VGRO Review – Vanguard’s Best Growth ETF Portfolio (2020)

Last updated on April 1st, 2020 at 11:44 pm

Vanguard’s VGRO is one of the best growth ETFs in the Canadian market right now. The next immediate question you may ask is “When there are 100’s of great ETFs out there in the Canadian market or the TSX, why invest in VGRO? Why not invest in others such as VCN, XIC, XUS, XAW, XRE, VBAL or other great choices? 

Here’s the thing right – Vanguard’s VGRO and VEQT hold other Vanguard Canada ETFs. Roughly around 25% of VGRO is invested in VCN. So it’s like buying additional shares of VCN isn’t going to help you diversify.

VGRO ETF also holds VUN. About 30% of VGRO is invested in VUN. And VUN holds over 3500 US-listed stocks, including every stock in the S&P 500 Index. So you aren’t getting any additional diversification by buying an S&P 500 ETF. That’s the beauty of investing in VGRO. It pretty much covers all of your investment needs through one portfolio. 

In total, VGRO holds over 12,000 different stocks and bonds from around the world. That makes it remarkably well diversified. You don’t need more diversification for your individual portfolios.

In this article I’ll try my best to answer all possible questions you may have regarding Vanguards growth ETF VGRO and why you should probably consider investing in this ETF. Let us look at all the factors that’ll make investing in VGRO not only great but why it is something you need to consider.

Also, let’s look dive deep into the Pros and Cons of the VGRO ETF from an investment standpoint and learn more about why I think it’s a very good investment for you in the long term. Now then, let’s get started. 

VGRO - 1

Why VGRO ETF?

First of all, one of the leading asset management companies in the world is Vanguard. As a result, it has over $6 trillion total assets in its possession and still growing.

Above all, It’s got total assets of 571.8 Million and its production and income rates are growing every day.

Before we actually begin talking about the VGRO ETF, let us quickly take a look at what the Vanguard’s official website has to say about VGRO – “Vanguard Growth ETF Portfolio seeks to provide long-term capital growth by investing in equity and fixed income securities”. And that’s exactly what VGRO has delivered to its investors in terms of performance. 

VGRO ETF is extremely well-diversified and invests your money in seven of the top-performing Vanguard funds making it extremely robust and high performance.

Also, VGRO yields an excellent dividend of 2.42% annually and pays out quarterly. There’s no denial of the fact that Vanguard’s ETFs are one of the best in the market; always and low-cost ETFs in Canada.

Lets’ look take a quick look at the performance of VGRO below (Over the years) –

Source – yahoo.ca

As you can see from the above performance chart, VGRO has returned a staggering 17.77% to its investors for the past one year. That is way better than the average mutual funds or any industry leader ETF (sector-wise) returns over a similar time frame. Also, don’t forget the annual dividend of 2.72% which adds on top of this. Do you seriously need any more considerations to invest in this ETF? If you’re still not convinced read on. 

Vanguard Group As An Investment Firm 

Vanguard is one of the world’s largest and leading asset management companies, with more than $6 trillion in assets under management globally. It has 100’s of mutual funds and ETFs under its portfolios in each of the different sectors and risk types.

Below is a quick snapshot of Vanguard: 

Founded:1975
Total assets under management:$6.6 trillion
Funds offered:191 in the U.S., and 222 funds in markets outside the U.S.
Headquarters:Valley Forge, Pennsylvania, USA
Chairman and CEO:Mortimer J. Buckley
The number of employees:More than 17,600 worldwide.

Vanguard Investments Canada Inc.

Founded:December 2011
Total assets under management:$17 billion
Funds offered:39 ETFs and 4 mutual funds
Headquarters:Bay Adelaide Centre
22 Adelaide St. West
Suite 2500
Toronto, ON M5H 4E3
Managing director:Kathleen C. Bock
The number of employees:56

VGRO Growth ETF – Key Fund Facts 

Let’s now look at the VGRO ETFs Fund Facts – 

  • Inception date : 25-01-2018

  • Net assets: $490.9 M

  • 12-month trailing yield: NA

  • Distribution yield: NA

  • Dividend schedule: Quarterly

  • Distribution per unit: $0.217646

  • Eligibility: RRSP, RRIF, RESP, TFSA, DPSP, RDSP

VGRO Growth ETF Performance Since Inception 

Below is the chart representing the growth of the VGRO ETF since inception and how well it has performed over the years in terms of generating returns. 

