VEQT Review

VEQT is the Vanguard’s All Equity ETF Portfolio. It is one of the most popular ETFs in Canada, loved by the masses.

Even though VEQT started trading from January 2019, the fund has already gained a lot of traction and is extremely popular amongst Canadians today. 

The Vanguard All Equity ETF Portfolio currently trades at $28.65 per unit in the Toronto Stock Exchange or TSE. The Management fee for the fund is 0.22% while the Management Expense Ratio is 0.25% (MER). 

If you’re set on 100% equities, I’d sell the VGRO and go 100% VEQT to make your portfolio even simpler.

Then you can simply add a bond fund later on as needed and it will be very easy to calculate how much of your portfolio is bonds vs equities. Why bother holding on to the VGRO when it will cost you only a few dollars to sell anyway?

On another note, I hope you have already gone through the other steps of personal finance such as getting out of debt, building a good emergency fund, etc. Having this solid base will make it easier to be in 100% equities when a recession hits.

In this article let’s talk about the VEQT ETF and what really makes it stand out from the rest of the crowd. Also, we’ll dive deep into the market growth, dividends if any, fund characteristics, comparisons with other Canadian ETFs and so on. 

Now, Let’s begin. 

What Is VEQT? 

VEQT is an All Equity ETF from the Vanguard Fund House. Vanguard is the 4th largest fund house in the world. 

As mentioned earlier, VEQT currently trades on the Toronto Stock Exchange (TSE) at $28.65 per unit. 

Below is the VEQT ETF’s historical market price and performance since it’s inception: 

VEQT Stock Price

As you can see, I’ve selected the maximum timeframe and there’s not much of the data that I can retrieve about the VEQT. That’s because the fund was created and started trading only from the year 2019. 

VEQT mostly invests your money in equity stocks with a percentage of 99.2%. 

VEQT Fund Facts 

Let us now look at the VEQT fund facts:

  • Inception date: 29 Jan 2019

  • Ticker Symbol: VEQT (TSE)

  • Exchange: Toronto Stock Exchange (TSE)

  • 52 Week high/low- $20.55/29.79

  • Dividend schedule: Annually

  • Income distribution per unit: $0.403751

  • Eligibility: RRSP, RRIF, RESP, TFSA, DPSP, RDSP

  • Benchmark: Internal Composite

  • Management Team: Vanguard Equity Index Group

  • Management fee: 0.22%

  • MER: 0.25%

Why VEQT? 

The main reason why VGRO and VEQT are so popular for recommendations is that they can help almost any investor achieve their financial goals without demanding a great deal of attention or research.

Because they’re easy to understand, have only one decision (how many shares to buy) and automatically rebalance, they effectively preempt a lot of behavioural biases that interfere with investors getting the full return of the market.

Below are the reasons why you might want to invest in VEQT: 

  • VEQT ETF seeks to achieve its investment objective by primarily investing in equity securities (99.2%, almost 100% in equities).

  • VEQT may do so either directly or indirectly through investment in one or more exchange-traded funds managed by the manager or an affiliate or certain other investment funds (Underlying Funds).

  • In seeking to achieve the above, the fund’s investment objective will strive to maintain a long-term strategic asset allocation of 100% equity securities. The portfolio asset mix may be reconstituted and rebalanced from time to time at the discretion of Vanguard.

  • The portfolios of the Underlying Funds are expected to consist of index funds that provide exposure to broad-based equity markets.

How To Invest In VEQT? 

To be frank, VEQT is a much bumpier ride than may be VGRO. It can swing 0.8% a day up or down on any day, but in the long run, I’m sure with 100% equity allocation VEQT will give more solid returns.

I do not like too much volatility myself, but that’s the norm anyways. So, can’t help much, other than not getting into the FOMO. 

You can probably buy VEQT in RRSP and VGRO in TFSA. That’s because the government gives a tax refund on the RRSP and if the money you’ve invested loses a lot of its value, it is taxable on the withdrawal anyway, so that is fewer taxes you’ll have to pay.

