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 progress bias, it pays a not inconsiderable quarterly dividend. If imitation is a type of flattery, VGRO comes extremely praised: there at the moment are 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 World 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. In truth, throughout 2022, VGRO’s worth 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 towards inventory losses on account of its ordinary damaging correlation, additionally dropped sharply within the face of rising rates of interest. The common length of VGRO’s bond holdings is 6.8 years, which implies it’s pretty delicate to fee hikes. All else being equal, a 1% rise in charges might result in roughly a 6.8% worth decline within the bond part alone. And in 2022, this occurred throughout an fairness bear market, exacerbating losses for VGRO.
For those who’re involved a couple of repeat of this state of affairs—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 here are two TSX-listed ETF concepts price 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 an honest yield with out taking up 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 identical time, money is likely one of the few issues that also holds its worth.
In these moments, money is king and much from being a useless weight. In truth, Warren Buffett (or fairly his successor, Greg Abel) holds practically $350 billion price in Berkshire Hathaway. That mentioned, there’s a better transfer than merely leaving cash sitting in your brokerage account.
I desire one thing just like the World 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 fee minus its charges. With a 0.11% administration expense ratio, the ETF at present yields about 2.58% annualized.
It’s additionally extremely liquid, with a one-cent bid-ask unfold and minimal worth fluctuation. The best way it really works is easy: its worth ticks up slowly all through the month, then drops barely on the ex-dividend date by the quantity of earnings earned that month—like a sawtooth sample.
