Everything you need to know about balanced mutual funds and all-in-one ETFs — with real numbers and an honest verdict.
A balanced fund holds both stocks and bonds in a single product. Buy one fund, get instant diversification across asset classes. The fund rebalances automatically when the mix drifts too far from the target.
Balanced funds are the largest fund category by assets under management in Canada — over $600 billion CAD. They've been the default "middle of the road" choice for Canadian investors for decades. The problem is that "balanced" describes the structure, not the quality. A 2.2% MER balanced fund and a 0.20% MER balanced ETF both hold stocks and bonds. Only one of them is worth owning.
Most balanced mutual funds sold at Canadian bank branches are mediocre after fees. That's not a shot at the managers — it's arithmetic. When your fund charges 2% annually, it needs to outperform its benchmark by 2% every year just to match what a passive alternative would deliver. That's a very high bar.
Here's where the major bank balanced funds stand:
| Fund | MER | Equity/Bond Split | 5-yr Return (Approx.) | Min. Investment | Verdict |
|---|---|---|---|---|---|
| RBC Balanced Fund (RBF268) | 2.02% | ~60/40 | ~5.4%/yr | $500 | Expensive |
| TD Balanced Growth Portfolio | 2.17% | ~70/30 | ~6.1%/yr | $100 | Expensive |
| Fidelity Canadian Balanced Fund | 2.28% | ~60/40 | ~5.8%/yr | $500 | Expensive |
| Mawer Balanced Fund (MAW104) | 0.97% | ~60/40 | ~8.2%/yr | $5,000 | Advisor-only; genuinely good |
| VBAL (Vanguard) | 0.24% | 60/40 | ~7.9%/yr | ~$35/share | Best choice for most |
| XBAL (iShares/BlackRock) | 0.20% | 60/40 | ~7.8%/yr | ~$35/share | Best choice for most |
| ZBAL (BMO) | 0.20% | 60/40 | ~7.6%/yr | ~$30/share | Solid alternative |
| TBAL (TD One-Click) | 0.25% | 60/40 | ~7.7%/yr | ~$25/share | Solid alternative |
On Mawer: Mawer Balanced (MAW104) is the notable exception among higher-fee Canadian balanced funds. It has a legitimate long-term track record and genuinely good active management. The catch: it's only available through advisors, and its MER is still 4–5x higher than XBAL or VBAL. If you're in a fee-based advisory relationship and your advisor suggests Mawer, that's a reasonable recommendation. If a bank branch teller is pushing you into a 2.2% MER product, that's a different conversation.
Vanguard Canada launched VBAL in February 2018. iShares followed with XBAL. BMO added ZBAL. TD launched TBAL. These four products collectively changed how Canadians should think about balanced investing.
Each one holds a globally diversified portfolio of stocks and bonds in a single ETF — exactly what a balanced mutual fund does — but at a fraction of the cost. They rebalance automatically. You don't need to do anything except hold them.
| ETF | Issuer | MER | AUM | Equity/Bond | Canadian Equity % |
|---|---|---|---|---|---|
| VBAL | Vanguard Canada | 0.24% | ~$3.5B | 60/40 | ~30% of equity |
| XBAL | iShares (BlackRock) | 0.20% | ~$2.8B | 60/40 | ~23% of equity |
| ZBAL | BMO Asset Management | 0.20% | ~$1.1B | 60/40 | ~28% of equity |
| TBAL | TD Asset Management | 0.25% | ~$0.4B | 60/40 | ~25% of equity |
VBAL has the largest AUM of the group — it launched first and has more time to accumulate assets. XBAL charges 0.04% less per year. Over 20 years, the difference is negligible. Pick either one and don't second-guess it.
VBAL and XBAL don't rebalance on a set schedule. They use threshold-based rules — the fund only rebalances when allocations drift beyond a certain band. VBAL rebalances when any holding drifts more than 2% from target. XBAL uses a relative 10% drift rule (meaning a holding needs to drift 10% relative to its target weight before triggering a rebalance).
What this means for you: you never need to do anything. No annual rebalancing trades. No capital gains triggered in a non-registered account from your rebalancing activity. The ETF handles it internally.
This is the number that matters. Here's the math on a $200,000 portfolio with a 6% gross annual return, comparing a 2.0% MER bank balanced fund to a 0.20% MER all-in-one ETF:
That $95,000 gap is entirely fees. Not performance. Not skill. Just the cost of not switching. On a $500,000 portfolio the difference exceeds $230,000 over the same period.
The 2.0% MER in this example is actually conservative — some bank balanced funds charge 2.2% or more. Every additional 0.1% in annual fees costs roughly $5,000–$7,000 on a $200K portfolio over 20 years.
