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VGRO vs. XGRO. Which ETF is Best?

October 28th, 2021

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VGRO and XGRO are both self-balancing ETFs that offer a blend of 80% equity and 20% bonds, it offers long-term portfolio growth with medium risk level. Which one is best?

In this article, we’ll explain what VGRO and XGRO are and discuss their differences to help you choose between the two.

What are one-fund ETFs?

Also called self-rebalancing or asset allocation ETFs, one-fund ETFs are comprehensive portfolios that are rebalanced automatically to maintain their allocation and risk/return goals. They come in various blends of allocations, ranging from long-term options with 100% equity to conservative portfolios of mostly bonds.

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What is VGRO?

VGRO is Vanguard’s Growth ETF Portfolio. It's Vanguard's most popular one-fund ETF with $3B of assets under management (AUM).

It consists of 80% equities and 20% bonds. VGRO is an ETF comprised of other Vanguard ETFs with the following allocation:

VGRO Holdings

As of December 31, 2020

TickerSecurity NamePercentage
VUNVanguard US Total Market Index ETF33.20%
VCNVanguard FTSE Canada All Cap Index ETF23.80%
VIUVanguard FTSE Developed All Cap ex North America Index ETF17.00%
VABVanguard Canadian Aggregate Bond Index ETF11.70%
VEEVanguard FTSE Emerging Markets All Cap Index ETF6.40%
VBGVanguard Global ex-US Aggregate Bond Index ETF CAD-hedged4.50%
VCBVanguard US Aggregate Bond Index ETF CAD-hedged3.40%

VGRO allows a good geographic diversification since its top 95% of net assets with the following allocation:

VGRO Geographical Allocation

As of December 31, 2020

CountryPercentage
United States41.20%
Canada29.40%
Japan5.20%
China3.30%
United Kingdom2.90%
France1.90%
Germany1.80%
Switzerland1.80%
Australia1.50%
Korea1.30%
Taiwan1.30%
India0.90%
Hong Kong0.70%
Netherlands0.70%
Sweden0.70%
Brazil0.50%


VGRO also offers industry diversification.

VGRO Industry Allocation

As of December 31, 2020

IndustryPercentage
Financials18.60%
Technology18.10%
Consumer Discretionary13.30%
Industrials12.80%
Health Care 8.80%
Basic Materials6.70%
Energy5.70%
Consumer Staples5.20%
Utilities3.90%
Telecommunications3.80%
Real Estate3.10%

VGRO is relatively new since it started in January 2018. It showed a return of of 17.66% in 2019 and 10.89% in 2020 and an average annual return of 8.44% since inception.

VGRO's distribution yield is currently 1.74%. Since VGRO is a mix of stocks and bonds, this includes both stock dividends and bond interest payments.

VGRO's Management Expense Ratio (MER) is 0.24%.

What is XGRO?

XGRO is BlackRock’s Growth ETF Portfolio. It consists of about 80% equities and 20% bonds. It's one of BlackRock's most popular one-fund ETF with $1.2B of assets under management (AUM).

In practice, XGRO is a portfolio ETF comprised of other BlackRock ETFs with the following allocation:

XGRO Holdings

As of February 2, 2021

TickerSecurity NameAsset ClassPercentage
ITOTISHARES CORE S&P TOTAL U.S. STOCKUS Stock37.96%
XEFISHARES MSCI EAFE IMI INDEXDeveloped Markets Stocks19.94%
XICISHARES S&P/TSX CAPPED COMPOSITECanadian Stocks19.43%
XBB XBB ISHS CORE CAD UNIV BND IDX ETF (CA)Canadian Bonds11.43%
IEMG ISHARES CORE MSCI EMERGING MARKETSEmerging Market Stocks4.39%
XSH iShares Core CAD ST Cor Bd IndexShort-Term Canadian Corporate Bonds2.89%
USIG ISHARES BROAD USD INVESTMENT GUS Corporate Bonds1.87%
GOVT ISHARES US TREASURY BOND ETFUS Government Bonds1.83%
USDUSD CASHCash or Cash Derivatives0.21%
CADCAD CASHCash or Cash Derivatives0.07%

XGRO is geographically diverse with its top 95% of net assets with the following allocation:

XGRO Geographical Allocation

As of February 2, 2021

CountryPercentage
United States41.66%
Canada33.75%
Japan5.17%
United Kingdom2.88%
France1.91%
Switzerland1.75%
Germany1.75%
China1.65%
Australia1.48%
Sweden0.81%
Netherlands0.76%
Hong Kong0.62%
Taiwan0.62%

BlackRock reports performance since 2007 for XGRO but the fund was actually restructured in December 2018, so performance before that date doesn’t mean much to current investors.

XGRO's performance was 17.96% in 2019 and 11.42% in 2020.

XGRO's distribution yield is currently at 1.83%. Since XGRO is a mix of stocks and bonds, this includes both stock dividends and bond interest payments.

XGRO has a 0.20% Management Expense Ratio (MER).

VGRO or XGRO?

VGRO and XGRO look pretty similar right? So how can you choose the best one? There are a few subtle differences that can help guide you.

MER

From a MER perspective, XGRO is a slight winner with 0.04% less than VGRO. It doesn't mean much to a small portfolio but, as it's a percentage, the more your portfolio grows, the more it would make a difference.

Performance

XGRO is a slight winner in terms of performance over the past 2 years, and the distribution yield is also slightly higher.

Geographical allocation

In terms of geographical allocation again, the differences are quite subtle. VGRO has slightly more exposure to emerging markets, while XGRO is slightly more exposed to North American markets.

This is a matter of personal preference, but ultimately, the percentage difference between the two funds is not enough to have a big impact on your portfolio.

In summary

XGRO takes the win with a lower MER and slightly better performance.

However, VGRO and XGRO are very similar and ultimately, the subtle differences between the two would not matter to most portfolios. Without a high enough portfolio value, the decimal percentage points difference would not make much of a difference on your allocation.

If your portfolio gets to that level, it may be worth it to consider investing in the underlying assets instead as it is cheaper to manage, and very easy with Passiv.

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If you want to learn more about buying the underlying assets of self-balancing ETFs, you can read these articles on VGRO and XGRO.


Source: VanguardCanada.ca, BlackRock.com

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