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Vanguard vs. iShares All-in-One ETFs

vanguard vs ishares all in one ETF

Many of you know how much I appreciate and recommend the Vanguard all-in-one ETFs.  What I like most about them is that in a single ETF, it provides investors with a complete globally indexed portfolio that will automatically rebalance to maintain the set ratio of equity/bonds.  All for a very low management expense ratio (MER) of 0.25%.

We all know that competition is good right?  Blackrock iShares has come out with their own version of all-in-one ETFs, and are just as good, and slightly cheaper!  They have some subtle differences, but I’ll let you decide which you like best.

Vanguard All-in-One ETFs

Here are the three Vanguard ETFs straight from the Vanguard website.   They each have a MER of 0.25%.  For more details, my post about the Vanguard all-in-one products here.

Vanguard ETF Investment objective Ticker Strategic asset allocation
Vanguard Conservative ETF Portfolio Seeks to provide a combination of income and moderate long-term capital growth. VCNS 40% equity/
60% fixed income
Vanguard Balanced ETF Portfolio Seeks to provide long-term capital growth with a moderate level of income. VBAL 60% equity/
40% fixed income
Vanguard Growth ETF Portfolio Seeks to provide long-term capital growth. VGRO 80% equity/
20% fixed income

iShares All-in-One ETFs

As you can see from the table below, even the ticker symbols are similar!  These iShares ETFs are a little cheaper with an estimated MER of 0.21% (official MER not posted yet).  It’s a great time to be an investor where you can build a completely hands-off indexed portfolio by purchasing a single ETF and paying only 0.21% in fees.  It can get even cheaper if you go with a discount brokerage that offers commission-free ETF purchases.

The biggest difference that I can see right now is that iShares does not offer a conservative portfolio (like Vanguard above), but they go head to head in the balanced and growth portfolios.

iShares ETF Investment objective Ticker Strategic asset allocation
iShares Core Balanced ETF Portfolio The Fund seeks to provide long-term capital growth and income 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. XBAL 60% equity/
40% fixed income
iShares Core Growth ETF Portfolio 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. XGRO 80% equity/
20% fixed income

Comparing Holdings

XBAL vs. VBAL

Comparing the holdings of these two leading ETF providers show that there is little difference in the exposure and holdings.  With XBAL, you’ll get slightly more exposure to the US market and slightly less exposure to Canada.  In the grand scheme of things, that may not be a bad thing since Canadians have a tendency to have a home bias (myself included).

With VBAL, you’ll get slightly better diversification with your bonds portfolio with exposure to the US and global bonds.  However, XBAL gives you more exposure to corporate bonds. With only a 0.04% difference in MER, it’s a tough choice, but if I were to start a portfolio today, it would lean towards XBAL.

Allocation XBAL VBAL
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 15.21% VCN Vanguard FTSE Canada All Cap Index ETF 17.1%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 26.56% VUN Vanguard US Total Market Index ETF 23.0%
International XEF ISHARES MSCI EAFE IMI INDEX 14.93%

IEMG ISHARES CORE MSCI EMERGING MARKETS 3.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 13.7%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 4.2%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 25.56%

XSH ISHARES CANADIAN SHORT TERM CORPOR 6.40%

VAB Vanguard Canadian Aggregate Bond Index ETF 24.8%
US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 4.04%

GOVT ISHARES US TREASURY BOND ETF 3.99%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 9.7%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 7.5%

XGRO vs. VGRO

Comparing the iShares and Vanguard all-in-one growth ETFs, again, there are slight differences.  iShares gives you more US equity exposure (36.5% vs 31%) and less Canadian equity (20.51% vs 23.2%).  Vanguard, on the other hand, gives you better global exposure to bonds.  However, this is less important as bonds are only 20% of these portfolios.

Both are strong portfolios, but I like that XGRO has slightly greater global equity exposure.