VGRO

Source – https://www.vanguardcanada.ca

What Is VGRO’s Investment Strategy?

  • VGRO ETF Seeks to achieve its investment objective by primarily investing in equity and fixed-income securities. It may do so either directly or indirectly through investment in one or more exchange-traded funds managed by the manager or an affiliate or certain other investment funds.

  • In seeking to achieve the investment objective (under normal market conditions), the sub-advisor will strive to maintain a long-term strategic asset allocation of equity (approximately 80%) and fixed income (approximately 20%) securities.

  • The portfolio asset mix may be reconstituted and rebalanced from time to time at the discretion of the sub-advisor.

  • The underlying funds are expected to be index funds that provide exposure to broad-based equity and fixed income markets.

 

VGRO

VGRO Portfolio Types

1. Portfolio Well Diversified Globally

Like I said before, VGRO is very well diversified, In-fact it is the most diversified platform. Risk management here is pretty low too. It has five different diverse sectors as we discussed before.

2. Income Portfolio

VGRO Growth ETF has a specific Income Index. What it means is it has a fixed and very modest income rate. Different factors are considered while assigning this income stuff to the VGRO team. It has the lowest management fee of 0.22%. The risk rating is very low too!

3. Conservative Portfolio

It’s the second type of the VGRO ETF portfolio. It has a fixed income of 60%. Long term capital growth is provided here. One can invest directly or by indirect means. ETF has seven low index investment plans. This is best for those who want to invest in moderate or long term income growth. However, the management fee is the same as 0.22% and chances of risk are very low.

4. Growth Portfolio

This has a fixed 20 to 80% ratio of equity and fixed percentage respectively. It’s best for low to medium risk investors.

5. All Equity Portfolio

Here the portfolio has 100% of equity and 0% of fixed income. But the risk rate is increased from medium to high in this type of portfolio as its all equity. On the other hand, fees still remain at 0.22% as in other portfolio types.

Source – https://www.vanguardcanada.ca

VGRO Trading Information – TSX

Below is the trading information of the VGRO ETF – 

  • Ticker symbol: VGRO

  • CUSIP : 92207X105

  • SEDOL: BF7ML33

  • ISIN: CA92207X1050

  • Exchange: Toronto Stock Exchange

  • Currency: CAD

What Are The Fees Associated With VGRO ETF?

1. Management fee of 0.22%

2. MER (Management Expense Ratio) of 0.25%

You might notice that the MER Ratio for VGRO is only 0.25%, However, when we talk about the Management Expense Ratio or MER, it’s an extremely important financial metric of any ETF you want to invest in. why so? Let’s talk about it here – let’s compare VGRO’s MER with say for example with an ETF X or Y here, even when there’s a small MER difference, about .1%, which will compound over 30 years. On a $30,000 portfolio initially, the cost difference would be about $30,000*.1% or $30. Compounded over 30 years this would mean that the account balance would be about $900 more. I’m pretty sure no would be invested for so long in one ETF portfolio and you would be making switches every now and then, But, still, that was a valid point when it comes to MER and picking the right ETF, savings over the time-frame. 

Pros Of The VGRO Growth ETF Portfolio 

1. Cost-effective: VGRO portfolios are extremely low cost compared to others. Low-cost portfolios usually return big profits

2. Assets management: Mix of assets are designed to meet the requirement of every investor

3. Detailed diversification: Fixed markets of income and equity will help to bring a sustainable and risk-free return. That’s the dream of every investor

4. Regular Maintenance: Folks at Vanguard VGRO always keep rebalancing the rates and Interest percentages. As a result, you save all the headaches and costs of the rebalancing stuff

Cons Of The VGRO Growth ETF Portfolio 

1. Even though VGRO is well-balanced and diversified across the globe and sectors, still, VGRO has a high-risk basket of stocks. Anyone who’s should not be invested in high-risk securities should not have VGRO as their only holdings – but should diversify ( All I mean to say is don’t go all-in with VGRO). Again, age is not the only factor in determining the risk levels of investors. If you are looking for investments with lower risk types you have many other options, in the Vanguard family if you need it. 

2. Next, VGRO is not tax efficient. This may not be a bummer to you, but still, this is something you need to be aware of before you invest

3. Again, VGRO is not the lowest-cost solution (remember the MER and Management Fee we spoke earlier – that’s what I’m referring to here), but for the small-time investors and portfolios with less capital infusion, it is certainly one of the best in terms of market growth, robustness and stability.

