Just Buy XGRO

Should you just buy XGRO? Convenience and cost

iShares' 80/20 growth ETF pairs broad global equity with a Canadian bond sleeve. Here's the case for it, and what it costs compared to a DIY equity/bond split.

TL;DR

If you want this, XGRO delivers

✓ One-fund 80/20 exposure: global equity with a Canadian bond sleeve
✓ Automatic rebalancing back to 80/20 without any manual trades
✓ Lowest MER among major Canadian 80/20 all-in-one ETFs (0.20%)

Worth knowing

· Bond sleeve uses broad Canadian bond index: duration risk in rising-rate environments
· MER of 0.20% is higher than holding the equity and bond components separately
· Quarterly distributions: four ACB adjustment events per year in non-registered accounts

ETF specifications

XGRO: ETF Specifications

MER: 0.20%
Holdings: ~9,800
Equity / Bond: 80% equity / 20% bonds
Distribution: Quarterly
Inception: Aug 7, 2018
AUM: ~$3B CAD
Exchange: TSX
Currency: CAD

Who XGRO is for

XGRO is suited to investors who want a mostly-equity portfolio with some bond cushion, and a time horizon long enough to tolerate equity drawdowns but shorter than the 25-plus year horizon where 100% equity makes most sense. A 15-year horizon, moderate drawdown tolerance, or a preference for a slightly smoother ride than XEQT delivers are all reasonable reasons to land on XGRO.

The 20% bond allocation reduces expected long-run return versus XEQT, but it also reduces the depth of drawdowns in bad equity years. That is not a free lunch: if you hold XGRO for 30 years, you will likely end up with less money than if you held XEQT for 30 years. But for investors who are 8-20 years from needing the money, the shallower drawdown profile can make a real behavioural difference, particularly if a 40% portfolio drop would cause you to sell.

The convenience trade-off

Just-buying XGRO is a reasonable choice. Here's what that convenience costs annually and over 20 years compared to holding the underlying equity components (ITOT, XIC, XEF, XEC) plus a Canadian bond ETF (XBB) at 80/20, with the US portion in an RRSP.

The convenience cost: XGRO vs a DIY equity/bond split

Assumes 50% RRSP allocation. See the calculator for your own numbers.

Portfolio	Annual cost	20-year cost (compounded)
$250K	$371/yr	$13,638
$500K	$742/yr	$27,277
$1M	$1,483/yr	$54,553

See your portfolio's cost → ETF Split Calculator

Annual cost combines MER drag and foreign withholding tax savings foregone. Assumes 50% RRSP / 50% TFSA split. 20-year figure compounds annual savings at 6% growth.

Compare and explore

VGRO: the Vanguard 80/20 alternativeSame 80/20 strategy, slightly higher MER, annual distribution in December. How to choose.Read the VGRO guide →XEQT: the 100% equity versionIf your horizon is longer or your drawdown tolerance is higher, XEQT drops the bond sleeve entirely.Read the XEQT guide →XBAL: the 60/40 alternativeMore bond exposure for shorter horizons or lower drawdown tolerance. Same iShares structure.Read the XBAL guide →Back to the hubSee the full guide covering 100% equity, 80/20, and 60/40 ETFs across iShares and Vanguard.Just Buy hub →

Frequently asked questions

Why would I choose XGRO over XEQT?+

XGRO adds a 20% bond sleeve to an otherwise XEQT-like equity portfolio. That bond allocation smooths drawdowns modestly: in a year where equities fall 30%, XGRO will typically fall less than XEQT because bonds tend to partially offset equity losses. The trade-off is lower long-run expected return. XGRO is not a step down from XEQT on a quality scale; it's a different allocation for a different investor with a shorter horizon or lower drawdown tolerance.

Is XGRO better than VGRO?+

They're nearly identical in strategy, both 80/20. XGRO has a slightly lower MER (0.20% vs VGRO's 0.24%) and distributes quarterly. VGRO distributes annually in December, which simplifies ACB tracking in non-registered accounts. The MER difference amounts to about $200 per year per $500,000. For most investors the choice is a preference between iShares and Vanguard rather than a meaningful performance question.

What is the 20% bond allocation in XGRO?+

XGRO holds XBB (iShares Canadian Universe Bond Index ETF) for its bond sleeve. XBB tracks the FTSE Canada Universe Bond Index, a broad Canadian investment-grade bond index covering government and corporate bonds across all maturities. It is not a short-duration or inflation-linked strategy. In a rising-rate environment, a broad bond index like XBB will face price pressure on longer-duration holdings.

What happens to XGRO in a rising-rate environment?+

Rising rates push down bond prices, which hurts the 20% bond sleeve. The equity portion is unaffected by rates in a direct sense, though rate environments influence equity valuations too. In a prolonged rising-rate cycle, an investor in XGRO may find that the bond sleeve provides less cushion than expected, because bond prices are falling alongside equity prices. This is one reason some investors prefer holding a short-duration bond ETF separately rather than relying on a broad-index bond sleeve inside an all-in-one.

See exactly what splitting XGRO would save for your portfolio size and account mix.

Open the ETF Split Calculator →