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This is a VGRO review covering the ETF’s key facts, holdings, returns, fees and how it compares to other all-in-one funds like VEQT and Blackrock’s XGRO.
Some of the biggest worries for DIY investors are the cost to build a well-diversified portfolio and the on-going maintenance to ensure the portfolio does not diverge too far from the target allocation.
Asset allocation ETFs like VGRO solves both problems. They provide a quick, low-cost way to build a well-diversified portfolio conveniently without the stress. And they are a great addition to a DIY investor’s investment toolkit.
Whether you’re an experienced or beginner do-it-yourself investor, the Vanguard Growth ETF Portfolio (VGRO) or any of the other all-in-one ETFs would be a smart addition to your investment portfolio.
If you’re ready, let’s begin…
What is VGRO ETF?
VGRO is an asset allocation ETF solution from Vanguard, one of the largest asset management companies in the world.
It is one of the 6 all-in-one diversified ETF portfolios from Vanguard Canada.
The portfolio’s objective is to provide investors with “long-term capital growth” by investing in both equity (80%) and fixed income (20%) securities.
It is a Canadian denominated ETF that is listed on the Toronto Stock Exchange and was introduced in January 2018.
With more than 27,800 individual stocks and bonds at the time of writing, VGRO offers investors a quick way to build a portfolio that is diversified worldwide and across different sectors with a single purchase.
VGRO pays a quarterly dividend with a current dividend yield of 1.93% and it is rebalanced periodically to maintain its target asset allocation.
Key Fund Facts:
- Dividend: Quarterly
- Account Eligibility: RRSP, RRIF, RESP, TFSA, DPSP, RDSP
- Asset Under Management: $1.7 billion
- MER: 0.25%
- Inception Date: Jan 25, 2018
- Equity Allocation: 80%
When you buy VGRO ETF, you’re getting a fund that is well diversified with thousand of stocks. This is amazing considering you would only need to make a single purchase.
VGRO’s holding is highly skewed towards companies with large capitalization. They make up over 82% of its assets as at November 2020.
But we can further analyze the ETF’s holdings using other criteria such as the ETFs it holds, underlying stocks, sector weightings and geographic or market exposure.
Asset allocation ETFs are generally fund of funds; that is, they don’t hold individual stocks but invests in other ETFs with exposure to their component asset classes.
VGRO is no exemption. It is invested in 7 Vanguard funds (ETFs).
The 7 ETFs that make up VGRO and their weights as at November 2020 are:
- Vanguard US Total Market Index ETF: 33.20%
- Vanguard FTSE Canada All Cap Index ETF: 24.10%
- Vanguard FTSE Developed All Cap ex North America Index ETF: 16.90%
- Vanguard Canadian Aggregate Bond Index ETF: 11.60%
- Vanguard FTSE Emerging Markets All Cap Index ETF: 6.30%
- Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged: 4.50%
- Vanguard US Aggregate Bond Index ETF CAD-hedged: 3.40%
Notice that more than half of the fixed income allocation are Canadian bonds.
The ETF indirectly holds individual stocks and bonds through its underlying ETFs.
In total, you’re looking at over 27,000 individual securities across the world, sector and market capitalization. Talk about diversification!
Here’s the total securities holding of the 2 asset classes as at Nov 2020.
- Equities: 12,532
- Bonds: 17,370
The top 10 equity securities are presented below and contains some of the largest and most popular companies in both U.S. and Canada.
|Holding Name||% of Market Value||Sector||Market|
|Apple Inc.||1.65||Computer Hardware||US|
|Royal Bank of Canada||1.55||Banks||CA|
|Shopify Inc. Class A||1.55||Consumer Digital Services||CA|
|Amazon.com Inc.||1.21||Diversified Retailers||US|
|Canadian National Railway Co.||0.99||Railroads||CA|
|Bank of Nova Scotia||0.79||Banks||CA|
|Brookfield Asset Management Inc. Class A||0.75||Asset Managers and Custodians||CA|
Together, the VGRO’s top 10 equity holdings account for 12.08% of its total assets.
The fixed income allocation’s top holdings are mostly government bonds, primarily Government of Canada.
The asset allocation ETF is also diversified across sectors. Depending on when you check, the allocation to each sector may look quite different.
For example, VGRO had a 26.2% allocation to Financials as at November 2019 but it was down to 18.70% in Nov 2020. On the other hand, Technology sector grew from 12.60% to 17.80% within the same period.
