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VGRO ETF Review: All You Need to Know About the Vanguard Growth ETF Portfolio

vgro etf

There are several ETFs or exchange traded funds that are popular in Canada. Two such ETFs are BlackRock’s XGRO ETF and Vanguard’s VGRO ETF. Both are top-shelf products, with a lot in common and a few differences. Now that you’ve read Learning Bull’s XGRO ETF review, here is all you need to know about the Vanguard Growth ETF Portfolio.

What is VGRO ETF?

The Vanguard Equity Index Group, is a non-profit asset management firm and it founded the VGRO ETF on January 25th, 2018. The firm manages assets worth more than $6.2 trillion, making it a global powerhouse in asset management.

The company’s brainchild VGRO ETF is an all-in-one ETF with a bias for Canadian equity and fixed-income assets. So far, its income distribution is 0.124983 per unit, and it will go well with your RRIF, RESP, RRSP, DPSP, RDSP, and TFSA accounts. You will find VGRO trading on the Toronto Stock Exchange.

As you know, an all-in-one ETF gives you a mixed and matched selection of equities and bonds in one basket. That gives you a chance to spread your risks-reward ratio and get yourself some passive income.

VGRO ETF has an 80/20 allocation, meaning 80% is allocated in stocks and 20% in bonds. Therefore, it is an excellent package for investors with a low-medium risk tolerance.

How does VGRO ETF work?

Those who buy VGRO ETF have the following objectives:

  • They want a long-term capital growth portfolio that they can run from the couch without stress. If you need your profits tomorrow (within a short time), ETFs will not give you the satisfaction you get from money markets.
  • They want iShare ETFs that employ hedging and indexing strategies to expose investors to the best equity and fixed-income assets across North America and very little from the US and other international markets.
  • They have a low-high risk tolerance, so they don’t mind an investment portfolio that keeps rebalancing from time to time. Eventually, they will make some profit.

Vanguard’s VGRO carries ETFs that include VUN (about 30%) and VCN (about 25%) on top of other carefully selected equity; hence it has something from all the major asset classes. Therefore, once you buy VGRO, you don’t need another ETF.

Is VGRO a good investment?

Let’s look at all the features of VGRO ETF; then we can answer this question together, okay?

VGRO top ten investments as of March 31st, 2021

Vanguard US Total Market Index ETF33.10%
Vanguard FTSE Canada All Cap Index ETF24.20%
Vanguard FTSE Developed All Cap ex North America Index ETF16.60%
Vanguard Canadian Aggregate Bond Index ETF11.70%
Vanguard FTSE Emerging Markets All Cap Index ETF6.40%
Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged4.50%
Vanguard US Aggregate Bond Index ETF CAD-hedged3.50
  • Number of stocks        12, 986
  • Median market cap     58.4B
  • Price/earning ratio      22.7X
  • Price/book ratio          2.4X
  • Return on equity         13.7%
  • Earnings growth rate  12.8%

Bonds

No. of bonds17, 490
Yield of maturity1.4%
Average duration7.6years
Average maturity10.7 years
Average coupon2.6%
Short-term reserves0.1%

Summary of asset allocation

Equity 80.32%

Bonds  19.62%

Short-term reserves     0.06%

VGRO top 10 holdings

Royal Bank of Canada1.55%
Apple Inc.1.48%
Shopify1.44%
Microsoft Corp.1.43%
Toronto-Dominion Bank1.39%
Amazon.com1.06%
Canadian National Railway0.97%
Bank of Nova Scotia0.89%
Enbridge0.87%
Brookfield Asset Management Inc.0.70%

VGRO Trading Information

  • Exchange        Toronto Stock Exchange
  • Symbol                        VGRO
  • Currency         CAD
  • ISIN                CA92207X1050
  • CUSIP             92207X105
  • SEDOL                       BF7ML33

VGRO ETF FEES

You will pay a 0.22% management fee and it has an MER (Management Expense Ratio) of 0.25%. That’s more expensive than XGRO and DIY ETFs, but it’s less than the average equity mutual funds and robo advisors.

Also, your portfolio will rebalance automatically hence saving you unnecessary stress. You can buy VGRO ETF for free from Questrade or Wealthsimple.

VGRO ETF returns/VGRO Performance

VGRO dividends as of September 2019

  • 12-month trailing yield 2.20%
  • Distribution yield 2.05%
  • Dividend schedule: quarterly

VGRO dividend as of March 31st, 2021 (First quarter)

  • 12-month trailing yield 1.85%
  • Distribution yield 1.68

To summarize, investors went home with 17.84% in returns in 2019 and 10.89% in 2020. These are inflation-thumping returns considering the world went through the COVID-19 pandemic.

VGRO ETF pros and cons

Pros

  • You have a chance to invest easily and cheaply across a wide variety of top Canadian assets. Investors call it the Canadian Couch Potato Strategy meaning; you have an investment portfolio containing stocks and bonds you manage from your couch.
  • Automatic rebalancing
  • Low management fee
  • It gives tax efficiency to TFSA or RRSP accounts.
  • The mix and match asset allocation meets the needs of all types of investors.
  • Vanguard has excellent customer service.

Cons

  • If you’re a pro trader, you might want to buy your ETF to avoid the management fee.
  • VGRO leans too much towards Canadian markets.
  • The portfolio has a couple of high-risk stocks. You can see a couple of blue-chip Canadian stocks among the top 10 holdings.
  • It has a higher risk than VBAL ETF and VCN (Vanguard FTSE Canada All Cap Index ETF).

VGRO vs. VBAL

  • Both are products from the Vanguard asset company.
  • While VGRO has an 80/20 market allocation, VBAL is 60/40 (60% equity, 40% fixed-income assets.

VGRO vs. VCN

  • VCN is an all fixed-income ETF
  • VGRO has better returns than VCN, which is expected because bonds have low dividends compared to stocks.

VGRO vs. XGRO

  • VGRO is more expensive than XGRO in terms of the management fee (MER). VGRO is at 0.25%, while XGRO is at 0.18%.
  • Both ETFs are long-term capital growth portfolios.
  • Both employ the Canadian Couch Potato strategy.
  • VGRO is from Vanguard, while XGRO is a BlackRock product
  • XGRO leans more on the US and other international markets.
  • VGRO is older than XGRO hence more popular among Canadian investors.
  • VGRO has posted better returns in the last two years compared to XGRO
  • Both are low-medium risk investments.

Verdict

VGRO is worth your time and money, especially if you’re a beginner and you have long-term investment objectives. Also, blue-chip stocks may be volatile in an economic downturn, but they’re time-tested and trustworthy.


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