4. Fourth, and the last one here, one of the cons of VGRO is that it only holds high market cap stocks (blue-chips) and a small number of bonds too. There is this market sentiment that bonds are not always the right portfolio mix because of their lower yield, however there is nothing wrong in holding a mix of equities and bonds to balance out the risk involved (which is actually true). That said, for a small portfolio investor with capital less than $50,000, always pick your investments in a way that you are covered for the worst scenario. 

VGRO ETF Top Holdings 

Below is the list of the top 10 Largest Holdings Of VGRO ETF and of course they are all blue-chips and the heavyweights of their individual sectors. 


RankHoldings
1Royal Bank of Canada
2Toronto-Dominion Bank
3Enbridge Inc.
4Bank of Nova Scotia
5Canadian National Railway Co.
6Microsoft Corp.
7Suncor Energy Inc.
8Apple Inc.
9Bank of Montreal
10Amazon.com Inc

As you just saw, the top 10 holdings of VGRO are all the biggies in the industry and reputed blue-chip companies from the US and Canadian stock markets.

That means to only say that, all of your investments are pretty much safe in the short to the long run and keep growing over-time. Do remember that all of the big companies or blue chips make more profits over time, increasing dividends and thus return more to the fund houses or the investors at the end of the day. So, it is all good here!

Source – https://www.vanguardcanada.ca

VGRO Vs. VBAL Vs. VCN

When you compare VGRO to the likes of VBAL and VCNS, which are other great picks when it comes to ETFs – The advantage you get with VGRO is that – almost 80% of the portfolio is made of equities or stocks and the rest 20% into bonds.

VGRO has an 80/20 allocation for stock and bonds, VBAL has 60/40 and VCN majority into Canadian stocks. You should also know that VCN has been around much longer than the other two and has a much lower management fee (MER). Again, all three are really good picks. It all depends on what your needs are – at the end of the day.  

Here’s a possible model portfolio you may consider: 

Option 1: 100% VBAL 

Option 2: 100% VGRO

Option 3: VCN + XAW + ZAG (Canadian Couch Potato Approach)

Like I said, Option 3 is the Canadian couch potato model portfolio. If you set your bonds ratio at 20% or 40% its performance should be very close to that of VGRO or VBAL (remember – its slightly lower fees but more work for you). Option 3 also has the flexibility that allows you to adjust your allocation for stocks/bonds to any ratio that you want (That should do the trick for your correct?. I mean in case you are little confused on which ones to pick of the three here)

As a matter of fact, more weightage into the equities is always better if your intention is inclined towards faster investment growth, especially a mix of US, Canadian and Emerging Markets. 

Again, it all depends on various factors of the individual investing – what kind of an investor you are, what is your age, risk appetite, how long is your investment plan, what are your other considerations. For example – A 50-year-old investor may find ETFs with more exposure to Bonds to be safer for his risk appetite. Rite? That’s fair too. 

Therefore it all depends on what your individual choice is and where you want to park your hard-earned money. My only goal is to provide knowledge that will help you along the path. I’m no expert here sitting and preaching things. 

At the end of the day, whether you’re going to pick VGRO, VBAL, VCNS or any others like XRE, XAW (different fund house), it’s your choice. Better have a complete understanding before you invest. Once you have invested always leave it for the long term. Long term is more than 5-10 years at least for the investment/s to mature and grow over time. 

VGRO

Source – https://www.vanguardcanada.ca

VGRO ETF – Allocation To Underlying Vanguard Funds

Please read this information carefully, as it is super important. This is where things get interesting. In this section, I’ll talk about where exactly is VGRO investing your money into and how it grows. 

Fund NamePercentage
Vanguard US Total Market Index ETF32.1%
Vanguard FTSE Canada All Cap Index ETF24.0%
Vanguard FTSE Developed All Cap ex North America Index ETF17.9%
Vanguard Canadian Aggregate Bond Index ETF11.7%
Vanguard FTSE Emerging Markets All Cap Index ETF6.1%
Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged4.4%
Vanguard US Aggregate Bond Index ETF CAD-hedged3.8%

Did you notice how well VGRO is diversified into multiple sectors?

This is what I was talking about in the previous section. All of your hard-earned money is split across different portfolios across – The US Blue chips, Canadian Blue chips, Emerging markets – like Japan and India. By diversifying into multiple sectors – your money is not only that much safer but you gain the benefit of market fluctuation and currency hedging. 

