VGRO ETF Review: Vanguard iShares Core Growth ETF Explained

VGRO Review: Rating: 4.7/5

If you’re looking for an alternative investment vehicle, VGRO may be just what you’re looking for.

As one of the best ETFs in Canada, VGRO is a well-diversified all-in-one ETF portfolio that serves the long-term investment objectives of both new and seasoned investors in Canada.

VGRO provides a low-cost alternative to costly mutual funds for managing your money.

Based on my over 2-year experience with VGRO, I keep counting more reasons to sustain my investment with VGRO EFT.

However, since everyone has a different financial situation and investment objective, it is important to know the two sides of VGRO: the good and the ugly.

You will learn about all of this from my experience.

As you continue reading this VGRO review, you will learn about what VGRO ETF is all about, its pros and cons, and whether or not it’s the right investment vehicle for you.

Here we go!

VGRO Stock Overview

The Vanguard Group, being one of the biggest stock and fixed income managers in the world, manages the Vanguard Growth ETF Portfolio (VGRO).

VGRO was launched in January 2018 and is part of a growing wave of ETFs that offer a simplified all-in-one investment solution.

Of all the five major ETF portfolios of Vanguard Canada, only VGRO and Vanguard Conservative Income ETF Portfolio (VCIP) have high exposure to equities with low weighting on fixed income securities.

ETF Portfolio  Asset Allocation
Vanguard Growth ETF Portfolio

(VGRO)

80% equity and 20% fixed income
Vanguard Conservative Income ETF Portfolio (VCIP)80% fixed income and 20% equity
Vanguard Conservative ETF Portfolio

(VCNS)

60% fixed income and 40% equity
Vanguard Balanced ETF Portfolio

(VBAL)

60% equity and 40% fixed income

 

Vanguard All-Equity ETF Portfolio

(VEQT)

100% equity

Source: Vanguard.ca

What Exactly is an All-in-One ETF?

An ETF is a kind of fund that allows you to purchase different single stocks or bonds at the same time.

An all-in-one ETF combines multiple individual ETFs into one, simplifying the process of diversifying your portfolio and obtaining broader market exposure.

Otherwise known as asset allocation or self-balancing ETFs, all-in-one ETFs are automatically rebalanced to maintain their risk levels/objectives and asset allocation.

All-in-one ETFs are available in a variety of allocation combinations, varying from long-term options of stocks, bonds, or mixed-asset allocation.

Even though you don’t have to worry about your asset distribution with all-in-one ETFs (aside from selecting your stock/bond split), there is also no room for tweaking.

However, despite the ups and downs in the stock market, investing in a diversified ETF with broad sector exposure allows you to survive market storms without thinking about rebalancing your asset allocation.

What is VGRO ETF?

VGRO is a Vanguard all-in-one ETF, which implies that it contains a variety of various ETFs in a single package. VGRO is well-diversified both internationally and across different sectors.

Traded on the Toronto Stock Exchange (TSX), VGRO is composed of many other Vanguard Index ETFs and seeks to invest in approximately 80% equity and 20% fixed income.

With a low to medium risk indicator, you don’t need to rebalance your VGRO  portfolio. Your portfolio is already balanced because each unit is balanced.

VGRO, like most all-in-one exchange-traded funds, is well-diversified. This is a great benefit because wide international exposure reduces investment risks.

Additionally, VGRO is a low-cost investing platform as opposed to mutual funds and Robo-advisors.

VGRO Investment Objective and Strategy

The investment objective of Vanguard Growth ETF Portfolio (VGRO) is to offer investors long-term capital growth through equity and fixed-income investment.

In other words, the Vanguard Growth ETF Portfolio invests mainly in stocks and bonds in order to meet its investment objective.

It does so directly or indirectly by investing in a single, multiple ETFs or any other investment funds which are managed by a manager or an affiliate.

In order to meet the investment objective, the sub-advisor would aim to sustain a long-term strategy of approximately 80% equity and 20% fixed income securities asset allocation.

Based on the discretion of the sub-advisor, the portfolio asset composition can be reconstituted and rebalanced at any point in time.

The underlying funds are supposed to be broad-based stock and fixed income index funds.

Who Can Buy VGRO ETF?

VGRO is an exchange-traded fund, and anyone can buy it on the stock market. However, this ETF portfolio is most suitable for:

  • Investors seeking long-term capital growth.
  • Those who are looking for global and diversified diversification across different sectors.
  • People that can stand the ups and downs of the stock market.

