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HBAL Review 2023: Horizons All-in-One Balanced ETF Portfolio Explained

Horizons Balanced Tri ETF (HBAL) is one of the all-in-one ETFs (aka asset allocation ETFs) offered by Horizons.

For most investors, selecting individual stocks is a process that requires not only research but also an understanding of fundamental and technical factors that may impact price.

It is a major reason why most individual investors, and most hedge fund managers as well, have trouble matching the annual returns of benchmark indexes such as the S&P 500.

So, what does that tell us about the habits of investors?

Today’s investors are often looking for quick gains made only possible through high-risk investments.

Investing is a marathon and not a race, which is why hand-picking stocks is usually a losing proposition.

It might seem less exciting but investing in indexes through ETFs like Horizon’s Balanced Tri ETF Portfolio (HBAL) is actually one of the easiest ways to build wealth over the long term.

ETFs provide a basket of assets that help investors gain exposure to different areas of the market without having to purchase individual stocks.

Horizons is a company that has a proven track record in providing well-diversified ETFs for Canadian investors. And when discussing balanced, steady performers, HBAL ETF is a great option.

This HBAL review covers its composition, returns, fees, top holdings, pros and cons, how to purchase Horizons ETFs in Canada, and how it compares to VBAL.

What is HBAL?

The Horizons Balanced Tri ETF was established in August 2018 and was designed to provide Canadian investors with a unique long-term capital growth strategy.

HBAL is structured around a long-term asset allocation of 70% equities and 30% fixed-income securities.

This provides investors with a relatively safe asset, as well as plenty of opportunity for future growth.

HBAL Key Information

  • Inception date: August 1, 2018
  • Net assets: $152,790,127 as of February 17, 2022
  • 12-month trailing yield: 0.07%
  • Distribution Frequency: Annually
  • Management fee: 0.0% (but underlying fees from ETFs are charged and factor into the price of HBAL).
  • Management Expense Ratio (MER): 0.15%
  • Account Eligibility: All registered and non-registered investment accounts
  • Listing currency: CAD
  • Listing Exchange: Toronto Stock Exchange
HBAL Review

HBAL Asset Allocation

The first thing you will notice about HBAL’s allocation is that the fund consists of only eight different assets.

But aren’t ETFs generally a basket of hundreds of different stocks? In this case, both of these things can be true. HBAL is built around a portfolio of eight other ETFs.

Here are the eight different ETFs that HBAL is comprised of as of February 2022:

HBAL HoldingsPortfolio Weight
Horizons US Large Cap ETF22.57%
Horizons CDN Select Universe ETF20.26%
Horizons NASDAQ-100 Index ETF16.19%
Horizons S&P/TSX 60 Index ETF10.35%
Horizons US 7-10 Year Treasury ETF10.34%
Horizons International Developed Markets ETF10.03%
Horizons Emerging Markets ETF5.16%
Horizons Europe 50 Index ETF4.97%
Source: Horizonsetfs.com

As you can see that despite this being a Canadian-based ETF, there is a heavy allocation towards US equities.

In fact, 49.1% of the allocation is distributed amongst the Horizons US Large Cap ETF, the Horizons NASDAQ-100 Index ETF, and the Horizons US 7-10 Year Treasury ETF.

Of course, when you have a fund concentrated on US stocks, particularly with the NASDAQ-100 and the US Large Cap stocks, you will get some overlap.

This might provide too much concentration in mega-cap tech stocks for some investors, but given their market weight, it is always difficult to avoid this when investing in US index funds.

Related: Best Energy ETFs in Canada.

HBAL Returns

Since its inception in 2018, HBAL has seen a steady performance year-over-year.

With the major indices currently at a loss for the year following a correction since the beginning of 2022, HBAL also finds itself down about -15.55% year to date.

Its calendar year performance over the last 3 years is shown below.

hbal etf performance
Source: Horizonsetfs.com

HBAL Fees

Due to its structure as an ETF composed of other ETFs, HBAL is unique because it does not have any fund management fees. Instead, the HBAL ETF is subject to the underlying fees of the ETFs it holds.

The MER or Management Expense Ratio is at a low rate of 0.16%. Low MERs are a part of what makes ETFs more attractive to investors than mutual funds.