Allocation XGRO VGRO
Canada XIC ISHARES S&P/TSX CAPPED COMPOSITE I 20.51% VCN Vanguard FTSE Canada All Cap Index ETF 23.2%
US ITOT ISHARES CORE S&P TOTAL U.S. STOCK 36.52% VUN Vanguard US Total Market Index ETF 31.0%
International XEF ISHARES MSCI EAFE IMI INDEX 19.71%

IEMG ISHARES CORE MSCI EMERGING MARKETS 4.02%

VIU Vanguard FTSE Developed All Cap EX North America Index ETF 18.6%

VEE Vanguard FTSE Emerging Markets All Cap Index ETF 5.7%

Canadian Bonds XBB ISHS CORE CAD UNIV BND IDX ETF 12.22%

XSH ISHARES CANADIAN SHORT TERM CORPOR 3.06%

VAB Vanguard Canadian Aggregate Bond Index ETF 12.5%
US/International  Bonds USIG ISHARES BROAD USD INVESTMENT G 1.92%

GOVT ISHARES US TREASURY BOND ETF 1.89%

VBG Vanguard Global ex-US Aggregate Bond Index ETF CAD-hedged 4.9%

VBU Vanguard US Aggregate Bond Index ETF CAD-hedged 3.8%

Final Thoughts

Comparing both products, it looks like Vanguard has met its match!  While both products are very similar (and awesome), it’s a toss up on which is better.  If you’ve already started a portfolio using Vanguard all-in-one products, I’d say to stay the course.  If you’re new to investing, then I think the iShares all-in-one ETF line will serve you well with a slightly lower MER and slightly more equity exposure outside of Canada.  Either way, investors win with the low fees and ease of use.  As mentioned earlier, combine it with a discount broker that offers commission-free ETFs, and you’ll save even more!

You decide, which product do you like better?  Vanguard or iShares?

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40 Comments

  1. Shea on January 28, 2019 at 2:35 pm

    IShares also allows PACC

    If you set it up you can automatically take money out of your bank account on the same day of the month, every month and they will buy the shares for you.

    • FT on January 28, 2019 at 2:39 pm

      Great tip – Thanks Shea!

    • Johnny on February 8, 2019 at 12:38 pm

      Thanks for the tip! How do I set up PACC with iShares if I use a discount broker (in my case Scotia iTrade)?

      • Kaman on April 6, 2019 at 11:45 am

        PACC means you cannot use limit orders, always market orders? That’s NOT good.

  2. Maha on January 28, 2019 at 8:53 pm

    Thanks for this. Curious though – – how do they compare in terms of liquidity/trading volumes?

    • FT on January 28, 2019 at 8:59 pm

      Since xgro and xbal are new, their trading volumes are lower by approx half . However these aren’t etfs that you trade , just buy and hold until retirement.

  3. Kevin Nelson on January 28, 2019 at 9:12 pm

    Thanks for bringing up the comparison so clearly. The MERs on the ETFs listed are very attractive. I noticed that they follow a ETF-of-ETFs approach (appears similar to a fund-of-funds setup). If I were to buy 1 share of the VGRO for example, would you be able to illustrate if the MERs of each of the ETFs held by VGRO are built into the 0.25% MER in the VGRO, or is the investor really paying multiple layers of fees here? I always find the disclosures cumbersome in this regard.

    Thank you!
    Kevin

    • FT on January 28, 2019 at 9:27 pm

      You would only be paying the 0.25%, it really is a great deal.

  4. Mr. Prairie FIRE on January 29, 2019 at 7:57 am

    Great post and thanks for putting this together. I have a question regarding rebalancing as you get older or approach retirement. Say I start with all in one growth ETFs at 20 years old and continue until 50 years. I then want to reshape my portfolio and rebalance so it’s more conservative (60% equities 40% bonds). Would it be a bit tricky to get the allocation right? Or would you simply sell all your growth all in one ETFs in exchange for conservative All in one ETFs?

    • FT on January 29, 2019 at 8:53 am

      My suggestion would be to follow one of two strategies:
      1. Add a bond index ETF to your portfolio as you age (like VAB) and keep increasing VAB to meet your desired asset allocation. For example, if you add 5% of your portfolio in VAB, this means that you’ve added 5% bonds. In total, if you owned VGRO, that would result in 75% equities 25% bonds in your portfolio.
      2. Sell pieces of VGRO as you age while adding VBAL. This will add your bond exposure over time, and eventually, you’ll switch entirely over to VBAL. This method would require a little more math to determine your asset allocation.