If you are one of the above categories, then congratulations, VGRO is for you!

5 Key Facts about VGRO

Considering the growing number of ETFs in Canada, it was so difficult for me to make a choice in the first place.

How do iIfind an all-in-one ETF portfolio with not only low management fee but low MER, low minimum investment and favourable return and low?

After in-depth research and consultations with friends and family, VGRO was the answer. And I must confess that I was not disappointed.

Here are the current VGRO facts as of May 17, 2021:

  • VGRO Stock Price: $30.0112
  • Management Fee: 22%
  • Management Expense Ratio (MER): 0.25%
  • Asset Allocation: 80% equity and 20% fixed income
  • Average Annual Return:81%

VGRO Stock Pros and Cons

Wondering why VGRO is tempting to both new and seasoned investors in Canada? Here are the open secrets:

Pros

  • Low management fee
  • Ease of use and possession
  • All-in-one global diversification
  • Tax benefits (such as on TFSA and RRSP)
  • High liquidity
  • Hands-free portfolio management

However, just like other ETF portfolios, VGRO also has some drawbacks, which I also experienced. Let’s take a look:

Cons

  • Growing trading commissions (i.e. you trade with a commission-based broker)
  • More inclined to the Canadian market.

Overall, you will notice that VGRO has more benefits than drawbacks which also justifies the 4.7-star rating of this review.

VGRO Asset Allocation

VGRO  seeks to invest in approximately 80% equity and 20% fixed income. Hence, as of April 30, 2021, VGRO has the following asset allocation:

  • Stocks – 80.61 %
  • Bonds – 19.34 %
  • Short-term reserves – 0.05 %

You don’t have to think about rebalancing your portfolio with VGRO asset allocation because it is handled automatically.

This is a big plus as most people don’t have the time, interest or knowledge on how to rebalance their asset allocation by themselves.

Here are the seven VGRO allocations to underlying Vanguard funds:

AllocationETF
3.40%Vanguard US Aggregate Bond Index ETF CAD-hedged
4.40%Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged
6.30%Vanguard FTSE Emerging Markets All Cap Index ETF
11.50%Vanguard Canadian Aggregate Bond Index ETF
16.50%Vanguard FTSE Developed All Cap ex North America Index ETF
24.40%Vanguard FTSE Canada All Cap Index ETF
33.50%Vanguard US Total Market Index ETF

Source: Vanguard.ca

VGRO Geographical Allocation

Here is the geographic allocation of VGRO ETF of the top 10 countries as of April 30, 2021.

CountryAllocation (%)
United States41.5%
Canada30.0%
Japan4.7%
China3.1%
United Kingdom2.9%
France1.9%
Germany1.7%
Switzerland1.6%
Australia1.5%
Taiwan1.4%

Source: Vanguard.ca

VGRO Top 10 Holdings

VGRO has a total of 12819 holdings as of April 30, 2021. Here are the top ten:

SectorWeighting (%)
Royal Bank of Canada1.54797%
Apple Inc.1.53177%
Shopify Inc.1.49047%
Microsoft Corporation1.46678%
Toronto Dominion Bank1.41530%
Amazon Inc.1.14456%
Enbridge0.88897%
Bank of Nova Scotia0.87679%
Canadian National Railway0.87205%
Brookfield Asset Management0.69206%

Source: Vanguard.ca

VGRO Returns/Performance

The cumulative growth of VGRO from inception (January 2018) to April 2021 is $10,000. The following is a display of one month to three years return.

VGRO Returns

Source: Vanguard.ca

VGRO ETF Dividends

As of April 30, 2021:

  • 12-month trailing yield:82%
  • Distribution yield:65%
  • Dividend frequency: Quarterly

Here is the dividend distribution history of VGRO in 2020:

VGRO Distribution History

Source: Vanguard.ca

VGRO Fees

VGRO fees are categorized into two:

  • Management fee: 0.22%
  • MER: 0.25%.

Compared to individual ETFs, the MER is higher. However, I’m okay with it because my portfolio is rebalanced automatically, and it Is lower compared to mutual funds and Robo-advisors.

VGRO Eligibility

You can invest with VGRO ETF on eight investment vehicles as follows:

  • TFSA
  • RRSP
  • RRIF
  • RESP
  • RDSP
  • DPSP
  • Non-registered

Anything beyond or less than the above is unqualified for VGRO investment.

