Investing can feel like a roller coaster at times, especially on days when markets seem to be wildly swinging up or down based on everything from pandemics to whatever the headline of the day may be.
Somewhere between all these feelings of euphoria and defeat is sanity. And within that sanity is a wish not to worry or constantly think about checking your investments daily.
For me, some of that sanity lies within choosing an ETF (exchange traded funds) that’s an all-in-one approach to investing. One simple ETF to buy instead of 5 different ones to have a balanced investment portfolio.
But which one should you choose? IS VGRO a good option?
- What’s an all-in-one ETF?
- What’s VGRO?
- The pros and cons
- VGRO distribution
- An alternative to consider
- How to buy Vanguard ETFs in Canada
So what exactly is an all-in-one ETF?
An ETF is an investment fund that lets you buy several individual stocks or bonds at once. An all-in-one ETF has many individual ETFs in one package, making it easier to have a wider market exposure and a diversified portfolio.
Sure there will be ups and downs in the markets, but holding a diversified ETF with wide market exposure means weathering any market storms without constantly worrying about balancing your asset allocation and making it easier to avoid panic selling or buying.
Will there be drops in market value in the future? Of course, but I haven’t shined up my crystal ball lately to tell when or by how much. If you’re prone to panicking in market swings, then it may be best to keep your money under your mattress where you like it. Just remember that historically, markets always recover and you’re likely better off staying in than selling low.
Related: Self-Directed Investing: What You Must Know Before Starting
What’s VGRO?
VGRO is managed by The Vanguard Group, one of the world’s largest equity and fixed income managers. They were the first to introduce index investing way back in 1975.
The ETF has been around since January 2018 and is part of a newer trend for ETFs offering a simpler one-buy approach to investing.
Vanguard offers a few other options besides VGRO for an all-in-one ETF, but what sets VGRO apart from the others is its large exposure to equities while maintaining a smaller weighting in fixed income assets like bonds.
Here’s a basic overview:
| Fund code | VGRO |
|---|---|
| Management team | Vanguard Equity Index Group |
| Inception date | January 2018 |
| Asset allocation | * Stocks: 78.51% * Bonds: 21.42% * Short-term reserves: 0.07% |
| Fees | * MER: 0.25% * Management fee: 0.22% |
| Yields (annualised) | * 12 month trailing: 2.29% * 1 year: -7.19% * Since inception: -2.03% |
| Net assets | $1.1 billion CAD |
| Average distribution (July 2018 – April 2020) | $0.11375109 |
| Last distribution (Payable April 8, 2020) | $0.094021 |
| Largest country weighting | USA @ 40.1% |
| Eligible plans | * RRSP * RRIF * RESP * TFSA * DPSP * RDSP |
Related: Robo Advisors in Canada
The pros and cons of VGRO
Overall I think VGRO mostly has pretty good things going for it.
The good
- Compared to traditional mutual funds, the management fees are very low for this ETF.
- I can buy without the worry of constantly rebalancing my portfolio. The fund employs people to do this within its holdings.
- For me it makes investing simple, buying and holding this one ETF is like buying a complete investment portfolio.
As for the not so good
- It’s a fairly new approach to investing (the all-in-one, not the ETF) which can feel unproven.
- Because it’s weighted in equities, price drops may scare off investors.
Related: 11 Signs Your Financial Advisor Is Robbing You Blind (And How To Stop It!)
VGRO distribution and allocation
What makes VGRO interesting to some investors, besides its simplicity, is how diversified it is through its international exposure and the way the money is spread among sectors.
It has an 80% stocks and 20% bonds approach. This means 80% equities, which can prove volatile when the markets are up or down, and 20% bonds, which are typically a safer stable investment with lower yield but less risk.
Let’s take a closer look at the different distributions.
Sector distribution
Below are the sectors the fund is distributed through. Note the largest holdings in the fund are financials (25.8%) and the smallest are telecommunications (2.5%).
| Sector | Fund |
|---|---|
| Financials | 25.8% |
| Industrials | 13.7% |
| Technology | 13.3% |
| Consumer Services | 10.7% |
| Consumer Goods | 8.3% |
| Health Care | 8.2% |
| Oil & Gas | 7.9% |
| Basic Materials | 5.9% |
| Utilities | 3.6% |
| Telecommunications | 2.5% |
| Other | 0.1% |
| Total | 100.0% |
Sourced from Vanguard website: April 14, 2020
Underlying Vanguard funds allocation
Vanguard assembled a bundle of their products to form the VGRO fund. For example, it holds VUN which is their US total market index. Holding VUN alone is like owning a tiny piece of over 3,500 US stocks, including all the stocks in the S&P Index.
