# VGRO, ZGRO or XGRO? Or maybe mix and match?



## curioso (Nov 22, 2018)

Hi folks. I already own VGRO, and the majority of my ETFS are there... out of curiosity I purchased a few XGRO as well (since I would still be within the main strategy in terms of allocation) but now with the new ZGRO - does it really matter which one we buy? I mean, is there a downside to owning a few of each? Or should I focus on only a single product (if all I want is an ETF with 80/20)?

Thanks for your input.


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## hfp75 (Mar 15, 2018)

Those funds are all designed around simplicity. Dont over complicate it, just buy one. For security, you could pick one from the largest most established company - provide some protection for yourself that way OR pick the oldest fund as it will be the most established, sometimes with new funds (small) there are some inefficiencies that exist.


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## OnlyMyOpinion (Sep 1, 2013)

I agree with hfp75.
My bias is to just own VGRO.


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## AltaRed (Jun 8, 2009)

I agree as well. Some folks have only one holding, e.g. VGRO, in their entire portfolio. It is only a year old, but the Vanguard family of VGRO/VBAL/VCNS has sufficient AUM that they will now be an established product that has global reach.

VGRO has something like $700M in AUM and VBAL has ~$500M in AUM, together enough to be viable. The iShares and BMO offerings are just getting going and it is unclear how they will fare against the Vanguard offering.


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## fireseeker (Jul 24, 2017)

I can imagine an argument for investing in one ETF for, say, 10 years, then switching new funds to another similar ETF. IOW, start with VGRO then switch to XGRO.
The reason would be this: In retirement, say, you could start depleting the XGRO, which would presumably have a much smaller embedded cap gain. This would further delay taxation on the cap gain built up in the VGRO.
Multiple ETFs, even if similar, can offer tax optimization options.


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## AltaRed (Jun 8, 2009)

Yes, that is a good approach. Indeed, my ex has a long standing chunk in XIU for her Canadian allocation. She started an XDIV allocation recently when she wanted to increase her Cdn equity component (but could have been VCN or similar). Same logic applies to any 2 mostly equivalent pairs.


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## pearl (Mar 5, 2015)

Deleted


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## pearl (Mar 5, 2015)

fireseeker said:


> I can imagine an argument for investing in one ETF for, say, 10 years, then switching new funds to another similar ETF. IOW, start with VGRO then switch to XGRO.
> The reason would be this: In retirement, say, you could start depleting the XGRO, which would presumably have a much smaller embedded cap gain. This would further delay taxation on the cap gain built up in the VGRO.
> Multiple ETFs, even if similar, can offer tax optimization options.


Smart. I agree.


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## curioso (Nov 22, 2018)

fireseeker said:


> I can imagine an argument for investing in one ETF for, say, 10 years, then switching new funds to another similar ETF. IOW, start with VGRO then switch to XGRO.
> The reason would be this: In retirement, say, you could start depleting the XGRO, which would presumably have a much smaller embedded cap gain. This would further delay taxation on the cap gain built up in the VGRO.
> Multiple ETFs, even if similar, can offer tax optimization options.


I like this idea... but just to be clear - do you mean buy VGRO for 10y, then stop buying it and start buying XGRO? That way, once you enter retirement you could start depleting the latest purchases (which are expected to have a small cap gain, due to the shorter time invested) and thus deferring the tax load on the initial VGRO purchases?


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## OnlyMyOpinion (Sep 1, 2013)

If you buy vgro at $25 and it grows to $35, your capital gain is *simplistically* $10/unit. This assumes you haven't bought more over the years which would have raised your acb and lowered that $10 CG.
Now you buy xgro and let both etf's grow another $8. Then you sell xgro because it only as a $8 CG. Meanwhile vgro has an embedded CG of $18 that will continue to grow and ... now what ... do you never sell it? 
Sorry, I don't see the benefit. Keep it simple. Own one, add to it when able, and sell some for income when necessary. You or your estate will pay the piper eventually.


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## cainvest (May 1, 2013)

curioso said:


> Or should I focus on only a single product (if all I want is an ETF with 80/20)?


Sorry if I missed this but what type of account are you planning to buy these ETFs in ... TFSA, RRSP, taxable?


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## AltaRed (Jun 8, 2009)

I agree with OMO that despite my post #6, the idea is really nothing more than the potential for tax deferment and the potential PV that tax deferment may provide. I underline "potential" purposely because deferring that tax bill may actually result in a higher MTR for the estate negating the present value of the tax deferment entirely. One will only know in hindsight. To me, it is mostly a 'feel good' exercise to play the 'pairs' game....with some potential benefits.


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## fireseeker (Jul 24, 2017)

curioso said:


> I like this idea... but just to be clear - do you mean buy VGRO for 10y, then stop buying it and start buying XGRO? That way, once you enter retirement you could start depleting the latest purchases (which are expected to have a small cap gain, due to the shorter time invested) and thus deferring the tax load on the initial VGRO purchases?


Yes, exactly. 

To OMO and AR: Yes, the benefits are only "potential" benefits. And, yes, the piper will have to be paid eventually for the gains on the original purchase.
The strategy merely gives you a potential option to defer taxation. Most people find deferred taxation to be desirable.
As OMO points out, the "cost" is complexity -- two ETFs rather than one. 
Some may find that tradeoff acceptable.


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## curioso (Nov 22, 2018)

cainvest said:


> Sorry if I missed this but what type of account are you planning to buy these ETFs in ... TFSA, RRSP, taxable?


Across them all. I have VGRO in RRSP/ TFSA and taxable accounts, both mine and my wife's. RRSPs are not maxed out yet (long story....) but we will start loading them up to the brim over the next few years.


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## cainvest (May 1, 2013)

curioso said:


> Across them all. I have VGRO in RRSP/ TFSA and taxable accounts, both mine and my wife's. RRSPs are not maxed out yet (long story....) but we will start loading them up to the brim over the next few years.


If that's the case you could buy different products for different account types if you want to spread things out a little. They're all separate trades anyways and use the most tax effective one in the taxable account.


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