veqt review

VEQT Review

An All-In-One Stock ETF for Canadian Investors

Photo by Greg Rosenke on Unsplash

Investing in the stock market is a proven path to wealth creation. It’s how everyday investors build wealth with the same returns as fancy billionaires. The key is investing regularly and staying invested. It’s best to stay invested during the good times and bad. Do not try and time the market; no one can do that. Time in the market is what matters most. 

Investing in stocks provides superior historical returns to any publicly traded asset class. Better than bonds, better than gold, and better than cash. Investing in index funds that track the stock market performance is easy and cheap. Warren Buffet plans to invest his trust worth billions of dollars in two index funds. An index fund for the S&P 500 and one for short-term treasury bonds. 

Suppose you are a Canadian investor looking for a stock index fund. In that case, you may also be wondering if you should invest in other countries. The all-in-one ETF from Vanguard, VEQT, takes all the guesswork out of the equation. Investing in this ETF gives you international stock exposure and a targeted allocation. It all gives you instant diversification across countries around the world. All managed by Vanguard. 

What is VEQT?

VEQT is an All-In-One ETF managed by Vanguard Canada with a 100% allocation to stocks. This ETF targets high growth and does not attempt to smooth the ride by investing in fixed income. The long-term growth strategy of this ETF also targets a global basket of stocks. The fund invests in Candian Stocks, US Stocks, Developed Market Stocks, and Emerging Market Stocks. 

Vanguard monitors the portfolio of stocks and automatically rebalances to its target allocation. VEQT is a passive and hands-off solution for global stock investing. 

VEQT ETF details

  • Target Equity Allocation: 100%
  • Target Fixed Income Allocation: 0%
  • Inception Date: Jan 29, 2019
  • Number of holdings: 4
  • The number of underlying stock holdings: 13,464
  • Distribution frequency: Annually 
  • Management Expense Ratio (MER): 0.24%

Vanguard VEQT

  • VEQT is a Vanguard ETF product managed by Vanguard Canada. 
  • This ETF invests in 4 other Vanguard ETFs.

VEQT MER

  • Management Fee = 0.22%
  • Management Expense Ration (MER) = 0.24%

A 0.24% expense ratio means you pay $24 per year in fees per $10,000 invested. This expense ratio is competitive with similar funds offering the same product. It’s 400 basis points more expansive than iShares competitive product, XEQT.

VEQT’s MER of 0.24% includes the fees of the underlying holdings. 

VEQT price

This ETF trades on the Toronto Stock Exchange in Canadian Dollars (CAD). Get a real-time price quote from Yahoo! Finance. 

VEQT returns

Launched in 2019, this fund has a 13.04% CAGR. This product recently crossed its 3-year lifespan. The underlying indexes have performance data going back decades. 

VEQT holdings

This fund invests in four ETF index funds. Each ETF provides equity exposure to a strategic stock market asset class.

Here are the four holdings for VEQT:

  • U.S. Total Market Index ETF (Ticker: VUN)
  • FTSE Canada All Cap Index ETF (Ticker: VNC)
  • FTSE Developed All Cap ex North America Index ETF (Ticker: VIU)
  • FTSE Emerging Markets All Cap Index ETF (Ticker: VEE)

Here’s the current allocation by position: 

  • U.S. Stock Market Index: 42.62%
  • S&P/TSX Index: 31.01%
  • EAFE Index: 19.05%
  • Emerging Markets Index:7.33%

Asset allocation

The long-term strategic allocation is 100% equities or stocks. The current allocation::

  • Equities = 99.99%
  • Cash = 0.01%

Here’s the asset allocation by asset class:

  • Canadia Equity = 30.72%
  • U.S. Equity = 42.14%
  • International Equity = 26.51%

Here are the Top 10 geographies

  1. United States = 42.53%
  2. Canada = 31.01%
  3. Japan = 4.32%
  4. United Kingdom = 2.80%
  5. China = 2.50%
  6. Switzerland = 1.83%
  7. France – 1.74%
  8. Germany = 1.53%
  9. Taiwan = 1.40%
  10. Australia = 1.31%

VEQT stock holdings

When you invest in VEQT, you own stock in 13,464 underlying companies. The underlying ETFs of this all-in-one ETF are market cap-weighted. As a result, the most valuable companies are the most significant underlying holdings. 

Here are the Top 10 Underlying Holdings:  

  1. Apple
  2. Microsoft
  3. Royal Bank of Canada
  4. Toronto Dominion
  5. Amazon
  6. Bank of Nova Scotia
  7. Enbridge
  8. Shopify
  9. Bank of Montreal
  10. Canadian National Railway Co

VEQT dividend

VEQT pays dividends annually. The current 12-month yield of this ETF is ~1.48%. 

VEQT vs. XEQT

Vanguard is a global player in the ETF marketplace. Vanguard has over $2 trillion in assets. The only company with more assets under management is BlackRock. 

Fees

  • VEQT MER = 0.24%
  • XEQT MER = 0.20%

Distribution frequency

  • VEQT = Annually 
  • XEQT = Quartelry

Allocation by asset class:

  • VEQT
    • Canadia Equity = 30.72%
    • U.S. Equity = 42.14%
    • International Equity = 26.51%
  • XEQT
    • Canadia Equity = 25.64%
    • U.S. Equity = 45.57%
    • International Equity = 28.34%

Most notably, VEQT has a higher exposure to Candian Equities. If you’re more bullish on Candian stocks, VEQT is a better choice. Both ETFs are great options with low fees. Both provide instant global diversification for equities, and you benefit from automatic rebalancing. Big picture, choosing between these two ETFs won’t make or break your portfolio. How much you save and invest in stocks will have a more material impact on your net worth. 

Bottom Line

VEQT is on my shortlist of Best Candian ETFs. With one ETF, you get a global equity portfolio that Vanguard automatically rebalances. You can buy the four underlying ETFs if you prefer the DIY approach. You’ll save a few basis points on cost, but you have to rebalance your portfolio. You need to worry about and act on this extra step each quarter or year. There are also higher potential tax implications with the DIY approach. However, the ETF structure of VEQT provides an excellent tax buffer when rebalancing. This buffer could result in a lower tax burden. Always consult with your CPA on tax-related matters.

The road to financial freedom is long. It’s crucial to be consistent and choose easily repeatable solutions. Simplicity highlights the appeal of an All-In-One ETF investing choice. Want to smooth out the ride? Consider adding fixed income to your asset allocation. The Vanguard’s Candian Aggregate Bond Index is an option if you decide to do this. 

Saving and investing +50% of your income is the fast track to FI. The more you invest in stocks over the long run, the better your expected results. So, earn, save, invest and repeat until you’re rich. Or at least until you have enough money for LeanFIRE.

Disclosure: Nothing on this site is a recommendation or solicitation to buy or sell any security. All investments are subject to risk and may lose value. Securities and products mentioned on this page belong to their respective companies. All trademarks belong to their respective holders. This site does not have any affiliation with any security mentioned on this page.