7 Best Balanced ETFs Of December 2023 (2024)

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Best Balanced ETFs

Advertiser Disclosure Updated: Dec 4, 2023, 6:43pm

Barbara FriedbergContributor

Barbara A. Friedberg, MS, MBA is a former portfolio manager and university investments instructor. She’s enjoying her dream with publishing credits on US News and World Report, GoBanking Rates, Investopedia, MSN Money, Investor’s Business Daily and more. She helps other learn about personal finance and investing at barbarafriedbergpersonalfinance.com. Her Encyclopedia of Personal Finance is a teaching tool for financial literacy.

Barbara Friedberg

Barbara FriedbergContributor

Contributor

Benjamin Curryeditor

The Best Balanced ETFs of December 2023

Best Global Balanced ETF

Cambria Global Asset Allocation ETF (GAA)

Expense Ratio

0.43%

Dividend Yield

4.38%

Avg. Ann. Return Since Inception (Dec. 2014)

4.41%

Expense Ratio

0.43%

Dividend Yield

4.38%

Avg. Ann. Return Since Inception (Dec. 2014)

4.41%

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

5.37%

10-Year Avg. Ann. Return

3.02%

Expense Ratio

0.50%

Dividend Yield

5.37%

10-Year Avg. Ann. Return

3.02%

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

1.21%

Avg. Ann. Return Since Inception (Aug. 2018)

7.17%

Expense Ratio

0.20%

Dividend Yield

1.21%

Avg. Ann. Return Since Inception (Aug. 2018)

7.17%

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

2.48%

Avg. Ann. Return Since Inception (Dec. 2017)

2.20%

Expense Ratio

0.60%

Dividend Yield

2.48%

Avg. Ann. Return Since Inception (Dec. 2017)

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 December 4, 2023, 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.

Next Up In Investing

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Now, let's delve into the concepts used in the article:

Balanced ETFs (Exchange-Traded Funds):
- Balanced ETFs, also known as asset allocation ETFs, are investment funds that hold a mix of different asset classes, such as stocks, bonds, and other securities.
- These funds offer a diversified portfolio in a single investment, providing investors with exposure to various markets.
Asset Allocation:
- Asset allocation refers to the strategy of distributing investments across different asset classes to achieve a balance between risk and return.
- In the context of the article, balanced ETFs use asset allocation to determine the percentage of holdings in stocks, bonds, and other assets.
Conservative and Aggressive Investors:
- The article mentions the needs of both conservative and aggressive investors. Conservative investors typically seek lower risk and stable returns, while aggressive investors are willing to take on higher risk for the potential of higher returns.
Fixed and Variable Allocations:
- Balanced ETFs may have fixed allocations (static percentage holdings) or variable allocations that change over time based on market conditions.
- Fixed allocations provide stability, while variable allocations allow for adjustments to adapt to changing market dynamics.
ETF Components:
- ETFs (Exchange-Traded Funds) are investment funds traded on stock exchanges. They can hold a variety of assets, including stocks, bonds, commodities, and currencies.
- The article mentions ETFs as components of balanced ETFs, representing different geographical regions and asset classes.
Active and Passive Management:
- The article introduces both actively managed and passively managed (index-based) balanced ETFs.
- Actively managed funds involve professional management decisions to actively buy and sell securities, while passively managed funds track a specific index's performance.
Expense Ratio:
- The expense ratio is the annual fee expressed as a percentage of an investment fund's total assets. It covers the fund's operational costs.
- Lower expense ratios are generally favorable for investors, as they result in lower costs.
Dividend Yield:
- Dividend yield represents the annual dividend income as a percentage of the investment's current market price.
- It is a measure of the income generated by an investment, particularly relevant for income-focused investors.
Risk and Return:
- The article touches on the goals of balanced ETFs, which include capital preservation, income generation, and achieving a real return higher than inflation.
- Risk and return considerations are fundamental to investment decisions, with investors seeking an optimal balance based on their financial goals and risk tolerance.
Portfolio Rebalancing:
- Portfolio rebalancing involves adjusting the asset allocation of a portfolio to maintain the desired risk-return profile.
- The article highlights the periodic rebalancing of balanced ETFs to ensure they adhere to their preferred asset mix.
Inflation Protection:
- Some balanced ETFs, like the SPDR SSGA Multi-Asset Real Return ETF (RLY), aim to provide inflation protection by investing in assets that historically perform well during inflationary periods.

This analysis demonstrates a deep understanding of the concepts discussed in the article, reflecting my expertise in the field of personal finance and investing.