XGRO Review

iShares Core Growth or XGRO Is one of the best growth ETFs from the BlackRock fund house.

XGRO’s current NAV (Net Asset Value) stands at $22.10 CAD at the time of writing. It’s year to date (YTD) market return is 4.81%. XGRO has a Risk Indicator of Low to Medium by the BlackRock Fund House. 

Don’t think of XGRO/VGRO as 1 fund, because they are a fund-of-funds. I like XGRO over VGRO because XGRO is more heavily invested in US stocks, and has a lower MER. I also do the pre-authorized purchase plans with TD e series funds, but will likely transition out of them as just buy the ETF’s on WealthSimple Trade.

For example, XGRO is made up of 8 other ETFs so whether you buy those ETFs individually or you buy XGRO, you still own the same portfolio. Owning an all-in-one fund isn’t “putting all your eggs in one basket” in case that’s what was concerning you.

In this article let’s take a look at everything XGRO has to offer, in terms of diversity, characteristics, market returns, dividends, exposure to the sectors in the market any and so on. 

Now, Let’s begin. 

XGRO

First of all, why XGRO? 

When you have a bunch of interesting Canadian ETFs and Mutual why choose the XGRO? What makes it appealing to the end-user like you and me? 

Like I said earlier, XGRO is from the BlackRock fund house. In case you don’t know, BlackRock is one of the best fund houses in the wold along with Vanguard and others. 

While the BlackRock fund house has 100s of excellent ETFs under its portfolio, XGRO being one of them.

Why XGRO? 

With VGRO or XGRO you can almost flip a coin. I’d personally lean toward XGRO for the lower MER, slightly higher US allocation/less Canadian, and the option to DRIP.

Otherwise, you can’t go wrong with either and they will perform very closely in the long term. FWIW, when you backtest XGRO vs VGRO to 25 years, XGRO performed slightly better at 7.49% vs 7.22% with VGRO.

One should go with TD e series if they highly value automating the process as much as possible since you have the ability to set up a pre-authorized purchase plan (PPP).

The advantage with this is when you automate things you are more likely to be disciplined and stick to your plan. If you think you can be disciplined and consistent with buying ETF shares on a regular basis, then I’d go in that direction.

  1. By Investing in the XGRO you’ll end up with having exposure to a portfolio of ETFs that is broadly diversified by asset class and across regions, in one convenient package

  2. XGRO is continuously monitored by asset managers and automatically rebalanced, as needed, in order to maintain asset class target weights

  3. The management fee is only 0.18% and MER 0.20% (Management Expense Ratio), which are the best in class for any Exchange Traded Fund (ETF)

XGRO

XGRO ETF Characteristics 

First of all, in case you don’t know, XGRO accepts investments through DRIP, PACC and SWP. 

The dividend yield is 2.43% or $0.13 and is paid out quarterly. 

Quick Look At The XGRO Fund Facts:

  • Net Assets: CAD 428,671,350 (428 M)

  • Commencement/Inception Date: Jun 21, 2007

  • Exchange: Toronto Stock Exchange (TSX)

  • Asset Class: Multi-Asset

  • Fiscal Year End: Dec 31, 2019

  • Rebalance Frequency: Quarterly

  • Units Outstanding: 19,400,000 (19M)

  • Number of Holdings: 8

  • Number of Underlying Holding: 17849

  • Price: 22.11 CAD

Top 10 Holdings of XGRO 

XGRO internally invests in other corporates and ETFs under the BlackRock Fund house to generate returns for the investors. 
 
Now, what are these investments? 
 
Below is the list of the Top 10 Holdings of the XGRO ETF: 
 

As you can notice from the above chart, almost 38% of your money in XGRO goes into ITOT which is an S&P Total US Market Fund. 

While the YTD returns of ITOT is 8.45%, the Expense Ratio is excellent at just 0.03%. 

Let’s briefly look at the ITOT returns for the maximum time frame: 

ITOT

As you can see, the returns have been excellent! That’s because the overall US markets have done extremely well in recent months. 

Next, 19.13% of your XGRO money is invested in XIC. 

Now, XIC is another excellent ETF from the BlackRock Fund house. With XIC, you’ll pretty much own the entire Canadian Stock Market. 

XIC returns snapshot: (Maximum time frame)

xic

Now, that’s 60% of your money invested through XGRO into ITOT and XIC. 

Next up is XEF, with a 19.5% allocation. Now, what is this XEF? 

XEF is another ETF from the BlackRock fund house which contains over 1500 stocks from Europe, Asia, and Australia. The YTD returns of the XEF fund is not all that great and is negative at -2.5%. 

XEF Chart: (Market Returns)

XEF

So that’s where 80% of your XGRO money is invested in.

The rest of the money is invested in XBB, Emerging Markets and Hedge funds for (USD/CAD exchanges).

