With the anticipated Market Correction of 10-40%, I was wondering if I shouldn’t add bonds to my portfolio or buy something like $VBAL or $XBAL to balance off or replace my $ZEQT; when my research brought me to $FBAL. FBAL is Fidelity’s one-ticket balanced ETF. It is interesting, but I am not going to replace my ZEQT with it. FBAL’s target allocation is approximately: • 59% global equities • 39% bonds $XBB • 2% Bitcoin $BTC$FBTC$IBIT$MSBT It has a 0.40% MER, automatically rebalances and pays distributions annually. The equity portion uses four investment factors—momentum, value, quality and low volatility—across Canada, the United States and international markets. Its fixed-income allocation combines Canadian investment-grade bonds with smaller allocations to US, global and higher-yield bonds. FBAL versus ZEQT $XEQT$VEQT FBAL holds only 59% equities, compared with approximately 100% equities in ZEQT. Consequently, FBAL should experience smaller market declines, but it should also produce lower long-term growth. A reasonable long-term return assumption might be: • FBAL: approximately 6% to 7% annually • ZEQT: approximately 7.5% to 9% annually The 15.49% annualized three-year return shown on Blossoms backdating checker is interesting, but it should not be projected into the future. Since its January 2021 inception, FBAL has returned approximately 9.76% annually. It also lost approximately 9.67% in 2022, demonstrating that a balanced ETF can still decline when stocks and bonds fall together. My view FBAL is a genuinely good balanced ETF. I particularly like its combination of multiple equity factors, diversified bonds and a restrained 2% Bitcoin allocation. However, I will not choose it over ZEQT for my own portfolio. With a roughly 17-year investment horizon, a high tolerance for volatility, substantial pension assets and a separate Bitcoin position, FBAL’s 39% bond allocation would probably suppress too much long-term growth. My choice is to stay with ZEQT. FBAL could become more appropriate during the final five years before retirement if greater stability and smaller drawdowns become more important. It is also an excellent standalone investment for someone with moderate risk tolerance, but it is not the strongest growth vehicle for this particular objective; I would consider pairing it with $ZLSU closer to retirement. One of my next articles will be on reversion to the mean, how it applies to the stock market and how like Father Time, it will 💯 always be the end result. What goes up, must go down. This time will not be different.
396 views
0 Comments
Join the conversation with 500,000+ other investors 💸
Create an account to get access to everything Blossom has to offer!
📊 Personalized algorithm based on your investing style, experience level and interests
📈 Powerful portfolio and dividend tracking tools
👀 See what top creators and others in the community are investing in