How to Buy VGRO ETF

When it comes to buying VGRO, you have two great options: Questrade and Wealthsimple Trade.

Questrade is one of the major online discount brokerages in Canada.

With a different range of multiple investment vehicles such as stocks, bonds, mutual ETFs, mutual funds, etc., Questrade got you covered on your VGRO investment.

Although you’re charged anything from $4.95 – $9.95 when you sell, you can buy ETFs free of charge on Questrade.

All you need is to create a Questrade account which is free, deposit a minimum of $1000 and begin trading with a %50 bonus.

If you’re not comfortable with Questrade, you can use Wealthsimple Trade which is the only brokerage in Canada with zero commission on any trade.

One thing I like about Wealthsimple Trade is that you can open an account and start trading with as low as $1.

My 5-Star Rating on VGRO Stock ETF

Here are the factors that determine my 4.7-star rating on VRGO ETF:

FeatureRating
VGRO Stock Price**** (4.3)
Management Fee**** (4.5)
Management Expense Ratio (MER)*****
Asset Allocation****(4.7)
Average Annual Return**** (4.3)

VGRO vs XGRO

Here I present to you a brief comparison between VGRO and its top competitor, XGRO.

The truth is, these two great ETF portfolios have some similarities, such as similar investment objectives and a wide range of diversification.

However, the two have some differences. iShares Core Growth ETF Portfolio (XGRO), which is managed by Blackrock, has a relatively lower MER (0.20%) vs Vanguard VGRO MER (0.25%)

Also, iShares Core Growth ETF Portfolio (XGRO) has a relatively low management fee (0.18%) vs Vanguard VGRO (0.22%).

Also, VGRO has a home bias because it is more inclined to the Canadian market while XGRO is more inclined to the US market.

Even though it’s hard to identify which is the best among these two great ETFs, at least now you know their similarities and differences, it’s up to you to make a choice.

Finally, to learn more about XGRO ETF, read this comprehensive review.

VGRO All-in-One ETF vs Individual Holdings: Which to Choose?

If you’re considering going the DIY path to save cost, you can invest in any of the VGRO’s underlying ETFs.

Comparably speaking, purchasing an individual ETF is less expensive than purchasing the all-in-one ETF.

Also, paying a small fee to avoid rebalancing can be worthwhile as it can quickly add up over time and impact your portfolio growth.

The MER of VGRO all-in-one is 0.25%, the MER of VGRO underlying ETFs with similar allocation is just 0.16%. This implies that for every $10,000 you invest, you save $9 annually.

Although it may not sound like much, but as the portfolio becomes larger, so your fees increase.

Moreover, a popular investing strategy is to minimize risk as the investment period draws to a close. Investors usually raise their bond holdings when they near retirement to mitigate volatility risk.

Verdict on VGRO Review

Now you can dictate that my VGRO review is positive. It’s so because its performance, MER, management fee, asset allocation and stock price are all consistent with its investment objective.

Besides being a low-cost alternative to mutual funds and Robo-advisors, VGRO is also easy to use for purchase for both new and seasoned investors.

However, since the VGRO all-in-one ETF is relatively costly in management fee compared to underlying VGRO individual holdings… you can begin with an individual ETF and later upgrade to the all-in-one ETF.

Also, you can choose to purchase XGRO ETF which has some appealing differences from VGRO.

However, the choice is yours!

Frequently Asked Questions and Answers on VGRO ETF

Is VGRO a Good ETF?

Yes. This is especially because of its ease of use, low MER, low management, and low-medium risk indicator.

Is VGRO Tax Efficient?

Yes. VGRO is tax-efficient if you invest in one of its tax-free eligible accounts such as TFSA and RRSP without contributing more than you are expected to contribute.

How Risky is XGRO?

XGRO is not so risky because of its low-medium risk indicator. This ranking is determined by the amount by which the ETF’s returns have adjusted over the years. It does not indicate the potential volatility of the ETF.

Note that this risk indicator is subject to change. Also, an ETF with a low-risk indicator has the potential of losing money.

How Much Money Does Vanguard Growth ETF Portfolio Make?

As of April 30, 2021, the total of Vanguard Growth ETF Portfolio assets under management (AUM) is $2.4 billion. Have more questions on VGRO ETF? Drop them in the comment section.

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