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Balanced ETF funds that compare to CGBL

MikeMMikeM
in Fund Discussions
I will have cash available after selling out of my Schwab intelligent portfolio account. I'd like to put at least most of it to work as soon as the transaction takes place. My thought was to put the money into an existing fund I already hold, CGBL, Capital Group Core Balanced ETF. It's a pretty new fund run by a very experienced management team and I've been very happy so far with this fund. Thanks to @Mark for bringing it to my attention a while back.

I thought I'd ask the question though, are there other ETF balanced funds out there in the 50-70% equity holding category that are worth comparing CGBL too?

A couple funds that popped out on an initial filter search:
OCIO ClearShares OCIO ETF
AOR iShares Core Growth Allocation ETF
RISN Inspire Tactical Balanced ETF

LEUTHOLD CORE ETF, LCR is also an option I'm considering for some of the $. I've held that one before.

Comments

  • yogibearbullyogibearbull
    edited March 5
    I am not impressed by iShares allocation series AOK, AOM, AOR, AOA. These are generic mixes, so there isn't any magic in their mixing sauce.

    I haven't looked at active CGBL in detail. Its ER is 33 bps, inception 09/2023. Of the 5 managers, 2 (Berro, Lee) are common with 12 managers of the giant ABALX.

    But on my watchlist is Franklin INCM, an active ETF at 38 bps, 06/2023- , by the managers of the giant FKIQX.
    https://www.franklintempleton.com/investments/options/exchange-traded-funds/products/36262/SINGLCLASS/franklin-income-focus-etf/INCM

    There aren't many balanced ETFs around, so active INCM and CGBL are good finds. Being new shouldn't matter if they are cousins of existing mutual funds.

  • MarkMark
    I agree with YBB's comments above.
  • golub1
    Unfortunately the ER's of the BALANCED Funds mentioned are very high excluding INCM and the I Share allocation series. Both Vanguard, Fidelity and T Rowe have great balanced funds that are lower priced.

    I own LCR which I wished was lower, but they have a good track record, and I like that are tactical.
  • MarkMark
    @golub1 - you said "Both Vanguard, Fidelity and T Rowe have great balanced funds that are lower priced."

    Are you referring to 'mutual' funds or ETF's which is what the OP asked about?
  • golub1
    Mutual funds
  • BaluBalu
    From March issue (in case it is useful) -

    https://www.mutualfundobserver.com/2024/03/outperforming-actively-managed-etfs/#ShortListofGreatOwlFunds
  • JD_co
    I was looking for a balanced ETF for my taxable account and chose CGBL. It's surprising that there are not too many choices. CGBL has filled that bucket nicely for me.
  • MikeMMikeM
    Thank you everyone for your ideas, input and links. My retired robo money should be available for investment by end of week. I'm still leaning towards adding heavily to my existing CGBL. Another healthy portion may go to LCR or LCORX, but as pointed out, that does have a high exp ratio. I may sleep a week or 2 on that decision. Smaller amounts also going to existing funds, JHQAX, AVGE and bond funds RSIIX and CBLDX. Altogether, a pretty conservative mix which matches portfolio-wise close to what the robo distribution was.

    @golub1, you make a good point on some of these ETFs mentioned having high exp ratios. But CGBL has only a .33% exp ratio. Quite a bit lower than the TRP or Fidelity balanced mutual funds.
  • BaluBalu
    @yogibearbull,

    From my following and researching CGBL, I have been pleased with its behavior. Its fixed income sleeve Core Plus. The only reason I have not invested in it is because of potential high distributions from its fixed income sleeve (bonds with market discounts) if I were to put it in a taxable account. But may be with good inflows, some of that distribution will be picked up by shareholders coming in later. Any thoughts?
  • JD_co
    BaluBalu said:

    @yogibearbull,

    From my following and researching CGBL....The only reason I have not invested in it is because of potential high distributions from its fixed income sleeve (bonds with market discounts) if I were to put it in a taxable account.

    If bonds only make up 32% of the CGBL portfolio and it has a 30 day SEC yield of 2.5%, shouldn't the divy's be limited?

  • shipwreckedandalone
    edited March 7
    https://stockcharts.com/freecharts/perf.php?ABALX,CGBL
  • davidrmorandavidrmoran
    2/3 in jqua (or ivv or vone) and the rest into 5% Fido mm ?