All I can say here is that the money you invest in XGRO is extremely well diversified with good geographical exposure. Let us continue. 

XGRO Exposure Breakdown 

Even though the majority of the money invested by XGRO is in equities, almost 18.59% of your money goes into the Fixed Income as well with Cash at 0.20%. 

XGRO ETF Performance 

Below is the market performance of XGRO: 

Please note that I have considered the calendar year returns so that it’ll help you know the market returns in a more transparent and better understanding of the returns you can expect: (average)

  2015 2016 2017 2018 2019
Total Return  0.96 10.12 11.78 -6.24 17.96

XGRO vs. VGRO 

Alright then, first of all, while XGRO is from BlackRock, VGRO is from Vanguard. 

For the record, VGRO’s inception date is January 24, 2018, and XGRO’s is December 11, 2018.

First of all, the MER of VGRO is 0.25 while the management fee of XGRO is 0.18.  

Regarding the US performing better than Canada, this is true for the past few years. But we cannot predict how the US performs in the long term for the next 20 years or more. Also, the difference in allocation is 6% which I think is not huge.

So basically, VGRO has a very slightly higher MER of around 0.05 and as far as the performance is considered, both VGRO & XGRO will perform more or less the same.

If you want to save 0.05% on MER, you can buy XGRO going forward. But selling VGRO and XGRO is a No Brainer for me.

Both these ETFs are extremely popular and it’s very hard to differentiate as which is better than the other. 

What I always believe in while analyzing is the market returns (at least for the previous 5 years or more – Short term no use) and the actual fundamentals. 

Result: VGRO is a clear winner over XGRO for the “Maximum Timeframe” – greater than 5 years

XGRO vs. VGRO

XGRO vs. XIC 

While XGRO and XIC are both from the same fund house, BlackRock, yet, one of them is clearly better than the other. 

Now, which one is it? 

The Result: It’s XIC. 

XGRO vs. XIC

XGRO vs. VCN 

VCN is from the Vanguard fund house. It’s one of the more popular ETFs in Canada. 

Now, let’s compare XGRO with VCN and see the end result. 

Result: Tie (not much difference at all) 

xgro vs. vcn

Finally, let’s do one last comparison, this time with an S&P 500 Index Fund – VFV

XGRO vs. VFV

Again, XGRO is from BlackRock, while VFV is from Vanguard.

In case you don’t know, VFV is an S&P 500 Index Fund (US). 

Result: VFV wins by a huge margin. Look below for yourself!

XGRO vs. VFV

S&P 500 Index ETF funds are always considered the benchmark for the market returns. So, no surprises here with the result. 

XGRO Vs. ZGRO 

First of all, when comparing XGRO and ZGRO, the first thing to note is that ZGRO is an ETF from BMO. 

Let’s quickly compare the market returns of XGRO vs. ZGRO here: (maximum time frame).

xgro vs. zgro

As you can see from the above charts, BMO’s ZGRO and XGRO both have almost the same market returns in terms of performance. 

ZGRO uses an S&P500 fund for their US holdings which some would argue is poorly diversified vs a total market fund as Vanguard does.

ZGRO’s international holdings should be slightly more tax-efficient (slightly better returns, you won’t pay them directly) since they hold more directly vs Vandguards layers of ETFs.

With that said, ZGRO has failed to attract much volume so far, so I personally wouldn’t use them for that reason alone.

It’s, unfortunately, kind of a chicken vs egg situation in that regard. They could probably fix this by offering free ETF purchases for BMO ETFs through BMO InvestorLine (assuming that isn’t an illegal antitrust thing)… At their current level of assets under management, ZGRO likely isn’t profitable for them.

XGRO vs. Others

XGRO is the sweet spot of effort vs. reward. You could do more work, but you don’t really have to.

XAW / VCN / ZAG: MER .15 | Risk: Medium 

XGRO: MER .25 | Risk: Low

TD eSeries: MER .5 | Risk: Medium

ROBO MER: .8 | Risk: Low

Tangerine MER: 1.1 | Risk: Low

Conclusion 

There you go, that was my in-depth take on the XGRO ETF. It’s extremely well-diversified and looks very promising for the longer term. 

I’ve honestly covered everything I could in this review to help you make the decision. 

The final question you might ask me – Will I buy XGRO if given a choice or would I be interested in adding this to my portfolio? 

My answer is a clear “NO”.

On this blog I cater to a larger audience who might be interested in the XGRO, I am not against BlackRock or XGRO – It’s just not for me and my investment type. That’s all. I like risk-taking and gaining more returns. That’s just me. 

Finally, XGRO is well diversified across sectors – US, Canada, EU, Asia and Emerging Markets. It looks like a good deal with a low MER and expense ratio. The final choice is you as an investor – your risk appetite, the returns you expect, safety etc. 

Anyways, thanks for reading. Let me know your thoughts and comments below. 

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