Whereas with the rest of investments you need to be more conservative since the risk is not subsidized by the government. If that makes any sense. 

VEQT Market Performance Since Inception 

Investors in a one-decision portfolio actually generated a slightly better return than the individual funds summed together because they remove decision points, like buying too much or too little a fund based on emotion or faulty reasoning.

All-in-one funds are automatically rebalancing for you, providing mandatory discipline that is likely to improve your investment returns in the long run.

First, let’s look at the growth of $10,000 invested into the VEQT fund since inception: 

VEQT Growth

Next, let us look at the quarterly performance of the VEQT ETF fund: 

VEQT Growth

VEQT Portfolio Data

Now, let’s take a look at the VEQT Portfolio Data. 

Asset Allocation: 

  • Stocks: 99.92 %

  • Bonds: –

  • Short-term reserves: 0.08 %

Investment in Stocks: 

  • Number of stocks: 12,645

  • Median market cap: 107.9 B

  • PRICE/EARNINGS RATIO: 16.2 x

  • PRICE/BOOK RATIO: 1.6 x

  • RETURN ON EQUITY: 11.5%

  • EARNINGS GROWTH RATE: 11.0%

Investments In Bond: 

  • Number of bonds —

  • Yield to maturity —

  • Average duration —

  • Average maturity —

  • Average coupon —

  • Short-term reserves 0.1%

As mentioned earlier, VEQT does not invest in Bonds and only in Equity Market or Stocks (99.2%). That’s the reason you don’t have any Bond-related data for the fund. 

How Does VEQT Invest Your Money? 

Now, this is where things start to get a little interesting. 

We’ve already seen in the previous sections that VEQT will invest your money into underlying Vanguard funds. In this section, let us look at those underlying funds and the percentage invested in each of those funds. 

How Does VEQT Invest Your Money? 

VEQT invests your money into 4 Vanguard funds: 

  • Vanguard US Total Market Index ETF: 41.10%

  • Vanguard FTSE Canada All Cap Index ETF: 30.50%

  • Vanguard FTSE Developed All Cap ex North America Index ETF: 20.60%

  • Vanguard FTSE Emerging Markets All Cap Index ETF: 7.80%

As you can see from the above, the first column is the Vanguard fund name and the second is the percentage invested in that fund. 

Say for example – you have invested $10,000 CAD into the VEQT, this is how your money will be distributed based on the allocation: 

  • Vanguard US Total Market Index ETF: $4110

  • Vanguard FTSE Canada All Cap Index ETF: $3050

  • Vanguard FTSE Developed All Cap ex North America Index ETF: $2060

  • Vanguard FTSE Emerging Markets All Cap Index ETF: $780

Total: $10,000 

As you can notice, the majority of your money is invested in the Vanguard US Total Market Index ETF at 41.10%.

Then, it is the FTSE Canada All Cap Index ETF at 30.50%. Both these constitute almost 70%+ of where your money is invested in through VEQT. 

VEQT Market Capitalization

As you might know, every ETF allocates your funds into Large-cap, large/medium, medium, medium/small, small-cap funds.  

VEQT Market Capitalization data and the percentages: 

VEQT Market capitalization 

Again, from the above chart, you can see that the majority of your money in VEQT is being invested in the Large Cap and Large/Medium, Medium Fund allocations. 

The more your money is invested in the Large or Medium cap funds, the more stable the investments are. 

Remember, equity investments are always risky. However, by investing in the Large-cap funds, your money is so much more secured and safe. The growth in equity funds is always better when compared to Bonds or any other type of debt investment. 

VEQT Market Allocation 

Let us now take a look at the Market Allocation of the VEQT fund geographically. 