The sector allocation as at November 2020 were:
VGRO has a heavier weighting to North America for both the equity and fixed income components. The exposure to Canada and U.S. is about 57% for equities and 15%for fixed income.
|Asset Class||Total Allocation||Canada & US only|
That is over 70% of VGRO’s total AUM in both countries. The balance is spread across over 50 other markets across the world.
The top 5 countries for each asset class are:
|Others (45 markets)||17.7|
|Others (59 markets)||12.6|
Here’s a summary of VGRO holdings:
- Built using 7 other Vanguard ETFS
- Over 27,600 individual stocks
- Allocation to over 60 markets across the world
- The Top 3 sectors (Financials, Technology and Customer Discretionary) account for almost 50% of VGRO’s equity holding.
- About 82 percent exposure to companies with large capitalization
Like the other Vanguard Canada asset allocation ETFs, the management fee for VGRO is currently 0.22%. After adding the other operating costs of the fund, the management expense ratio (MER) comes to 0.25%
This is still a good bargain given that the average mutual fund fee in Canada is above 2%. On a $100,000 portfolio that is fully invested in VGRO, you would pay just $250 per year compared to over $2,000 for the average mutual fund.
Compound the difference over 10-20 years and you’re looking at thousands of dollars in savings.
Another potential cost of VGRO is the brokerage cost you may have to pay to buy the ETF.
Good news is:
The brokerage costs can be avoided if you have an account at a brokerage that let’s you buy ETFs and stocks commission fee like Questrade and Wealthsimple Trade.
In summary, here’s the fees you will pay for holding VGRO:
|Management Expense Ratio (MER)||0.25%|
Vanguard VGRO Performance
VGRO has been trading for over two years so we have some performance data to review. But the ETF is still relatively new, so it is difficult to compare its long-term returns to other asset allocation ETFs.
The Year-to-date returns performance of VGRO as at Nov 2020 was 8.62%.
If you had invested $10,000 in VGRO since inception, your investment would have grown to $12,203.61 in November 2020.
How does VGRO Compare?
Next, let’s review how VGRO ETF compare to other funds, including the ones from Vanguard.
VGRO vs VEQT
Vanguard All-Equity ETF Portfolio (VEQT) is another asset allocation ETF from Vanguard. They both have the same fees but VEQT was introduced a year later on January 29th, 2019.
The major difference between these 2 ETFs is their asset allocations. While VGRO has an allocation of 80% to equity and 20% to bond, VEQT has 100 percent equity exposure.
Also, VEQT is built using fewer underlying vanguard funds – the same 4 ETFs used for VGRO’s equity holdings.
Other asset Allocation ETFs from Vanguard include:
- Vanguard Balanced ETF Portfolio (VBAL): Classic 60:40 balanced portfolio
- Vanguard Conservative ETF Portfolio (VCNS): 40% equity allocation
- Vanguard Conservative Income ETF Portfolio (VCIP): 20% equity allocation
- Vanguard Retirement Income ETF Portfolio (VRIF): Introduced in Sep 2020, it has a 50% equity allocation but can go as high as 60%.
You can check this post for a full VEQT review.
VGRO vs XGRO
iShares Core Growth ETF Portfolio (XGRO) is Blackrock’s equivalent of VGRO. Like VGRO, it also has an 80/20 allocation to equities and bonds.
XGRO has been around for much longer but its fundamental investment objective, fees and risk ratings changed effective December 11, 2018.
The ETF holds 8 other iShares ETF, that collectively invests in over 18,000 underlying stocks and bonds.
In terms of cost, XGRO has a slightly lower management fee and management expense ratio of 0.18% and 0.20% respectively.
Whichever one you choose between XGRO or VGRO, you’ll be getting a low-cost portfolio that is diversified worldwide.
VGRO Vs VFV
Vanguard S&P 500 Index ETF (VFV) is also an all-equity ETF fund that invests in U.S. companies and tracks the S&P 500 index.
It is also a Canadian dollar ETF that is listed on the Toronto Stock Exchange (TSX).
At an MER of just 0.09%, VFV has a much lower cost than VGRO. But it is a less diversified fund with 100% of its assets invested in U.S., compared to VGRO’s exposure to U.S. equities of just 33%.
VGRO vs Robo-advisors
Robo-advisors are a low-cost way to build an hands-off, “set it and forget” investing portfolio. Your portfolio is managed by professionals and automatically rebalanced at regular intervals.
