VGRO Review: Vanguard Growth ETF Portfolio

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VGRO review showing the holding, fees, performance, returns and how it compares to XGRO and other ETFs

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 30,500 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 1.65% 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: $2.4 billion
  • MER: 0.25%
  • Inception Date: Jan 25, 2018
  • Equity Allocation: 80%

VGRO Holdings

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 about 82% of its assets as at April 2021.

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.

ETF Holdings

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 April 2021 are:

  • Vanguard US Total Market Index ETF: 33.5%
  • Vanguard FTSE Canada All Cap Index ETF: 24.40%
  • Vanguard FTSE Developed All Cap ex North America Index ETF: 16.50%
  • Vanguard Canadian Aggregate Bond Index ETF: 11.50%
  • Vanguard FTSE Emerging Markets All Cap Index ETF: 6.30%
  • Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged: 4.40%
  • Vanguard US Aggregate Bond Index ETF CAD-hedged: 3.40%

Notice that more than half of the fixed income allocation are Canadian bonds.

Stock Holdings

The ETF indirectly holds individual stocks and bonds through its underlying ETFs.

In total, you’re looking at over 30,500 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 April 2021.

  • Equities: 13,023
  • Bonds: 17,543

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 ValueSectorMarket
Royal Bank of Canada1.55BanksCA
Apple Inc.1.53Computer HardwareUS
Shopify Inc. Class A1.49Consumer Digital ServicesCA
Microsoft Corp.1.47SoftwareUS
Toronto-Dominion Bank1.42BanksCA
Amazon.com Inc.1.14Diversified RetailersUS
Enbridge Inc.0.89PipelinesCA
Bank of Nova Scotia0.88BanksCA
Canadian National Railway Co.0.87RailroadsCA
Brookfield Asset Management Inc. Class A0.69Asset Managers and CustodiansCA

Together, the VGRO’s top 10 equity holdings account for 11.93% of its total assets.

The fixed income allocation’s top holdings are mostly government bonds, primarily Government of Canada.

Sector Weights

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 19.7% in April 2021. On the other hand, Technology sector grew from 12.6% to 17.9% within the same period.

The sector allocation as at April 2021 were:

SectorWeight(%)
Financials19.7
Technology17.9
Consumer Discretionary13.1
Industrials12.9
Health Care8.4
Basic Materials6.4
Energy6.2
Consumer Staples4.8
Utilities3.8
Telecommunications3.6
Real Estate3.2
Other0.0

Geographical Allocation

VGRO has a heavier weighting to North America for both the equity and fixed income components. The total exposure to Canada and U.S. is about 62% for equities and 14% for fixed income.

Asset ClassTotal AllocationCanada & US only
Equities80%57%
Fixed Income20%14%

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:

Equities:

CountryWeight (%)
United States41.5
Canada30.0
Japan4.7
China3.1
United Kingdom2.9
Others (45 markets)17.8
Total100

Fixed Income:

CountryWeight (%)
Canada59.5
United States17.9
Japan4.3
France3.0
Germany2.6
Others (59 markets)12.7
Total100

Here’s a summary of VGRO holdings:

  • Built using 7 other Vanguard ETFS
  • Over 30,500 individual securities
  • Allocation to over 60 markets across the world
  • The Top 3 sectors (Financials, Technology and Customer Discretionary) account for almost 51% of VGRO’s equity holding.
  • About 82 percent exposure to companies with large capitalization

VGRO Fees

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%
Brokerage CommissionVaries

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 April 2021 was 5.78%.

Year to date and inception to date  performance of VGRO returns as at March 2021

If you had invested $10,000 in VGRO since inception, your investment would have grown to $13,181.55 in May 2021.

Value of $10,000 invested in VGRO since inception to March 2021

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.

Related: XEQT Review

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 0.08%, 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 they’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

What is VGRO’s allocation to Equity?

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.

Is VGRO is a good investment?

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.

Conclusion

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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Related Posts:

Vanguard Growth ETF Portfolio (VGRO) Review
4.7

Summary

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.

Simon is a CPA by day and a Personal Finance Blogger by night. With over a decade experience in financial services, he's passionate about personal finance, investing and helping people take control of their financial life.

2 thoughts on “VGRO Review: Vanguard Growth ETF Portfolio”

  1. Thanks good article…question: why don’t you mention how you can avoid the higher Robo fees by doing a self directed TFSA and just using some of those asset allocation funds ….with wealthsimple for example and a self-directed TFSA or RRSP you’re not paying any of their
    .5 mgmt fees is buying can stocks and ETFs.

    Reply
    • Thanks for the comment Joe.
      I think that’s what the post is about. Anyone investing in VGRO or any of the other asset allocation funds is a self-directed investor. I mentioned the robo-advisors as alternatives to one-ticket ETFs but also pointed out that “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.”

      Reply

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