If you haven’t heard of VGRO ETF, it is a Vanguard ETF (exchange traded fund) that is a one fund solution and automatically rebalances for you from Vanguard Canada. It is the ultimate minimalist investment portfolio for Canadian investors because there’s just one fund from Vanguard ETF Canada.
The asset allocation of VGRO is 80% equities and 20% fixed income, with a focus on long term growth. It’s so popular that VGRO reddit exists and there’s even VGRO ETF reddit threads.
When did VGRO ETF start? The inception date (when the ETF first started) is January 24 2018.
The Vanguard asset allocation ETFs are giving robo-advisors a run for their money. The allure for investing with robo-advisors is that they will do the rebalancing for you to keep the proper asset allocation and in return they charge about an extra 0.70% to 1.00% on top of the ETF fees.
However, Vanguard has taken care of this and basically there is very little difference between setting up a robo-advisor account and a DIY investing brokerage account funded with VGRO ETF. The only thing missing from the one fund Vanguard ETF is the pre-authorized contribution piece.
Related: The Pros and Cons of Robo-Advisors: Should You Invest Your Money with a Robo-Advisor?
VGRO ETF Review
VGRO stands for Vanguard Growth ETF Portfolio. Is VGRO Canadian?
When we look at ‘VGRO stock’, VGRO is the ETF ticker symbol on Toronto Stock Exchange or TSX. VGRO which stands for Vanguard Growth Exchange Traded Fund.
As of writing, the net assets under management for VGRO is almost $1.8 billion.
The Vanguard ETF is considered part of the Vanguard Growth ETF Portfolio. The objective for this portfolio is to seek long-term capital growth by investing in equity and fixed income securities. The rebalancing of asset allocation will be focused 80% on equity and 20% on fixed income (approximately).
The VGRO ETF currency is in Canadian dollars (CAD) and it is traded on the Toronto Stock Exchange (TSX).
What is the VGRO MER? The cost of VGRO management fee is 0.25%. This is in addition to the cost of buying or selling the VRGO ETF dependent on your brokerage commission costs, which for Questrade it is free to buy (but there are pennies of ECN fees, see this post on Questrade fees here) but there is a commission of $4.95 up to $9.95 when you sell.
The risk rating of VGRO stock is low to medium risk according to Vanguard Canada.
If you invested $10,000 since inception of January 2018, your investment would be worth around $12,500 today in 2021.
For 2020, the annual returns were around 10.89% and for 2019, the annual return was 17.84%. I’d say that’s pretty good for 20% fixed income bonds!
According to Vanguard Canada, the VGRO ETF is eligible in the following investment vehicles:
What is the VGRO dividend schedule? Well the VGRO distributions are paid quarterly.
At the time of writing, the current VGRO dividend yield or more accurately, distribution yield is around 1.75% (the cash distributions were $0.5198 for 2020 for a price per share of $29.70) which is not too bad considering you get growth in addition to income.
Personally I prefer a distribution or dividend yield of between 3-5% but my VXC (Vanguard ex-Canada ETF which is similar to iShare’s XAW) yields around 1.80% as well and my VTI ETF is even lower.
The VGRO distribution history for recent years are as follows:
According to Vanguard documents, the regional asset allocation is as follows. There is about equal representation from US and Canada in the ETF (about 35%) with Canada being a bit more than the US equities, and about 22% in developed ex-North America and another 5.7% or so in emerging markets.
VGRO is on the far right. See the chart below from Vanguard Canada.
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VGRO stock is really just a combo of seven different Vanguard Canada ETFs- here’s the breakdown of which Vanguard ETFs are in this one stop Vanguard ETF VGRO as of December 31, 2021:
VGRO ETF Holdings:
The seven Vanguard ETFs that comprise of the VGRO ETF are:
- VCN- Vanguard FTSE Canada All Cap ETF
- VUN- Vanguard US Total Market
- VIU- Vanguard FTSE Developed All Cap ex North America Index ETF
- VEE- Vanguard FTSE Emerging Markets All Cap ETF
- VAB- Vanguard Canadian Aggregate Bond ETF
- VBU- Vanguard US Aggregate Bond ETF- Canadian Hedged
- VBG- Vanguard Global Ex-US Aggregate Bond ETF- Canadian Hedged
VGRO Top 10 Holdings
Here are the top 10 holdings in the VGRO ETF.
