Over 90% of the fluctuations in your portfolio’s return variations generally comes from asset allocation.
One-ticket solutions are a great way to approach investing early on because they take care of several problems that can arise if you hold just a few stocks or a specific sector or country ETF.
These problems include being too concentrated in a particular sector or investing solely in one geographical region.
HGRO is an all-equity asset allocation ETF from Horizons. We’ll provide a Horizons HGRO review below, and if it’s a good choice as an all-equity one-ticket fund to consider for your personal accounts.
One-ticket all-equity portfolio ETF
A well-diversified equity ETF that holds approximately six underlying equity ETFs.
- Diversified Equity Exposure
- Liquid Solution
- Large Size
- Tax-Efficiency in Non-Registered Accounts
- Short Performance Track Record
- No Dividend Yield
What is Horizons’ HGRO ETF?
HGRO is an all-equity asset allocation ETF offered by Horizons in Canada. It is a fund of funds, meaning that it invests in several underlying ETFs.
HGRO.TO is currently trading at close to $13.93.
HGRO Key Facts
As of Dec 31, 2021:
- Ticker Symbol: HGRO.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $170.14 Million (As of Aug 17, 2022)
- MER: 0.16%
- 12-Month Trailing Yield: 0.02%
- Currency Traded: CAD
- Registered Accounts Availability: Yes
What is an Asset Allocation Fund?
Asset allocation generally refers to the percentage that is allocated to either fixed income or equities.
These asset allocation funds typically vary from very conservative (100% fixed income) to maximum growth (100% equities). HGRO falls in the second category as it aims to have at least a 99% allocation to equities at all times.
A key benefit of asset allocation funds is that they rebalance over time to their specific targeted allocation. This means that if market conditions cause the percent allocations to change, the portfolio manager will adjust them back in line with the targeted percentages.
Essentially, asset allocation funds are meant to be purchased and held over the long term with minimal oversight from you as the investor.
HGRO MER
HGRO’s MER is 0.16%, which is very low when compared to other all-equity asset allocation strategies. When compared to most equity ETFs and mutual funds, HGRO’s MER is again significantly lower.
HGRO Dividend Yield
The underlying ETFs held by HGRO are mostly Horizons’ Total Return Index ETFs. These ETFs are structured in such a way that they pay a minimal or zero income each year.
As a result, HGRO’s yield is close to zero.
From a tax-efficiency perspective, this is great because dividends are taxed less favourably than capital gains.
Horizons HGRO’s dividend yield as of December 31, 2021:
- 12-month trailing yield: 0.02%
- Distribution yield: 0.02%
- Dividend schedule: Annual
HGRO Performance
Here is the recent performance of HGRO:
52-Week Low: $11.14
52-Week High: $14.63
YTD Return: 10.76%
3-Month Returns: -4.56%
Growth of a hypothetical $10,000 since the inception of Horizons HGRO:
As of July 31, 2022:
| 1mo | 3mo | 6mo | YTD | 1 yr | SIR** | |
|---|---|---|---|---|---|---|
| Horizons Growth TRI ETF Portfolio | 7.54 | -1.29 | -9.79 | -13.90 | -8.49 | 10.06 |
Go to the Horizons website for real-time performance numbers of HGRO.
What does HGRO Invest In?
HGRO invests at least 99% of its assets in global stock ETFs. These ETFs themselves entirely hold equities based on their specific geographic mandates.
HGRO looks to offer investors geographically diversified exposure to stocks around the world.
