FolioNorth

Just Buy XBAL

Should you just buy XBAL? Convenience and cost

iShares' 60/40 balanced ETF pairs broad global equity with a substantial Canadian bond sleeve. Here's the case for it, and what it costs compared to holding the components yourself.

TL;DR

If you want this, XBAL delivers

  • ✓ One-fund 60/40 exposure: less equity volatility than XGRO or XEQT
  • ✓ Automatic rebalancing to 60/40 with no manual trades
  • ✓ Lowest MER among major Canadian 60/40 all-in-one ETFs (0.20%)

Worth knowing

  • · MER of 0.20% is higher than holding equity and bond components separately
  • · Broad bond index (XBB) carries duration risk: price falls when rates rise
  • · Quarterly distributions: four ACB adjustment events per year in non-registered accounts

A 60/40 fund is not a retirement plan

XBAL is a product, not a strategy. Whether 60/40 fits your situation depends on your withdrawal timeline, account type mix, pension income, spending needs, and tax position. FolioNorth does not know any of those things. If you are within 10 years of retirement, the Asset Location Optimizer can help with account-type decisions, but it is not a substitute for a full retirement plan. Consider speaking with a fee-only financial planner.

ETF specifications

XBAL: ETF Specifications

MER
0.20%
Holdings
~9,800
Equity / Bond
60% equity / 40% bonds
Distribution
Quarterly
Inception
Aug 7, 2018
AUM
~$2B CAD
Exchange
TSX
Currency
CAD

Who XBAL is for

XBAL suits investors with a shorter time horizon or lower drawdown tolerance than XGRO would require. A 5-15 year horizon, discomfort with the idea of a 35% portfolio drop, or a situation where capital preservation matters alongside growth are all reasons to land on 60/40 rather than 80/20 or 100% equity.

The 40% bond allocation meaningfully reduces drawdown depth in bad equity years. In a year where global equities fall 30%, a 60/40 portfolio will typically fall considerably less, because bonds partially offset the equity loss. That cushion is not free: you also give up significant long-run expected return compared to a higher-equity allocation. XBAL is a deliberate trade of return potential for a smoother ride.

XBAL is also used by investors who are accumulating toward a near-term goal: a house purchase in 8 years, a child's education fund, or a phased early retirement. For goals with a defined, shorter timeline, the equity-heavy allocations (XEQT, XGRO) carry more risk than the timeline justifies.

The convenience trade-off

Just-buying XBAL is a reasonable choice. Here's what that convenience costs annually and over 20 years compared to holding the equity components (ITOT, XIC, XEF, XEC) plus XBB at 60/40, with the US portion in an RRSP.

The convenience cost: XBAL vs a DIY equity/bond split

Assumes 50% RRSP allocation. See the calculator for your own numbers.

PortfolioAnnual cost20-year cost (compounded)
$250K$341/yr$12,528
$500K$681/yr$25,056
$1M$1,362/yr$50,111
See your portfolio's cost → ETF Split Calculator

Annual cost combines MER drag and foreign withholding tax savings foregone. Assumes 50% RRSP / 50% TFSA split. 20-year figure compounds annual savings at 6% growth.

Compare and explore

VBAL: the Vanguard 60/40 alternativeSame 60/40 structure, slightly higher MER, annual distribution. How to choose between them.Read the VBAL guide →XGRO: the 80/20 step upIf your horizon is longer or drawdown tolerance is higher, XGRO reduces the bond sleeve to 20%.Read the XGRO guide →XEQT: the 100% equity versionLong horizon, high drawdown tolerance? XEQT drops bonds entirely for maximum expected long-run return.Read the XEQT guide →Back to the hubSee all eight ETFs across 100% equity, 80/20, and 60/40 categories with a profile-finder tool.Just Buy hub →

Frequently asked questions

Why is XBAL more expensive than a DIY 60/40 split?+
XBAL's MER of 0.20% covers the cost of bundling six ETFs into one, automatic daily rebalancing, and the iShares brand and infrastructure. Holding the underlying components separately (ITOT + XIC + XEF + XEC + XBB) has a lower weighted MER because you remove the fund-of-funds layer. You also gain the option to hold ITOT directly in an RRSP, eliminating US withholding tax on the equity portion. The ETF Split Calculator shows your exact savings at any portfolio size.
Should I prefer XBAL over VBAL?+
XBAL and VBAL are both 60/40 balanced ETFs with similar underlying strategies. XBAL's MER is 0.20%, VBAL's is 0.24%. At $500,000, that's a $200 annual difference. VBAL distributes annually in December (one T3 per year in non-registered accounts); XBAL distributes quarterly (four T3 events). For investors with non-registered holdings who want to minimize bookkeeping, VBAL's distribution schedule is a practical advantage. For registered-account-only investors, XBAL's lower MER is the cleaner choice.
What if I want a different equity/bond split than 60/40?+
XBAL is a fixed 60/40 product. It does not adjust allocation as you age or as market conditions change. If you want 70/30, 50/50, or any other ratio, your options are: hold two ETFs yourself (for example, XEQT and XBB at whatever ratio matches your target), or use an all-in-one that approximates your preferred split (XGRO is 80/20, XCNS would be 40/60 if you require more bonds). The flexibility of a DIY split is one reason some investors prefer holding components separately.
Is XBAL appropriate for someone close to retirement?+
That depends on your specific situation, which FolioNorth does not know and cannot assess. A 60/40 allocation is a common starting point in retirement-planning discussions because it balances growth potential with capital preservation. But it is not a complete retirement plan: drawdown strategy, account type, pension income, spending needs, and tax efficiency all matter. See a fee-only financial planner if you are within 10 years of retirement and have not worked through these questions formally.

See exactly what splitting XBAL would save for your portfolio size and account mix.

Open the ETF Split Calculator →