  5. Chelsey on January 29, 2019 at 4:08 pm

    Do you have a preference for one over the other when it comes to investing for an RESP. Our kids are 4 and 1 now, so we have some time, but clearly not as much as saving for retirement. I was thinking of choosing XBAL for their education savings. Thoughts?

    • FT on January 29, 2019 at 4:15 pm

      It’s a risk tolerance question, but for longer timelines (very young children) it may be of benefit to be more aggressive (vgro or xgro) then increase bond exposure as the kids get closer to post-secondary. However, to answer your question, xbal or vbal would be fine.

  6. Shami on January 30, 2019 at 3:46 am

    My issue is the dividend withholding taxes from these ETFs. I recently read an article by two accountants which clearly show withholding taxes are taking a bigger bite out of ETFs returns than fees.

  7. Dr. MB on February 2, 2019 at 11:06 pm

    I am seriously thinking of using VGRO in my TFSA, RRSP, CCPC and taxable accounts.

    The main difference is I would not DRIP in the taxable and CCPC accounts.

    I plan on holding 25% laddered GIC and 75% VGRO in my CCPC. This would make this a 60/40 portfolio.

    Perhaps there will be some tax inefficiency. But I can manage a portfolio like this very easily. That alone would be worth it to me.

    • FT on February 4, 2019 at 9:35 am

      I’d say go for it Dr. MB! There is value in simplicity.

  8. A on February 6, 2019 at 7:03 pm

    How do these work in terms of pricing? Over the last year, VGRO has not gone up or down more than a couple of dollars. In terms of investing for retirement, are we to expect that the value of these ETFs might fluctuate more and gain more in dollar value over time?

    • FT on February 6, 2019 at 7:07 pm

      These funds will mimic the broad market (index). So if a comparable index portfolio goes up by 10% , vgro should do about the same . 2018 was a rough year for the broad index which means investors in general. Remember to think in terms of decades rather than years . Markets go up over any 20 plus year period.

  9. Cris on February 6, 2019 at 7:08 pm

    If you look to the performance of all of them, you are better off with a GIS over 3%.
    There are much better options in the market.

    • nobleea on February 7, 2019 at 1:02 pm

      That’s not true at all. These are young funds, about a year old, and the past year has not been great for the market as a whole, so for sure the performance the last year hasn’t been great. But over the long term, there’s no comparison.
      The 10 yr annualized return for VGRO would have been about 9% and for VBAL would have been about 7.8%. Over 20 yrs, they would have been identical at 5.2% annualized.

  10. zudora on February 13, 2019 at 1:29 am

    I’m a bit confused with the MER of XGRO, the Fact Sheet states it is 0.80% which seems a lot higher than VGRO at 0.25%?

    • FC on February 14, 2019 at 3:54 am

      I have the same question, the fact sheet does not show a better MER than VGRO.

  11. Johnny on February 13, 2019 at 3:30 am

    The management fee of XGRO is listed on iShare’s website here and it’s 0.20%. The MER hasn’t been posted yet, but it shouldn’t be too much higher. https://www.blackrock.com/ca/individual/en/products/239447/ishares-balanced-growth-coreportfoliotm-fund

  12. Chris on February 19, 2019 at 2:36 pm

    Do you feel these sort of funds are better suited for smaller balances? I’ve heard John Hood on BNN say a few times, these are great for small accounts. What drawbacks of putting large amounts in VGRO? What are the alternatives?

    • FT on February 19, 2019 at 2:39 pm

      These are good for smaller and larger balances IMO. What did John Hood say about investing for larger balances? What is considered a large balance?

      • Chris on February 20, 2019 at 2:37 am

        I’ve only heard him reference a dollar amount once for small accounts and that was $35K, I believe. If someone is considering placing most or all of their RRSP into VGRO, this would be well above $35K and into the 6 digits.

        Perhaps at a higher amount, it may be better to build your own portfolio without all the diversification of the ETFs???

        • FT on February 20, 2019 at 9:16 am

          Not sure what the logic is there. My advice would be to continue using index ETFs no matter the size of your portfolio. Of course, when portfolios/net worth gets really large, some decide to move into private equity/real estate etc, but a large part of market exposure should be indexed (imo).