Below is a listing of those ETFs that make up VGRO, all of which are offered from Vanguard on their own as well.
| Product | Fund |
|---|---|
| Vanguard US Total Market Index ETF | 31.6% |
| Vanguard FTSE Canada All Cap Index ETF | 23.8% |
| Vanguard FTSE Developed All Cap ex North America Index ETF | 17.2% |
| Vanguard Canadian Aggregate Bond Index ETF | 12.6% |
| Vanguard FTSE Emerging Markets All Cap Index ETF | 6.0% |
| Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged | 4.7% |
| Vanguard US Aggregate Bond Index ETF CAD-hedged | 4.1% |
Top market allocation exposure
Which countries have the heaviest allocations for VGRO, you ask?
Well, it’s heavily weighted in US stocks with 40% exposure dedicated to that market. What that means is when US markets go up, typically so will this ETF. When they go down, the ETF sinks as well.
| Market Allocation | Fund |
|---|---|
| United States | 40.1% |
| Canada | 30.5% |
| Japan | 5.3% |
| United Kingdom | 3.4% |
| China | 2.9% |
As of close 29 February 2020
VGRO alternatives
There are other all-in-one ETFs similar to VGRO, including XGRO from BlackRock, which also has an 80% equity and a 20% fixed income.
Side by side, how do they compare?
| Fund code | VGRO | XGRO |
|---|---|---|
| Management team | Vanguard Equity Index Group | BlackRock |
| Commencement date | January 2018 | June 2007 |
| Asset allocation | * Stocks: 78.51% * Bonds: 21.42% * Short-term reserves: 0.07% |
* Stocks: 79.10% * Bonds: 20.69% * Short-term reserves: 0.21% |
| Fees | * MER: 0.25% * Management fee: 0.22% |
* MER: 0.20% * Management fee: 0.18% |
| Yield | * 12 month trailing: 2.29% * 1 year: -7.19% * Since inception: -2.03% |
* 12 month trailing: 2.48% * 1 year: -6.24% * Since inception: 2.23% |
| Net assets | $1.1 billion | $312,085,848 |
| Last distribution | $0.09 | $0.08 |
| Largest country weighting | USA @ 40.1% | USA @ 48.4% |
Overall these funds are pretty similar, with Vanguard edging out Blackrock only on Net Assets within the fund.
In terms of return, BlackRock has been doing marginally better than Vanguard, but it’s hard to tell the long-term differences since VGRO’s inception was only in 2018.
Blackrock also beats Vanguard with a lower MER and Management Fee.
Comparing asset allocation
But what are you buying with XGRO, and how does it compare to what you get with VGRO?
Here are the top holdings for both ETFs:
| VGRO product | VGRO fund | XGRO product | XGRO fund |
|---|---|---|---|
| Vanguard US Total Market Index ETF | 31.6% | iShares Core S&P Total U.S. Stock Market ETF | 36.98% |
| Vanguard FTSE Canada All Cap Index ETF | 23.8% | iShares Core MSCI EAFE IMI Index ETF | 19.81% |
| Vanguard FTSE Developed All Cap ex North America Index ETF | 17.2% | iShares Core S&P/TSX Capped Composite Index ETF | 18.95% |
| Vanguard Canadian Aggregate Bond Index ETF | 12.6% | iShares Core Canadian Universe Bond Index ETF | 12.99% |
| Vanguard FTSE Emerging Markets All Cap Index ETF | 6.0% | iShares Core MSCI Emerging Markets ETF | 3.68% |
| Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged | 4.7% | iShares Core Canadian Short Term Corporate + Maple Bond Index ETF | 3.31% |
| Vanguard US Aggregate Bond Index ETF CAD-hedged | 4.1% | iShares Broad USD Investment Grade Corporate Bond ETF | 2.12% |
How to buy Vanguard ETFs in Canada
If you’re interested in investing with Vanguard, you can either buy through a financial advisor or an online brokerage account.
Want a recommendation? I personally use Questrade for investing. They’re a Canadian online broker with free ETF purchases and a robo advisor portfolio option as well, if you prefer a more hands-off approach.
Interested in checking it out? Use this link and you’ll get your first $10,000 managed for FREE for a year or a $50 commission rebate.
$25 GeniusCash + Total of $60 off your first four orders + free delivery (Eligible for New Customers in ON and QC only)
Conclusion
Do you own an all-in-one ETF within your investment portfolio? What do you think of it?
Are you more conservative with your approach to investing? Is there an all-in-one ETF you like more than VGRO?
FAQ
What are ETFs?
ETFs, or exchange traded funds, are investment funds that are made up of a lot of different stocks and bonds in one purchase. This makes it an easier buying process, since one purchase is already pretty diversified and includes a lot of different shares. Learn more about ETFs and all-in-one ETFs here.
What’s VGRO?
VGRO is an all-in-one ETF from Vanguard, which means it houses many different ETFs in one package. It’s well diversified both in terms of its international exposure as well as its spread amongst sectors. It has an 80% stocks and 20% approach, so it’s best for long-term holdings. Find out more about VGRO’s asset allocation here.
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