If you are looking to build a growth portfolio but don’t have time to pick individual stocks and bonds, an all-in-one growth ETF is an excellent option to consider.
Both Vanguard and iShares offer growth solutions, but you may be unaware of some of the differences between each.
A growth all-in-one ETF portfolio can save you a lot of time and trouble when investing, as well as making sure that you are properly diversified. As of January 2022, Canada’s share of the global stock market was only 2.5%, meaning that there are a lot of opportunities abroad.
In this head-to-head comparison, I will go over which growth ETF portfolio is best across the following categories:
- Length of track record and fund size
- Underlying holdings
I will outline XGRO vs VGRO below and go through some of the key differentiating features of each.
Understanding All-In-One ETF Portfolios
XGRO and VGRO are both all-in-one ETF portfolios as part of a full suite from Vanguard and iShares. Each all-in-one ETF portfolio is usually differentiated by its allocation to equities and to fixed income. ETF portfolios have different stock and bond weightings based on the fund’s advertised risk profile.
All-in-one ETFs have fairly basic naming conventions and generally look like this:
- Very Conservative
- Maximum Growth (or all-equity)
A very conservative ETF will likely be close to 100% invested in bonds while a maximum growth ETF will be closer to a 100% investment in equities. Both XGRO and VGRO are growth ETF portfolios, targeting an 80% allocation to stocks and a 20% allocation to bonds.
XGRO vs VGRO: Fees
Fees are very important to consider when investing because they can have a substantial impact on investment returns, especially over the long term.
Although XGRO and VGRO are both offered at low management expense ratios relative to most other mutual funds or ETFs, XGRO is priced lower than VGRO.
XGRO is currently offered at a management fee of 0.18% and a total management expense ratio of 0.20%.
VGRO is currently offered at a management fee of 0.22% and a total management expense ratio of 0.24%.
Although the difference is not major, it is substantial on a percentage basis (VGRO is 20% more expensive than XGRO).
Fees verdict – XGRO is the winner when it comes to fees, being offered at a lower management fee and management expense ratio.
XGRO vs VGRO: Performance
Performance is a key aspect to look at when deciding on an investment or ETF. Although XGRO has a much longer performance track record than VGRO, the ETF portfolios can be compared over two timeframes that they share: one-year and three-year performance.
The performance comparison is an apples-to-apples comparison since both XGRO and VGRO have the same target asset allocation.
When comparing the performance between XGRO and VGRO over three years and one year, XGRO has outperformed in both cases.
XGRO has also had a strong performance over longer periods of time, such as over five and ten years.
Performance verdict – XGRO has outperformed VGRO over the common timeframes that the two ETFs share while also showcasing strong performance numbers over a five and ten-year time period. It is the clear winner in this category.
XGRO vs VGRO: Yield
If you are focused on the yield your investments will be providing you, it is a good idea to know roughly how much to expect and how often distributions will be paid.
Both XGRO and VGRO offer investors distributions on a quarterly basis.
Currently, XGRO has a 12-month trailing yield of 2.02%, while VGRO has a 12-month trailing yield of 2.22%.
Be mindful that funds with a high allocation to stocks (such as both XGRO and VGRO) will usually see the majority of their gains come from capital gains or increases in the unit value of the ETF.
Yield verdict – both XGRO and VGRO offer distributions on a quarterly basis but VGRO has a higher 12-month trailing yield, making it the winner here.
XGRO vs VGRO: Length of Track Record and Fund Size
Two important considerations when investing in an ETF or a mutual fund are the length of the fund’s performance track record (how long since the fund was launched) as well as how large the fund is (measured by assets under management).
XGRO was launched on June 21, 2007. With a track record of over 15 years, investors are able to assess how the ETF has performed through various market cycles. A performance track record of over 15 years is considered very long.
In contrast, VGRO was launched on January 25, 2018, giving the fund a substantially shorter track record.