Country                    Region                          Fund 
United States         North America            41.1% 
Canada                    North America            30.1% 
Japan                       Pacific                           4.9% 
China                       Emerging Markets       3.3% 
United Kingdom    Europe                        2.8% 
Switzerland             Europe                        1.9% 
France                      Europe                          1.8% 
Germany                  Europe                          1.8% 
Australia                  Pacific                            1.4% 
Taiwan                    Emerging Markets       1.2%

VEQT Weighted Exposure 

In this section, let’s take a look at the VEQT Weighted Exposure Industry-wise: 

VEQT Weighted exposure

VEQT Top Holdings

In this section let’s look at the top stock holdings by the VEQT fund. 

VEQT Top Holdings

As you can see from the above chart, the majority of the top holdings in the VEQT funds are the large-cap blue-chip stocks such as Apple, Microsoft and Amazon. 

Do remember that, VEQT fund holds a total of 12484 individual stock holdings. 

VEQT Price Analysis

Below is the VEQT fund price analysis for the past 18 months time period: 

VEQT Price analysis

VEQT Dividends

VEQT pays out dividends annually. The dividend for 2019 was $0.152900 per unit held. 

VEQT Dividends

 

VEQT vs. XEQT 

In this section, I will compare the market returns of VEQT and XEQT and compare the percentage gain between the two for the maximum time frame. 

VEQT vs. XEQT

As you can see from the above chart, for the maximum time frame selected, the returns of VEQT and XEQT are almost similar in terms of market returns. 

VEQT vs. XGRO 

Now, let us compare the market returns of VEQT vs. XGRO for the maximum time frame. 

VEQT vs. XGRO

Again, as you can see from the above chart, for the maximum time frame selected, market returns of VEQT and XGRO are almost similar. 

VEQT vs. VCN 

Let us quickly compare the market returns of VEQT vs. VCN for the maximum time frame: 

VEQT vs. VCN

As you can clearly notice from the above chart, VEQT returns are better than VCN for the maximum time period. 

VEQT vs. QQQ

Let’s quickly compare the market returns of VEQT vs. QQQ for the maximum time frame. 

VEQT vs. QQQ

As you can see, the market returns of QQQ is better than VEQT for the maximum time frame. 

VEQT vs. VGRO 

Why VGRO?

First of all, VGRO allows you be to well-diversified into the global market including the US and Canada. Also includes bonds so in future near retirement your losses won’t be as severe if we are in a recession during that time.

Why VEQT?

VEQT as you have already seen is well-diversified globally but without bonds.

It is 100% equity which is better for young people who have a long term horizon and are not near retirement and don’t need the money even in cases of recession.

The whole point of ETF’s is to get diversified and reduce losses in case an individual company goes under.

For example, GE was considered a safe stock but you saw what happened right?

Why not MSFT/Apple or other individual stocks?

Personally, I am in Apple but only because I can mentally handle a 50-100% drop if a recession happens or if there’s some sudden lawsuit against Apple.

If you’re younger, it is in fact preferred that you pick safe growth stocks since you can handle the risk.

If you have a 20-30 year horizon. I would suggest buying 30% ETF’s and 70% growth stocks like MSFT, AAPL, etc. After 5-10 years cash out from the individual stocks and put it all into the ETF’s.

Conclusion

VEQT is an excellent all equity fund by Vanguard. 

Even though is fairly new to the market with not much history, the fund is performing excellent well. 

The ETF is well diversified with the majority of the amount invested in the US and Canada in large-cap funds. 

VGRO and VEQT are representative examples of passive index investing. They track solid indexes, are globally diversified, have low fees, and are passively managed. They also have the added benefit of having all this in one simple package that automatically rebalances itself, rather than having multiple ETFs to achieve the same goal.

As for stock picking, you would already be rich if you could tell me with certainty which companies will be the next amazon. You’re far more likely to come out ahead if you took the passive approach over the next decades.

My review of this VEQT ETF is very positive. The fund is from Vanguard and is very safe to invest for the long term. 

Thanks for reading and let me know your thoughts and comments below. 

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