In a nutshell, VGRO is well diversified across geographies and into multiple high performing funds of different sectors. 

So It’s definitely safer and sound, and you can definitely expect decent to excellent growth over the period of time. Please remain invested for a longer period of time, that’s how you can actually see the greater returns, by compounding. 

Source – https://www.vanguardcanada.ca

VGRO Dividend 

The annual dividend yield of VGRO ETF is 2.42%. This stock is currently trading at 26.90 CAD. Dividends are paid out on a quarterly basis. 

vgro

VGRO – Market Capitalization In Funds (Percentage-Wise)

I’ve listed below the fund allocation and percentage for VGRO ETF

Fund Allocation

Fund

Large

72.54%

Medium/Large

3.02%

Medium

12.40%

Medium/Small

5.33%

Small

6.70%

Total

100.0%

That’s 72.54% allocation into Large-cap funds. What more do you want me to say?

What Are Large-Cap Funds? 

Large-cap funds or companies are the safest possible investments and your money is that much more likely to grow over time. Examples of large-cap companies In Canada are – RBC, CIBC, Enbridge etc. 

According to Investopedia – A large-cap (sometimes called “big cap”) refers to a company with a market capitalization value of more than $10 billion. Large-cap is a shortened version of the term “large market capitalization.” 

Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share. A company’s stock is generally classified as large-cap, mid-cap or small-cap.

Again Medium/Large cap 3% and the rest follows. 

vgro

VGRO ETF Characteristics

The total number of stock holdings in the VGRO ETF is a staggering 12,143 stocks!

Out of that, we’ve only seen the top 10 large-cap holdings in the previous section. 

Do notice the Earnings Growth Rate – it is 8.27% which is seriously good!

 Fund
Number of shareholdings12,143
Median market cap1.0 B
P/E ratio12.8 x
P/B ratio1.4 x
Return on equity11.37%
Earnings growth rate8.27%

Source – https://www.vanguardcanada.ca

VGRO Market Allocation Exposure By Region

VGRO is a well-diversified stock geographically.

Over 70% of your money is invested in the US & Canadian stocks, with other major holdings in Japan, UK and China. 

Complete Stats below:

Market AllocationFund
United States40.4%
Canada30.6%
Japan5.5%
United Kingdom3.6%
China2.3%

vgro growth etf portfolio

Source – https://www.vanguardcanada.ca

VGRO Sectorise Breakup 

In this section, let us look at the sector-wise breakup for VGRO (I mean to say what sectors does this ETF invests your money in?)

Like I said before, VGRO is a very well-diversified ETF Portfolio. You can see for yourself here with the sectors that your money will be invested in: 

SectorFund
Financials26.4%
Industrials13.4%
Technology12.1%
Consumer Services10.7%
Consumer Goods8.8%
Oil & Gas8.6%
Health Care7.8%
Basic Materials6.1%
Utilities3.5%
Telecommunications2.6%
Other0.0%
Total100.0%

Conclusion 

I’ve pretty much-covered everything about VGRO here, also mentioning few other great picks from the Vanguard fund house in this article. 

As I’ve been saying this throughout the post, VGRO is really good for your investments – Be it in your TFSA’s, RRSP’s or brokerage. The kind of returns seen here are really good, also the overall objective of this ETF is robust with 75% of large-cap US and Canadian stocks.

Also, we saw that VGRO is globally diversified across multiple asset types and markets. 

If you did find the contents of this article good and helpful, please share it on social media and help spread the word, also feel free to comment below and let me know your thoughts.

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VGRO Growth ETF Review

4.75

Value For Money

5.0/5

Benefits

4.8/5

Rewards

4.5/5

Pros

  • Cost effective
  • Assets management
  • Detailed Diversification into assets

Cons

  • Management fee: 0.22%
  • MER : 0.25%

Sagar Sridhar

Sagar Sridhar is a personal finance blogger and a computer engineer. He is agile certified and has a master's degree in Project Management. His writing has been featured or quoted in leading publications such as Credit Canada and many other personal finance publications. "Risk comes from not knowing what you're doing" - Warren Buffet

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Robert W.

I am kind of surprised to see Amazon on that list but really, I shouldn’t be given that it is 2019 and they are a powerful company. Great overview of VGRO. I came here expecting to have a few questions but I believe you answered them all in this article.