Pros and Cons of Investing in HBAL

Pros:

  • Well-diversified fund with a low MER
  • Exposure to Canadian, US, and global markets
  • Available for both registered and non-registered investment accounts

Cons:

  • High exposure to US mega-cap tech stocks from the FAANG group
  • Relatively young fund with only a few years of performance history
  • Annual distribution frequency rather than quarterly or monthly

HBAL vs VBAL

VBAL (Vanguard Balanced ETF Portfolio) is the balanced ETF from fund giant Vanguard.

It has a similar makeup to HBAL in that VBAL is also a fairly equally weighted collection of Vanguard’s own ETFs.

Here are the funds that VBAL holds:

VBAL HoldingsPortfolio Weight
US Total Market Index ETF25.95%
Canadian Aggregate Bond Index ETF23.24%
FTSE Canada All Cap Index ETF18.47%
FTSE Developed All Cap ex North America Index ETF11.65%
Global ex-US Aggregate Bond Index ETF (CAD-hedged)8.78%
US Aggregate Bond Index ETF (CAD-hedged)7.41%
FTSE Emerging Markets All Cap Index ETF4.50%
Source: Vanguard.ca

As you can see, the two funds have similar makeups, with VBAL having a slightly heavier lean toward bonds than HBAL.

In terms of fees, VBAL has a management fee of 0.20% and an MER of 0.24%, which both cost more than HBAL.

Finally, VBAL distributed its dividends quarterly, rather than HBAL’s rather unique frequency, on an annualized basis.

How to Buy HBAL ETF on Questrade

Questrade is a popular investing platform for Canadians due to its lower transaction fees than big banks. it is also the best discount brokerage.

Below is a quick step-by-step guide for using Questrade (and how to get a $50 credit):

  1. Login to your Questrade account and click on ‘trading.’ Here you can enter the ticker symbol of the stock or ETF you wish to trade. In this case, you would enter HBAL.
  2. Click on Buy.
  3. Select the number of shares or units and select a market order to purchase HBAL at the current market price.
  4. Confirm order of HBAL has been placed into your account.

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How To Purchase HBAL ETF on Wealthsimple Trade

A great option for Canadians when buying HBAL is Wealthsimple Trade. Customers of Wealthsimple can take advantage of commission-free buying and selling of stocks and ETFs.

New users can open a Wealthsimple Trade account here and earn a $25 cash bonus.

  1. Login to your Wealthsimple Trade account and search for HBAL.
  2. Click on Buy.
  3. Select the number of shares or units and select a market order to purchase HBAL at the current market price.
  4. Confirm order of HBAL has been placed into your account.

Wealthsimple Trade

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HBAL FAQs

Is HBAL a good ETF or investment?

With a single investment in HBAL, Canadian investors receive exposure to hundreds of the best-performing companies worldwide. Not only do you get the best of both the Canadian and US markets, but HBAL has included global emerging markets and Europe as well.
As far as ETFs go, HBAL has a low MER and is available for Canadian investors for both registered and non-registered investment accounts.

How often does HBAL rebalance?

HBAL is rebalanced by Horizons on a semi-annual basis every January and July. Some ETFs will rebalance on a more frequent basis, but given that HBAL is composed of other ETFs, those funds likely already rebalance more frequently on their own.

Is HBAL an index fund?

While HBAL does hold certain ETFs that track indices, the ETF itself is not an index fund. Index funds solely track a single index like the NASDAQ or S&P 500. HBAL does track the NASDAQ-100 and S&P/TSX 60, but these are not considered tracking an entire index. HBAL is well-diversified and balanced, but it is not considered an index fund.

What are the benefits of ETFs?

The benefits of investing in ETFs are numerous. It saves investors time in researching individual stocks and provides a safer floor to the investment as well. ETFs are an excellent way to gain exposure to dozens, if not hundreds, of different companies under one asset. It also provides the ability to invest in markets around the world that are generally not accessible from most Canadian brokerages.

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Author

Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch is passionate about helping others win with their finances and has been writing about money matters for over a decade. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, CBC News, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, and many other personal finance publications. You can learn more about him on the About Page.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

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