    I am staring at when to put a slug into rsp
  • fundly
    I like and own WBALX for the more conservative part of the portfolio. 50/50 and quite conservative. Small 230K AUM. When the s--t hits the fan this should lose less. In retirement I hold the mantra, "Do not lose it " in high esteem.
  • larryB
    edited March 9
    @fundly. +100. DO NOT LOSE IT. you speak the truth. If you use portfolio visualizer try a 50 / 50 mix of vanguard Wellesley and Wellington which becomes a 50/50 allocation. Its worst year is less than WBALX and the return is much higher. And of course the ER is way less. Or with a shorter history to look at try SCHD and DODIX. @50/50.
  • fred495
    edited March 9
    fundly said:

    I like and own WBALX for the more conservative part of the portfolio. 50/50 and quite conservative. Small 230K AUM. When the s--t hits the fan this should lose less. In retirement I hold the mantra, "Do not lose it " in high esteem.


    As a retired and conservative investor, I naturally agree with your mantra.
    However, I use the following non-ETF funds with excellent risk/reward profiles and all with SD<10:
    QDSNX, JHQAX, BLNDX, CBLDX and ICMUX.

    The only ETF fund I use is TFLO.

    By the way, JHQAX has an extremely low tax cost ratio of 0.23 according to M*.

    So far, so good.

    Fred
  • Observant1
    edited March 9
    larryB said:

    @fundly. +100. DO NOT LOSE IT. you speak the truth. If you use portfolio visualizer try a 50 / 50 mix of vanguard Wellesley and Wellington which becomes a 50/50 allocation. Its worst year is less than WBALX and the return is much higher. And of course the ER is way less.
    [snip]

    I know of a poster on another investing board whose portfolio is a 50/50 mix of Wellesley and Wellington.
    This approach is simple to execute, has low expenses, and good risk-adjusted past performance.

    https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=60vGLZ2IHHbVmPAjuywMqr
  • msf
    BaluBalu said:


    From my following and researching CGBL, I have been pleased with its behavior. Its fixed income sleeve Core Plus. The only reason I have not invested in it is because of potential high distributions from its fixed income sleeve (bonds with market discounts) if I were to put it in a taxable account. But may be with good inflows, some of that distribution will be picked up by shareholders coming in later. Any thoughts?

    Morningstar reports that its fixed income securities have an average discount (weighted) of under 1%. That is, its average weighted fixed income price is 99.27. That's essentially par. In comparison, on average, moderate allocation ETFs have portfolios with an average discount of 7% (92.90 weighted fixed income price).

    https://www.morningstar.com/etfs/arcx/cgbl/portfolio
    (select "Bond" next to "Portfolio" toward upper left)

    What is your concern with CGBL discount bonds? It looks like the ETF's high interest is coming from the coupons, not any discount. Average coupon yield is 5.32% vs. 3.90% for its peers. It's coupon, not discount, accounting for high YTM.

    For whatever discount is due to OID, the fund declares and distributes accretion (progression toward par value/reduction of discount) annually. Consequently at maturity all OID is accounted for. In short, OID bonds do not realize a big gain at maturity or sale.

    Market discount is different. The rule is that investors (whether individuals or funds) can treat it the same way as OID (declaring it as annual income, gradually accreting), or defer all accretion (gain) until maturity or sale. It sounds like the latter is what you are concerned about.

    However, this portfolio has a roughly counterbalancing amount of premium bonds (weighted average price is 99.27). So ISTM gains on discount bonds (generally treated as ordinary income) could be balanced out by losses on premium bonds (sometimes treated as negative ordinary income).

    The links below give details on taxation of discount and premium bonds and how funds are required to handle OID "phantom interest" - what the last reference calls a "situation".

    Schwab, When Should You Pay Taxes on Discount Bonds?
    Baird, Tax Treatment of Bond Premium and Discount

    K&L Gates, Introduction to Original Issue Discount
    (last couple of slides describe how OID bonds in a mutual fund portfolio creates a "situation")
  • BaluBalu
    edited March 10
    deleted
  • fundly
    Every fund in my portfolio fills a niche. I have owned the Wellington funds for more than 25 years but WBALX for example has a bond duration of 1.8 yrs vs the almost 7 years in the Wellington funds. Its bond ratings are also higher ,so again it fits the more conservative part of a portfolio.
  • larryB
    @fundly. I appreciate the short duration, high quality bond element but according to M* the equity side is tech heavy, high PE and concentrated in two sectors. Not so conservative. For me,,, having separate bond and equity funds makes more sense despite my desire for one fund simplicity.
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