Choosing the ideal asset mix for your portfolio is the key to successful investing. With an actively managed, diversified mix of stocks, bonds, and other instruments in a single low-cost fund, balanced funds provide a simple shortcut. An asset allocation ETF or balanced ETF is a portfolio of funds that holds two or more different asset classes. They typically invest in various stock and bond funds with predetermined allocations to each asset category.
For instance, a cautiously balanced fund would invest 65% in stocks and 35% in bond ETFs. Others may use a variable allocation that shifts over time or invest in different asset types. We strive to provide you with a carefully screened range of balanced funds if you seek a diverse investment portfolio in a single fund. We’ve compiled a list of the top balanced ETFs that consider both cautious and aggressive investors’ needs and funds that use both fixed and variable allocations, but you will need an account with a forex broker to trade ETFs.
- Core Aggressive Allocation ETF from iShares (AOA)
The iShares Core Aggressive Allocation ETF may be worth additional examination by younger, more aggressive investors seeking a complete, low-fee portfolio in a single fund. It owns seven iShares exchange-traded funds in a widely diversified portfolio comprising local and foreign stock and fixed-income ETFs. Two bond funds, one local and one foreign, are held by AOA. Only 17% of the fund is invested in fixed income, as expected in an aggressive portfolio, with the remaining going to highly diversified stock funds. The S&P 500, mid- and small-cap US stocks, as well as developed and emerging market corporations, are the main focuses of the five stock funds.
- Global Asset Allocation ETF from Cambria (GAA)
You would have to search far and wide to find a balanced fund with a wider asset diversity than the Cambria Global Asset Allocation ETF. The 29 ETFs owned by this actively managed fund cover a wide range of geographic locations and asset classes. GAA is a buy-and-hold investment that covers the whole universe of investable assets, including domestic and foreign equities, bonds, property investments, commodities, and currencies. Both proprietary Cambria ETFs and outside funds are included in the portfolio. The fund’s allocations to equities, bonds, and real assets, such as commodities and currencies, are 40%, 40%, and 20%, respectively. To preserve this desired asset mix, it is rebalanced regularly. Rebalancing considers taxes, which is advantageous for people who own GAA in taxable brokerage accounts.
- Core Moderate Allocation ETF from iShares (AOM)
For cautious investors looking for a single low-fee fund to hold most of their investable assets, the iShares Core Moderate Allocation ETF is an excellent option. Despite the dismal five-year annualized average return, which results from historically ultra-low rates that have stifled returns on a fixed income, we think this fund is well-positioned to produce both stable cash flow and stronger growth in the future. AOM’s asset allocation is relatively conservative, with about 60% bonds and 40% stocks, even though it is referred to as a core moderate allocation fund. Seven iShares ETFs are held by the fund, which has an asset allocation appropriate for retirees or more risk-averse investors. 51% of the portfolio comprises the iShares Core Total USD Bond Market ETF (IUSB), which seeks to invest in the entire U.S. fixed-income market. The iShares International Bond ETF has 8.6% more (IAGG). The equity portion consists primarily of mid- and small-cap corporations, developed and emerging market stocks, and exchange-traded funds (ETFs) that invest in the S&P 500.
- U.S. Efficient Core Fund from WisdomTree (NTSX)
The WisdomTree U.S. Efficient Core Fund, previously known as the 90/60 U.S. Balanced ETF, employs a different approach than the other items on our list. It does not invest in funds of funds; instead, it buys individual large-cap equities and futures contracts on the US Treasury. Since they have a smaller correlation with stocks than bonds, WisdomTree has decided to invest in fixed-income futures. This strategy offers decreased portfolio volatility, income, and capital growth advantages. Currently, 60% of NTSX’s assets are allocated to treasury futures with various maturities, while 40% are invested in large-cap equities. However, the fund has a flexible asset allocation, so depending on the state of the market, this stock-to-bond ratio may fluctuate.
- Multi-Asset Real Return ETF from SPDR SSGA (RLY)
The SPDR SSGA Multi-Asset Real Return ETF’s objectives include capital preservation, income generation, and, eventually, the delivery of a real return greater than the inflation rate. As a result, RLY was able to secure a spot on our list of the top ETFs for beating inflation. RLY is an actively managed ETF that makes investments in commodities, real estate, and both domestic and foreign inflation-protected securities. It is intended to perform well in an inflationary environment to emphasize companies in the agricultural, energy, metals, and mining industries.
The SPDR Bloomberg 1-10 Year TIPS ETF (TIPX), which invests in Treasury Inflation-Protected Securities, has a 10% allocation to the portfolio’s 11 ETFs. Global infrastructure, high-yield commodities strategy ETFs, and global natural resources account for another 75% of the portfolio. A few fixed-income, REIT, metals, energy, mining, and agricultural ETFs are included in the remaining 15%.
- Core Growth Allocation ETF from iShares (AOR)
For investors looking for a low-fee, passively managed, and core-holding balanced fund for their portfolios, the iShares Core Growth Allocation ETF is the best option. Some might think that the phrase “Core Growth Allocation” in the title is slightly misleading. Although the fund’s asset allocation of 60% stocks and 40% bonds is designated as “growth,” it might be more accurately described as a modest core portfolio strategy, not that there’s anything problematic with it. The S&P 500, developed and worldwide equity markets, and a small allocation to mid- and small-cap equities are covered by the seven iShares ETFs AOR owns.