There are legitimate reasons to own a higher-fee balanced fund. They're just narrower than most people think.
These are real exceptions, not excuses to stay in a 2.2% MER product indefinitely. Run the switching payoff calculator if you're on the fence.
Each ETF issuer offers a family of all-in-one ETFs covering different risk profiles. The naming conventions differ slightly between providers, but the structure is consistent.
| iShares ETF | Vanguard ETF | Equity/Bond Split | Who It's For |
|---|---|---|---|
| XGRO | VGRO | 80/20 | Long time horizon (15+ years), can handle volatility |
| XBAL | VBAL | 60/40 | Medium horizon (10–15 years), moderate risk tolerance |
| XCNS | VCNS | 40/60 | Short horizon (<10 years), lower risk tolerance |
| XINC | — | 20/80 | Near or in retirement, capital preservation focus |
The general rule: the further you are from needing the money, the more equity you can hold. XGRO or VGRO for investors with 15+ years. XBAL or VBAL for 10–15 years. XCNS or VCNS when you're within a decade of drawing down the portfolio.
Some investors hold XGRO or VGRO for their entire accumulation phase and shift to XBAL in the decade before retirement. Others just stay in XBAL forever. Both approaches are reasonable — the right answer depends on your actual risk tolerance, not a formula.
For a deep dive on the all-equity options, see the XEQT vs VEQT comparison and the top Canadian ETFs guide.
All-in-one balanced ETFs generate annual distributions — typically a mix of dividends, interest income, and capital gains. In a registered account (RRSP, TFSA, RRIF), this doesn't matter. In a non-registered account, it does.
Interest income from bond holdings is taxed at your full marginal rate — the least tax-efficient type of investment income. Canadian dividends from equity holdings get the dividend tax credit. Capital gains get the partial inclusion treatment.
All-in-one ETFs that hold international equity may generate more foreign income distributions than Canadian-equity-only funds. Foreign dividends are taxed as ordinary income in non-registered accounts (no dividend tax credit), and are subject to foreign withholding tax depending on where the underlying fund holds the securities.
The practical implication: if you hold a balanced ETF in a non-registered account and want to maximize tax efficiency, check whether the ETF uses a "fund of funds" structure (like VBAL and XBAL do) or holds securities directly. Fund-of-funds structures may have higher internal tax drag in non-registered accounts due to how distributions flow through.
For most investors, the tax drag difference between XBAL in a TFSA versus a non-registered account is overwhelmed by the MER advantage over bank mutual funds. Tax optimization is worth thinking about, but not at the cost of switching to a 2% product.
For full detail on non-registered investment taxes, see the mutual fund tax guide for Canada.
Both are excellent. The differences are minor. Here's the honest comparison:
Pick one, set up automatic contributions, and move on. Spending time agonizing over VBAL vs XBAL is time not spent on decisions that actually matter.
Available on both Questrade and Wealthsimple: VBAL, XBAL, and ZBAL are all available commission-free on Wealthsimple Trade, and at zero commission for ETF buys on Questrade. There's no platform advantage to choose between them based on this factor alone.
Bank balanced mutual funds vs all-in-one ETFs, side by side.
| Product | MER | 5-yr Return | 60/40 Split | Available Accounts | Min. Investment |
|---|---|---|---|---|---|
| RBC Balanced Fund | 2.02% | ~5.4%/yr | ~Yes | RBC branch / RBC DI | $500 |
| TD Balanced Growth | 2.17% | ~6.1%/yr | ~70/30 | TD branch / TD DI | $100 |
| Fidelity Canadian Balanced | 2.28% | ~5.8%/yr | ~Yes | Advisor / select brokers | $500 |
| Mawer Balanced (MAW104) | 0.97% | ~8.2%/yr | ~Yes | Advisor-only | $5,000 |
| VBAL (Vanguard) | 0.24% | ~7.9%/yr | 60/40 | Any self-directed brokerage | ~$35/share |
| XBAL (iShares) | 0.20% | ~7.8%/yr | 60/40 | Any self-directed brokerage | ~$35/share |
| ZBAL (BMO) | 0.20% | ~7.6%/yr | 60/40 | Any self-directed brokerage | ~$30/share |
| TBAL (TD) | 0.25% | ~7.7%/yr | 60/40 | Any self-directed brokerage | ~$25/share |
Returns are approximate 5-year annualized figures as of early 2026. Past returns don't guarantee future results. MERs may change.
See exactly how much switching to XBAL or VBAL saves over your time horizon.
Run the Numbers Understand MERsThis page is for educational purposes only and does not constitute financial advice. All returns and MERs are approximate and may change. Consult a registered financial advisor before making investment decisions. Best practices for your situation depend on your tax bracket, account type, time horizon, and risk tolerance.