- Apple Inc.
- Royal Bank of Canada
- Microsoft Corporation
- Toronto Dominion Bank
- Canadian National Railway
- Bank of Nova Scotia
- Brookfield Asset Management
With the individual VGRO ETF, you get access to over 12,500 stocks from just one fund! One fund can give you access to 12,500 stocks– amazing!
The sector weighting courtesy of Yahoo Finance Canada are as follows, it doesn’t surprise me that most of it is (a whopping 23.54%) financial services, or Canadian banks (that is after all, the TSX’s bread and butter):
Automatically Rebalance for Asset Allocation
Asset allocation is of utmost importance. I learned the hard way after having Canadian home bias for many years and missed out on growth of my investment portfolio. It was one of the investing mistakes in my 20’s. Even though it’s important a lot of people can’t be bothered with rebalancing their portfolio (or don’t know how to) to the proper asset allocation.
With VGRO and Vanguard’s asset allocation ETFs, you won’t have to worry about rebalancing your US based fixed income and your Canadian fixed income because it is automatically done for you.
This is the huge draw for most people to VGRO ETF because most people are not interested, do not have the time, or do not know how to rebalance their asset allocation in their investment portfolio.
This makes setting up a Questrade drip more tempting (buying more shares of VGRO ETF when you are paid your distributions on a quarterly basis).
If a one step asset allocation VGRO ETF isn’t your thing, there are alternatives- especially if you are interested in setting up pre-authorized contributions to make sure you are investing in the market regularly. Unfortunately, most of them have a higher fee than the 0.25% MER and 0.22% management fee that VGRO has.
You get what you pay for, I suppose.
Here are some alternative to VGRO Do It Yourself ETF investing:
- Like using a robo-advisor and be completely hands off, just have regular preauthorized contributions. Cost is usually 0.70% plus the ETF’s MERs. One example is Wealthsimple.
- Or going with TD e-series. Here’s how to Open, Invest, and Rebalance a TD e-series portfolio.
- Here’s how TD e-series compares with ETFs.
- Or go for around a 1% MER with the Tangerine Investment Funds
- Buy a number of ETFs instead of a one fund ETF and use Passiv to rebalance for you (free for Questrade users for one year).
However, I think VGRO or another one fund ETF is the way to go. Set it and forget it, the fees can’t be beat with a one fund ETF.
How to Buy Vanguard ETF in Canada
Now that you are possibly even more intrigued in VGRO, here’s how you can invest in VGRO. You may be wondering how do I buy Vanguard ETF?
This might be an ideal one fund ETF to put into your TFSA because it’s simple and you can put in small aliquot of $6000 each year if you have already maxed out your TFSA contribution room.
Just be careful that you don’t over contribute to your TFSA as you will have to pay a penalty for this.
Here’s a step-by-step guide on how to invest your TFSA with Questrade with VGRO for $0 (except when you sell and except for the 0.22% MER with the Vanguard Investments Inc.’s VGRO).
Check this post out for more information on tax efficient investing in Canada.
VGRO is actively managed and regular rebalancing is done when the funds deviate from their asset allocation, so it’s important to realize that keeping it outside of a registered account may have increased (and unpredictable) additional taxes.
I personally do not have VGRO but I have a smattering of VGRO components (e.g. I have VAB, VEE in my portfolio). You may be wondering why I haven’t jumped on board the VGRO train. Personally, I like calculating my asset allocation on a quarterly basis and trying to rebalance by buying more. I find it somewhat therapeutic.
I am very cognizant that selling everything and then buying one ETF takes guts and commitment though and I’m definitely in the pre-contemplative state of change for this to occur. If I were to start fresh and with a clean slate (e.g. if I started investing now) I would definitely go for VGRO or VEQT in my investment portfolio for simplicity’s sake.
Is VGRO a good ETF? Yes. Because it’s simple.
With the simplicity and ease of this one stop shop for investing for retirement, I think this really makes VGRO one of the best ETFs in Canada.
To start your Questrade DIY portfolio, here are $50 in free trades (remember, purchasing ETFs are commission free with Questrade anyway).
You may also be interested in:
Do you hold VGRO ETF in your portfolio? If so, what do you think of it?
