For a 0.24% administration expense ratio (MER), you get an all-in-one mixture of 80% international shares and 20% bonds, rebalanced periodically, with a Canadian residence bias to enhance tax effectivity and scale back forex threat. Regardless of its development bias, it pays a not inconsiderable quarterly dividend. If imitation is a type of flattery, VGRO comes extremely praised: there are actually copycats on the market from different suppliers—XGRO, ZGRO, TGRO, HGRW—all with decrease MERs.
VGRO holdings
What shares does VGRO have?
- Vanguard U.S. Whole Market Index ETF 35.14%
- Vanguard FTSE Canada All Cap Index ETF 24.65%
- Vanguard FTSE Developed All Cap ex North America Index ETF 14.44%
- Vanguard Canadian Combination Bond Index ETF 11.83%
- Vanguard FTSE Rising Markets All Cap Index ETF 5.47%
- Vanguard International ex-U.S. Combination Bond Index ETF (CAD-hedged) 4.23%
- Vanguard U.S. Combination Bond Index ETF (CAD-hedged) 4.21%
As of April 30, 2025
The VGRO ETF and its friends aren’t good, nor are they as “protected” as some Canadian buyers may assume. Actually, throughout 2022, VGRO’s value fell 11.19%, a deeper drawdown than its 100% inventory counterpart, the Vanguard All-Fairness ETF Portfolio (VEQT).
That’s as a result of VGRO’s 20% bond sleeve, usually a buffer in opposition to inventory losses attributable to its normal destructive correlation, additionally dropped sharply within the face of rising rates of interest. The typical period of VGRO’s bond holdings is 6.8 years, which implies it’s pretty delicate to price hikes. All else being equal, a 1% rise in charges may result in roughly a 6.8% value decline within the bond element alone. And in 2022, this occurred throughout an fairness bear market, exacerbating losses for VGRO.
If you happen to’re involved a couple of repeat of this situation—the place each shares and bonds fall collectively—there are methods to shore up VGRO’s weaknesses, or that of any stock-and-bond-based portfolio. Listed below are two TSX-listed ETF concepts value contemplating, together with the trade-offs and what you’ll need to be careful for.
With the Financial institution of Canada holding charges regular at 2.75%, buyers nonetheless have the choice to maintain some money reserves of their portfolio incomes a good yield with out taking over significant threat. Money is a viable asset class. It doesn’t have the fairness threat of shares, and it avoids the credit score or rate of interest threat you get with bonds. When each shares and bonds fall on the similar time, money is among the few issues that also holds its worth.
In these moments, money is king and much from being a useless weight. Actually, Warren Buffett (or reasonably his successor, Greg Abel) holds almost $350 billion value in Berkshire Hathaway. That stated, there’s a better transfer than merely leaving cash sitting in your brokerage account.
I want one thing just like the International X 0–3 Month T-Invoice ETF (CBIL). This ETF invests in extremely short-term federal government-issued treasury payments and basically returns the Financial institution of Canada’s coverage price minus its charges. With a 0.11% administration expense ratio, the ETF presently yields about 2.58% annualized.
It’s additionally extremely liquid, with a one-cent bid-ask unfold and minimal value fluctuation. The best way it really works is easy: its value ticks up slowly all through the month, then drops barely on the ex-dividend date by the quantity of revenue earned that month—like a sawtooth sample.