HGRO Asset Allocation
| Asset Class | Net | Short | Long | Cat. | Index |
|---|---|---|---|---|---|
| Canadian Equity | 17.54 | 0.00 | 17.54 | 6.25 | 3.17 |
| U.S. Equity | 51.21 | 0.00 | 51.21 | 54.63 | 59.28 |
| International Equity | 0.63 | 0.00 | 0.63 | 33.65 | 37.50 |
| Fixed Income | 0.00 | 0.00 | 0.00 | 0.23 | 0.00 |
| Other | 12.82 | 1.17 | 13.99 | 1.41 | 0.05 |
| Cash | 17.81 | 79.02 | 96.83 | 4.91 | 0.00 |
HGRO Top Holdings
Here are the top holdings of HGRO as of Aug 17, 2022, as you can see it is a fund of funds and consists of many other ETFs:
| Security Name | Weight |
|---|---|
| Horizons US Large Cap Index ETF (HULC) | 33.19% |
| Horizons NASDAQ-100 Index ETF (HXQ) | 20.69% |
| Horizons S&P/TSX 60 Index ETF (HXT) | 18.11% |
| Horizons Intl Developed Mkts Eq Ix ETF (HXDM) | 13.96% |
| Horizons Europe 50 Index ETF (HXX) | 7.05% |
| Horizons Emerging Markets Equity IdxETF C$ (HXEM) | 6.96% |
| CASH | 0.05% |
HGRO Sector Weighting
| Sectors | Investment % | Cat % |
|---|---|---|
| Basic Materials | 3.21 | 3.88 |
| Consumer Cyclical | 10.79 | 10.94 |
| Financial Services | 15.22 | 15.14 |
| Real Estate | 1.51 | 1.80 |
| Communication Services | 10.26 | 7.21 |
| Energy | 6.58 | 4.91 |
| Industrials | 7.92 | 12.37 |
| Technology | 26.85 | 16.03 |
| Consumer Defensive | 6.24 | 10.23 |
| Healthcare | 8.69 | 14.61 |
| Utilities | 2.74 | 2.88 |
Horizons HGRO Risk Indicator
HGRO is a low-to-medium risk ETF:
HGRO vs Other Funds
Several other all-equity asset allocation ETFs exist in Canada as competitors to HGRO.
HGRO vs XEQT
iShares’ XEQT ETF is a similar option to consider, being a 100% equity asset-allocation portfolio in Canada.
XEQT is much larger than HGRO in terms of size, with $1.1 billion in assets under management. XEQT comes with a higher MER of 0.20% compared to HGRO’s 0.16%.
XEQT only holds four underlying ETFs, making it more fund-concentrated than HGRO. XEQT also pays a decent yield with quarterly distributions. This makes it less tax-efficient than HGRO but more appropriate for investors that are looking for income.
XEQT has a performance track record that is very similar to HGRO’s. The ETF has an inception date of August 7, 2019.
Since HGRO is offered at a lower MER, is more tax-efficient in non-registered accounts, and holds more ETF positions, we recommend it over XEQT.
HGRO vs VEQT
Vanguard’s VEQT is another all-equity asset-allocation portfolio available in Canada.
VEQT is much larger than HGRO in terms of size, with $2.0 billion in assets under management. VEQT comes with a higher MER of 0.24% compared to HGRO’s 0.16%.
VEQT, like XEQT, only holds four underlying ETFs, making both more fund-concentrated than HGRO. VEQT also pays a decent yield with annual distributions. This also makes VEQT less tax-efficient than HGRO but more appropriate for investors that are looking for income.
XEQT has a performance track record that is slightly longer than HGRO’s. The ETF has an inception date of January 29, 2019, so it still has a short performance track record.
Since HGRO is offered at a lower MER, is more tax-efficient in non-registered accounts, and holds more ETF positions, we also recommend it over VEQT.
Is HGRO, VEQT, Or XEQT Better?
As a second option to consider behind HGRO, XEQT is likely marginally better than VEQT.
Both XEQT and VEQT are massive funds, with VEQT having almost twice as many assets under management. At these large asset levels, the specific amount of AUM is not as important when comparing funds.
XEQT comes at a marginally lower MER than VEQT, which is always helpful to the end investor. This is the main factor leading to XEQT being a little bit better compared to VEQT.
Is HGRO a Good Investment?
Given our above analysis, HGRO is a great investment vehicle for accessing an all-equity one-ticket portfolio. A common way to invest in HGRO is to combine it with a fixed-income ETF, in order to properly match your risk tolerance.
HGRO is one of the cheapest options among its competitors in Canada, meaning that you are paying the least.
The ETF is the most tax-efficient among VEQT and XEQT because it pays a yield that is close to zero. This is extremely advantageous in non-registered accounts.
HGRO also invests in a larger number of ETFs than both VEQT and XEQT, offering greater diversification across funds. This does not necessarily mean that it is better diversified across underlying stocks, which depends on the number of holdings in each underlying ETF.
HGRO is relatively smaller than both iShares’ and Vanguard’s ETFs, but it is not small enough to put it at risk of closing down early.
Given all of these features, HGRO is a great investment to consider for the right investor.
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Our Final Verdict
HGRO is a great ETF to consider if you are an investor with a medium or high-risk tolerance.
If you are looking for simplicity in a one-ticket solution, HGRO does a superior job than both XEQT and VEQT.
Check out this list of all of Horizons All-In-One ETFs.