Asset allocation ETFs, like VGRO, let DIY investors do the same at a relatively cheaper cost if you’re willing to put in some extra effort.
Questwealth Portfolio, Questrade’s robo-advisor offering, has a low management fee of just 0.25%. But you can expect the total cost of the portfolio to be closer to 0.40% after adding the MER for the underlying ETF holdings.
On the hand, Wealthsimple, Canada’s most popular robo-advisor has a management fee starting at 0.50% for accounts below $100,000. The underlying ETFs will add another 0.20% to the portfolio for a total cost of 0.70%.
If you’re willing and able to spend a few extra minutes on your portfolio, then VGRO is a better option than the robo-advisors. Especially if you have an account at a brokerage that lets you buy ETFs for free like Questrade and WealthSimple Trade.
Pros and Cons of VGRO ETF
Pros of VGRO:
- Investors get a globally diversified portfolio with a single buy
- VGRO holdings are automatically rebalanced periodically – saving investors valuable time and extra brokerage fees
- It is traded in Canadian dollars: no foreign exchange stress and cost
- VGRO stock is priced low so it is easier to buy when you are investing small amounts of money at a time
- Quarterly dividend payment
- It can be held in registered accounts like RRSP, TFSA, RESP and so on
Cons of VGRO:
- Slightly more expensive than Blackrock’s offering (0.20% MER)
- VGRO has some home bias to Canada.
Is VGRO Right For You?
Though VGRO has a 20% allocation to fixed income, with 80% allocated to equities, it is not for everyone.
The fixed income part of the portfolio may help cushion some drop in your portfolio, but it may not be enough for larger swings. So you should only consider VGRO if you have a long-term investment horizon.
But a long investment horizon isn’t enough. You should also be willing to tolerate the short-term fluctuation.
Like VEQT, VGRO may be right for you if you:
- have a long investment horizon
- can take the occasional volatility – that is, you have a higher risk appetite
- want to build a low-cost diversified portfolio at the fraction of the cost of mutual funds
- don’t want to spend time and money rebalancing your portfolio periodically
For example, if you’re a parent that’s just starting to save for your kid’s education in RESP, but you don’t want an all-equity portfolio, VGRO may be a good balance between capital growth and volatility.
The bottom-line is:
Each investor should invest according to their risk appetite. There are several other one-ticket funds from Vanguard and other ETF providers that may better fit your investment goals and risk tolerance.
How To Buy VGRO ETF
You can buy VGRO like you would buy any other ETF or stocks at any of the brokerages in Canada.
A better way to buy it, especially if you’ll be investing smaller amounts, is at brokerages that let you buy ETFs for free. Questrade and WealthSimple Trade lets you do just that.
Buy VGRO at Questrade
Questrade is Canada’s most popular online brokerage. You can buy ETFs for free but selling ETFs or trading individual stocks costs 1 cent per share ($4.95 minimum and $9.95 maximum)
You can get a $50 trade rebate when you sign-up for Questrade using the promo code in the link below. The promo code will be automatically applied when you create an account.
Buy VGRO at WealthSimple Trade
WealthSimple Trade is the brokerage offering from WealthSimple. It started as a mobile app but it is now available as a web version (still in beta mode).
Canadians can buy or sell both ETFs and stocks for free on the platform; a great way to save fees for DIY investors that invest small amounts on a regular basis.
The only trading fees at WealthSimple Trade is the currency exchange fee on USD trades. But VGRO is traded in Canadian dollars so this isn’t a concern.
VGRO Review FAQ
VGRO’s target allocation to equities is 80% with the balance to fixed income. A big chunk of this is exposed to Canada and U.S. companies.
It depends on your personal circumstances. If you have a long investment horizon and above average risk tolerance, VGRO’s 80% equity allocation can provide investors with long-term capital appreciation.
My VGRO review is positive. It provides a good balance between cost and convenience and is a great option for DIY investors in Canadians.
If you’re a DIY investor that is:
- tired of the time and stress of managing your investment portfolio;
- want to keep things simple; and
- keep your investment costs low
Then VGRO may be for you.
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Vanguard Growth ETF Portfolio (VGRO) Review
VGRO is an asset allocation ETF solution from Vanguard, one of the largest asset management companies in the world. The portfolio’s objective is to provide investors with “long-term capital growth” by investing in both equity (80%) and fixed income (20%) securities.