When it comes to fund size, both XGRO and VGRO are very large ETFs, with over one billion dollars in assets under management.
XGRO currently has more than $1.4 billion in assets under management, while VGRO has over $3.5 billion in assets under management. VGRO is a substantially larger ETF when it comes to assets.
Fund size is more important when considering newer funds that are very small in size (single-digit millions of assets under management). Funds that are unable to attract enough capital from investors early on run the risk of having to close down early due to profitability issues. This is not a risk for either XGRO or VGRO.
Length of track record and fund size verdict – As both funds are incredibly large in terms of assets under management, the length of track record becomes the key differentiating factor. XGRO is the winner here, with a much longer track record than VGRO.
XGRO vs VGRO: Risk
Risk is another key property that differentiates different funds. Higher-risk investments come with higher potential returns but typically greater price swings in the short term. All ETFs are required by law to disclose a risk rating within their fund facts documents.
When it comes to both XGRO and VGRO’s fund facts documents, both ETFs are outlined as carrying a low-to-medium risk. By having an identical asset allocation (80% equities and 20% fixed income), both funds can be thought of as carrying the same investment risk.
Choosing a lower-risk investment is not always the best course of action, especially if you are an investor with a high-risk tolerance and a long investment time horizon.
Risk verdict – when it comes to the riskiness of both ETFs, XGRO and VGRO have identical risk ratings, resulting in a tie for this category.
XGRO vs VGRO: Underlying Holdings
Although both XGRO and VGRO are fairly similar in the sense that they both invest in broad bond and stock ETFs targeting several different geographies, I will break down each fund’s current ETF holdings below. Keep in mind that both XGRO and VGRO are fund-of-funds, meaning that they hold several underlying ETFs.
VGRO currently has seven underlying ETFs within its portfolio, all of which are broad ETFs:
- Vanguard US Total Market Index ETF
- Vanguard FTSE Canada All Cap Index ETF
- Vanguard FTSE Developed All Cap ex North America Index ETF
- Vanguard FTSE Emerging Markets All Cap Index ETF
- Vanguard Canadian Aggregate Bond Index ETF
- Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged
- Vanguard US Aggregate Bond Index ETF CAD-hedged
XGRO currently has eight underlying ETFs within its portfolio, all of which are also broad ETFs:
- iShares Core S&P Total US Stock Market ETF
- iShares S&P/TSX Capped Composite Index ETF
- iShares MSCI EAFE IMI Index ETF
- iShares Core MSCI Emerging Markets ETF
- iShares Core Canadian Universe Bond Index ETF
- iShares Core Canadian Short-Term Corporate Bond Index ETF
- iShares US Treasury Bond ETF
- iShares Broad USD Investment Grade Corporate Bond ETF
Both ETF portfolios are well diversified across different subcategories of stocks and bonds around the world. A key difference is that each underlying fund belongs to the same investment manager (XGRO has only iShares underlying ETFs and VGRO has only Vanguard underlying ETFs).
Underlying holdings verdict – With an additional ETF as an underlying holding, XGRO has a marginally more diverse underlying holding mix and comes out on top here.
Our Final Verdict
Although both XGRO and VGRO are excellent solutions to consider for a more aggressive investor, XGRO is the overall winner, mainly driven by its lower fees and much longer performance track record.
Despite this, you may want to consider XGRO or VGRO in the following situations.
Consider investing in VGRO if:
- You prefer investing in extremely large funds
- You are less concerned with yield
- You have a preference for Vanguard underlying ETFs
Consider investing in XGRO if:
- You want to choose the lower-cost option
- You want to see a long performance track record
- You have a preference for iShares underlying ETFs
Vanguard and iShares remain excellent investment managers to consider if you are looking for low-cost ETF solutions.
For more information on all-in-one ETF portfolios, make sure to check out my Vanguard all-in-one ETF series review and my iShares all-in-one ETF series review for full information on both portfolio suites.