GYM is a 30 something millennial interested in achieving financial freedom through disciplined saving, dividend and ETF investing, and living a minimalist lifestyle. Before you go, check out my recommendations page of financial tools I use to save and invest money. Don’t forget to subscribe for blog updates, a free dividend yield spreadsheet, and the free Young Money Bootcamp eCourse.
18 thoughts on “VGRO ETF: The Best ETF in Canada (2022)?”
GYM, Looks like the ultimate in low cost, set it and forget it investing. I’m a big Vanguard fan. VYM is my favorite ETF. (ps – I have your epic blog featured tomorrow-be sure to stop by and check it out) 🙂 Tom
@Tom- Ooh I will definitely check it out. It is nice to set it and forget it but I do like the extra dividend stuff. You should do a VYM review on your blog next!
We own 100% VGRO in all our TFSAs. I will also own VGRO in my taxable corporate accounts along with some GICs. I bought VGRO in the first week of Feb 2018 shortly after it started trading.
It does not get any easier than this.
@Dr. MB- Nice! Do you dollar cost average with your VGRO or just plunk in money annually?
Sounds like VGRO is the go to ETF. Not surprising is that the fund is from Vanguard, probably the best out there. I couldn’t be more happy having an investment account through them.
@Kris- Vanguard really revolutionized everything, RIP Jack Bogle, king of index investing! I don’t think Vanguard has investment accounts individually here in Canada, maybe that’s the next step!
Hi GYM, I don’t own any but it does sound really good. I will have to check it out.
@Caroline- perfect for your millennial (or early millennial? what is the younger than millennial generation called again?!) children!
Hello, I’m very new to investing and have a question regarding this part of your article. “You have to be careful and cognizant of the 15% foreign withholding tax though on US listed distributions.”
Are you referring to the 30.1% (& 3.6% in the Vanguard U.S. Aggregate Bond Index ETF) of the fund that is invested in the US Market? If so, when does the withholding tax come into play; when I sell, or annual, like on my taxes?
FYI I got those percentages from the Moneysense article about the VGR ETF.
@Meredith- Check out my guide on tax efficient investing in Canada. Mainly the withholding tax would be seen on distributions that you receive (which would be annual, on your taxes).
HI! Great info on VGRO! I was looking at VGRO, shares XGRO and BMO ZGRO to buy as all have a 80/20 split. The MER for shares and bio are lower than VGRO at 0.18%. Just wondering if you looked into these two as alternatives of VGRO. Thanks!
@Mary- No I haven’t- Vanguard is pretty hard to beat with their low MER. I’ll have to have a look at XGRO and ZGRO.
I personally invest in VGRO, but I wouldn’t say this was a very well researched article about it
First of all, you might consider reading the PWL paper on foreign withholding taxes https://www.pwlcapital.com/wp-content/uploads/2018/06/2016-06-17_-Bender-Bortolotti_Foreign_Withholding_Taxes_Hyperlinked.pdf
VGRO is a wrap ETF which holds Canadian listed ETFs which then hold their counterpart US listed ETF. That means for the US and international ETFs all registered accounts (RRSP, RESP, TFSA) are subject to Level 1 withholding taxes and are non-recoverable. So your comment above about investing in a RRSP to avoid FWT is incorrect.
Also like Mary I think you should mention the other all in one ETFs from iShares, Horizons, and BMO as alternatives. They have some really important differences, from iShares with a lower MER and different geographical allocation, to Horizons which uses a swap based ETF so there are no distributions.
@Dave- Thanks Dave for the correction 🙂 Yes, I wrote this before all the all in one ETFs came up but I hadn’t had time to look at the other ones. There are plenty of options now that’s for sure.
VGRO – and all other of Vanguards All-in-One ETF’s – are Canadian listed stocks and do not quality for tax treaties on dividends in an RRSP or other registered accounts. The fact that VGRO contains other funds tracking US equities is irrelevant and even if it did, these funds are in-turn also Canadian listed funds that themselves do not quality. General rule of thumb: if it’s traded in Canadian dollars, you’re going to pay withholding taxes no matter where you park it.
Great review! I am big fan of ETFs. They definitely make it so much easier for many investors to accumulate wealth through passive investing. VFV, XAW and ZCN are some of my picks. 🙂
@Moe- Agree! Thanks for visiting. Passive investing for the win 🙂