For the 0.24% administrative expense ratio (MER), you will regularly combine 80% of global stocks and 20% of bonds and have Canadian household bias to improve tax efficiency and reduce monetary risk. Despite growth bias, it can still pay under-quarter dividends. If imitation is a form of flattery, VGRO will be highly praised: there are now imitators from other providers (XGRO, ZGRO, TGRO, HGRW) with lower Mers.
VGRO hold
What stocks does VGRO have?
- Vanguard US Total Market Index ETF 35.14%
- Vanguard FTSE Canada All Cap Index ETF 24.65%
- Vanguard ftse develops all CAP EX North American Index ETFs 14.44%
- Vanguard Canadian Total Bond Index ETF 11.83%
- Vanguard FTSE Emerging Markets All CAP Index ETF 5.47%
- Vanguard Global Ex-US Total Bond Index ETF (CAD-HEDGED) 4.23%
- Vanguard US Total Bond Index ETF (CAD-HEDGED) 4.21%
As of April 30, 2025
VGRO ETF and its peers are not perfect, nor are they as “safe” as Canadian investors assume. In fact, in 2022, VGRO’s price fell 11.19%, a deeper decline than its 100% stock, Vanguard All-Equity ETF Portfolio (VEQT).
This is because VGRO’s 20% bond sleeve is usually a buffer against stock losses due to its usual negative correlation, but also a sharp drop in the face of rising interest rates. VGRO’s average duration of bond holdings is 6.8 years, meaning it is quite sensitive to interest rate hikes. For all other same people, a 1% increase in interest rates could result in a price drop of bond-only components to about 6.8%. In 2022, this happened in the stock bear market, exacerbating the losses of VGRO.
If you are concerned about duplication of this situation (stocks and bonds are all together), there are ways to address the weakness of VGRO or any stock-based portfolio. Here are two TSX-listed ETF ideas worth considering, and the tradeoffs you need to be aware of.
With Canadian banks’ holding rates stable at 2.75%, investors can still choose to keep some of their cash reserves in their portfolio without taking meaningful risks. Cash is a viable asset class. It has no equity risk to stocks and can avoid the credit or interest rate risk you get with bonds. When stocks and bonds fall at the same time, cash is one of the few things that still have their value.
In that moment, cash is king, far from weight. In fact, Warren Buffett (or his successor Greg Abel) holds nearly $350 billion in Berkshire Hathaway. That said, there is a smarter move instead of simply putting the money in your brokerage account.
I prefer a global X 0-3 month t-bill ETF (CBIL). The ETF invests in fiscal bills issued by the ultra-short term federal government, essentially, the policy interest rate of the Canadian bank minus its expenses. The ETF’s administrative expenses are 0.11%, currently generating an annual growth rate of about 2.58%.
It is also highly liquid, with a one-cent bid smear rate and a minimum price. It works in a simple way: prices slowly rise throughout the month, and then the amount of revenues (such as jagged patterns) drops slightly over the month.
