XGRO iShares all-in-one ETF: Full review

What’s an all-in-one ETF

XGRO (iShares Core Growth ETF Portfolio) is all-in-one ETF available on the TSX. All-in-one ETFs are a portfolio professionally managed available for investors in a form of an ETF. It has three main advantages:

• easy access to a portfolio so it’s great for DIY investors who would like a handoff approach to investing;
• portfolio is rebalanced automatically to maintain the desired allocation;
• Good substitute to Robo-advisors such wealthsimple invest (auto-pilot), Questrade porfolios…etc. All-in-one ETF cost less than managed Robo-advisors in terms of fees.

XGRO Investment objective

The Fund seeks to provide long-term capital growth by investing primarily in one or more exchange-traded funds managed by BlackRock Canada or an affiliate that provide exposure to equity and/or fixed income securities.

In essence, when acquiring XGRO, you are acquiring of portfolio of ETFs. 80% of the portfolio is invested in equity ETFs while the remaining 20% is invested in fixed income ETFs. It’s a growth portfolio ideal for investors with long term objective and medium risk tolerance.

Price and Chart

XGRO vs VGRO vs ZGRO

There are two main all-in-one ETFs that have same portfolio breakdown (80% equity and 20% bonds): The Vanguard Growth – VGRO and the BMO Growth – ZGRO.

VGRO and XGRO are neck to neck in terms of performance. VGRO has a slight edge in a 3 years period cumulative performance.

Updated daily – XGRO vs ZGRO vs VGRO

Fees and Morningstar rating

XGRO has a 0.20% management expense ratio. This is the total charge for the fund. Even if XGRO a group of ETFs at once, client will not pay MER for each ETF, the maximum they are charged is the MER of the all-in-one ETF.

Morningstar rating

Fees and AUM comparison

XGRO and ZGRO offer the lowest fees at 0.20%. Vanguard’s VGRO is a bit higher at 0.24%. Another factor that could impact your choice is liquidity. Generally speaking, the larger fund the better liquidity it offers to investors. Liquidity determines the difference between bid and ask price when selling or buying. So, it’s an important factor to consider. The largest fund among our three contenders is Vanguards ETF VGRO with over 3 Billion dollars in assets.

XGRO Holdings

XGRO, which stands for the iShares Core Growth ETF, comprises a diverse set of underlying iShares ETFs, each designed to represent distinct asset classes. These allocations provide a comprehensive investment strategy within a single ETF package.

iShares Core S&P Total U.S. Stock (ITOT)

The largest component of XGRO’s portfolio is the iShares Core S&P Total U.S. Stock (ITOT), accounting for 38.17% of its holdings. ITOT grants investors exposure to the entire spectrum of the U.S. stock market, encompassing large, mid, small, and micro-cap stocks. This component offers a broad representation of the American equities market.

iShares S&P/TSX Capped Composite (XIC)

Following closely is the iShares S&P/TSX Capped Composite (XIC), constituting 20.63% of XGRO’s assets. XIC concentrates on Canadian equities, mirroring the S&P/TSX Capped Composite Index, making it a core component for exposure to the Canadian stock market.

iShares MSCI EAFE IMI Index (XEF)

For international diversification, XGRO includes the iShares MSCI EAFE IMI Index (XEF), making up 19.14% of the portfolio. XEF is focused on developed market equities outside of North America, encompassing regions such as Europe, Asia, and Australia.

Other

The fixed-income component of XGRO’s portfolio is primarily represented by the iShares Core CAD Universal Bond Index (XBB), with an allocation of 11.51%. XBB is a Canadian bond ETF that primarily invests in investment-grade fixed-income securities. This inclusion adds stability to the overall portfolio. Incorporating emerging market exposure, XGRO includes the iShares Core MSCI Emerging Markets (IEMG) at 3.89%. IEMG offers access to emerging market equities, including stocks from diverse regions such as Asia, Latin America, and Africa. To complement its bond exposure, XGRO features the iShares Core CAD Short-Term Corporate Bond Index (XSH), accounting for 2.90% of the portfolio. XSH is a Canadian short-term corporate bond ETF, offering a shorter duration compared to XBB.

List of stocks held by XGRO through the basket ETFs it invests in:

XEQT iShares Core Equity ETF Portfolio vs XGRO iShares Core Growth ETF Portfolio

XGRO is generally considered to be less risky than XEQT due to differences in their asset allocations and investment strategies. Here are several key reasons why XGRO is often perceived as a lower-risk option:

Diversification:

XGRO typically follows a more diversified investment approach. While both XEQT and XGRO are all-in-one ETFs, XGRO typically allocates a portion of its holdings to fixed-income securities (bonds) in addition to stocks. This diversification can help cushion the portfolio against extreme market volatility. Bonds are generally less volatile than stocks and tend to provide a stabilizing effect on the overall portfolio.

Lower Equity Exposure:

As you mentioned, XGRO holds 80% of its assets in stocks, whereas XEQT holds 100% in stocks. Stocks are generally riskier and more volatile compared to bonds. Therefore, XGRO’s lower equity exposure reduces the overall risk level of the portfolio.

Risk Mitigation:

XGRO’s asset allocation is designed to provide some level of risk mitigation. During market downturns, the bonds in XGRO can act as a hedge against stock market losses. This can help preserve capital and reduce the impact of market volatility on the portfolio.

Long-Term Stability:

XGRO is often recommended for investors with a lower risk tolerance or those who are closer to their financial goals, such as retirement. Its asset mix is geared towards providing more stability and preserving capital over the long term, making it a suitable choice for conservative investors.

Rebalancing:

Both XEQT and XGRO are managed to maintain their target asset allocations. However, because XGRO has a fixed allocation to bonds, it may experience less frequent and severe fluctuations in its asset mix. This rebalancing can help control risk over time.

see below the holdings for XEQT:

How can I buy XGRO

Clients have simply to use their banks brokerage websites or independent brokers platform (such as Questrade or Wealthsimple) to acquire the ETF. No need to contact a financial advisor, it’s a product for DIY investors.

XGRO can be held in registered accounts such as RRSP, TFSA or RESP.

Additional source of info