. HBAL’s low MER also makes it significantly more affordable than most of its closest peers offered by other providers.
Horizons HBAL Performance and Returns
Horizons HBAL has been around since August 1, 2018. In almost three years of its inception, the ETF portfolio has provided its investors with respectable capital growth. The ETF portfolio exhibited a decline during the recent bear market between February and March 2020. However, it quickly bounced back to higher valuations with the stock market recovery.
Due to its relatively short time span since inception, we are yet to see the long-term performance of the one-ticket solution provided by Horizons in terms of its long-term capital growth.
Horizons HBAL vs. Other ETFs
Horizons HBAL vs. Vanguard VBAL
Vanguard VBAL is Vanguard’s Balanced All-In-One ETF portfolio that is comparable to Horizons HBAL in terms of what it invests in and its investment goals. VBAL provides investors with lower exposure to US stocks than Horizons HBAL. VBAL has a higher MER of 0.25%. Read my full Vanguard VBAL Review here to find out more.
Horizons HBAL vs. iShares XAW
iShares XAW is an ETF portfolio offered by BlackRock. Unlike Horizons HBAL, XAW is an ETF that invests primarily in equity securities. Considering its exposure to an all-equity portfolio, iShares XAW is more prone to volatility in turbulent market conditions. If you are alright with the significant risks that come with investing in an all-equity portfolio, you can consider iShares XAW for the potential rewards in a booming market.
Is Horizons HBAL a Good Investment For You?
Horizons HBAL is still a relatively new ETF portfolio because it was launched on August 1, 2018. However, it has shown promise in the time it has been around when it comes to providing its investors with capital growth.
Balanced portfolios like Horizons HBAL are suitable for investors with a low to moderate risk tolerance. It can provide you with long-term capital growth through its 70/30 equity to fixed-income split that can reduce risk to your capital.
The ETF portfolio can be an excellent pick for your portfolio if you seek gradual capital growth, or you are new to investing, and you want an ideal way to grow your wealth without understanding the complexities of stock market investing.
You will not need to rebalance your portfolio manually because this one-ticket solution by Horizons will rebalance it automatically to stay aligned with its investment goals.
How to Buy Horizons HBAL ETF in Canada
My two favourite ways to buy Horizons ETFs in Canada are the following:
- Questrade – Canada’s leading discount broker, I use Questrade to trade most of my stocks. It has a desktop and mobile trading platform. All Canadian ETF purchases are commission-free, but be aware that selling ETFs will cost a small fee. With this special offer, you can also get $50 of commission-free stock trades here.
- Wealthsimple Trade – Better known as a robo-advisor, Wealthsimple has now released this fantastic trading platform that now comes in both desktop and mobile versions. All Canadian stock and ETF trades are commission-free. Get a $10 signup bonus when you sign up here.
All-in-one ETF portfolios provide investors with a one-stop solution that reduces your effort when it comes to investing. Instead of choosing individual stocks or ETFs to align with your investment goals, you can allow the all-in-one ETF portfolio to handle it all for you.
The Horizons HBAL Balanced TRI ETF portfolio can be an excellent way for you to achieve your investment goals if you seek capital growth with the ability to tolerate some risk to your capital in a turbulent market.