  13. RKB on March 21, 2019 at 6:25 pm

    Hi, I’m 50 years old with $275,000 in the bank, $66,000 maxed out in a regular TFSA account and own my own home with precarious contract employment prospects lying ahead down the road. I’ve never really invested before. I was thinking of opening a TFSA account at Questrade and putting the entire $66000 in VGRO or VEQT and hope for the best in 20 years. Is that too simplistic of a view? Just looking for some straight forward advice. Thanks

    • FT on March 25, 2019 at 8:52 am

      RKB, I would look at your entire portfolio to help decide which investment strategy to go with. When do you plan on retiring? Do you have a pension with your employer? What is your risk tolerance? Can you sleep at night with a volatile market? At 50, and a traditional retirement at 65, you may want to look at more balanced products like VBAL, XBAL, or ZBAL that have 60% equity and 40% fixed income. If you already have a defined benefit pension (which acts like fixed income), then you may want to get more aggressive and go with VGRO/XGRO/ZGRO. At least that is my opinion.

      • RKB on March 28, 2019 at 3:57 am

        Hi, thanks for the reply. I’m on my own without a pension and have no set retirement age. However, I’m debt free with only typical living expenses to account for. I just thought putting my entire TFSA balance into a growth ETF like Vanguard’s new all equity VEQT and contributing the max amount each year would compound nicely over the next 20-25 years while still having cash on hand. I might not like it but would accept the volatility while the goal takes precedence. After the sale of some real estate, combined with the above, I should end up with around $400,000 – $450,000 that I could use to contribute the max amount to the TFSA each year. This represents my entire net worth and am trying to keep things simple from this point on. I was also thinking that since VEQT is just a couple of months old of buying in with the full TFSA amount that I have all at once (no dollar cost averaging). Thanks again

  14. Kat on April 9, 2019 at 10:55 pm

    Hi,
    I’m 37. I’m balanced type. I have 25k celi, 40k reer and 15k reee (kid 8). Should I put everything in VBAL? Or mixed with VGRO or something else?!
    Thanks!

    • FT on April 10, 2019 at 9:26 am

      Hi Kat, very challenging to give you a definitive answer as everyone has different risk tolerance. But if I’m interpreting the “balanced” type correctly, then VBAL might be a better fit.

  15. ovsa on May 3, 2019 at 9:14 pm

    Hard to find a US currency balanced ETF available in Canada. Lots of mutual funds but no ETFs.
    I would prefer to keep the account in US Dollars. Something similar to VBAL.

    Any suggestions

  16. Corey Harris on June 4, 2019 at 8:33 am

    Beware, iShares’ real cost is deceiving. ie today, XGRO has a MER of 0.84% + TER of 0.07% for a total expense of a whopping 0.91%. VGRO has a MER of 0.22% and a total expense of 0.25%.

    • FT on June 4, 2019 at 9:07 am

      Since iShares switched their CBN ETF to xgro, xgro inherited the printed mer. Since mer is not calculated until one year after (like filing taxes), we do not know the true mer for xgro but it ‘should’ be around 0.21%. The part that I need to look into further is how CBN had a management fee of 0.18% but then had a mer of 0.80%.

  17. Kay on June 26, 2019 at 12:53 am

    Hi FT,

    I am 24 years old and I am really hoping to step foot in the investment world this year. Right now, I have a TD balanced mutual funds for about $13000 and I am thinking of switching it to a higher return product such as the VGRO.
    Also, after putting aside an emergency fund, I have another $10000 to add onto my portfolio. So, my question is does it matter what time I sell my mutual funds? Also, how long should we hold ETFs for? Are they good until retirement? If so, what are some short time investment that you would recommend (3-5 years?) for people around my age?

    Thank you so much!
    Kay

    • FT on June 26, 2019 at 11:05 am

      Hi Kay,

      Do you know what MER you are paying for your TD funds? In terms of timing, it doesn’t really matter when you sell your funds to switch to ETFs. The goal is to buy and hold forever (mutual funds and/or ETFs) but you may need to increase your bond allocation as you get older. But for right now, VGRO/XGRO should be fine.

      This article may help as well:
      https://milliondollarjourney.com/how-and-why-asset-allocation-works.htm

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