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Vanguard Canada Overview (2024): Low-Cost Investing

Vanguard Canada

Vanguard Canada Overview (2024): Low-Cost Investing

If you’re an investor in Canada, chances are you’ve heard of Vanguard.

Vanguard has grown rapidly in Canada and boasts over $26.1 billion in assets.

The amount is a drop in the bucket compared to Vanguard Group (U.S.), which holds a jaw-dropping $7.9 trillion in assets. This indicates that Vanguard Canada still has a lot of room to grow.

As someone who used to work for a fund company, I understand that lowering management fees is crucial for the long-term performance of an investment.

Vanguard’s founder, Jack Bogle, had a grand vision to bring passive index investing to investors and to return profits to investors in the form of lower fees.

Vanguard Canada offers a robust product line of 39 ETFs and four mutual funds. I break down the products in this Vanguard product overview.

Warren Buffett: “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.” (The founder of Vanguard)

Vanguard Asset Allocation ETFs

Asset allocation ETFs are also known as all-in-one ETFs. An investor can simply purchase one of these funds that meets their desired risk tolerance and asset allocation and not have to worry about rebalancing it. The asset allocation will be rebalanced periodically. 

Vanguard was launched recently but is already one of the most popular Vanguard investments in Canada. It’s easy to see why, with its low MER and ease of use, many Canadians choose these funds for their investment accounts, such as the TFSA or RRSP. 

Here are the Vanguard asset allocation ETFs:

1. Conservative Income ETF Portfolio (VCIP)

Vanguard Logo Transparent
  • Ticker: VCIP.TO
  • MER: 0.24%
  • Asset Allocation: 20% Equities, 80% Fixed Income
  • Stock Price: $25.38
  • YTD Return: 0.62%

2. Conservative ETF Portfolio (VCNS)

Vanguard Logo Transparent
  • Ticker: VCNS.TO
  • MER: 0.24%
  • Asset Allocation: 40% Equities, 60% Fixed Income
  • Stock Price: $28.01
  • YTD Return: 2.95%

3. Balanced ETF Portfolio (VBAL)

Vanguard Logo Transparent
  • Ticker: VBAL.TO
  • MER: 0.24%
  • Asset Allocation: 60% Equities, 40% Fixed Income
  • Stock Price: $31.21
  • YTD Return: 5.4%

4. Growth ETF Portfolio (VGRO)

Vanguard Logo Transparent
  • Ticker: VGRO.TO
  • MER: 0.24%
  • Asset Allocation: 80% Equities, 20% Fixed Income
  • Stock Price: $34.64
  • YTD Return: 7.89%

5. All-Equity ETF Portfolio (VEQT)

Vanguard Logo Transparent
  • Ticker: VEQT.TO
  • MER: 0.24%
  • Asset Allocation: 100% Equities, 0% Fixed Income
  • Stock Price: $41.6
  • YTD Return: 10.27%

Related Reading: Best all-in-one ETFs in Canada

Vanguard Mutual Funds

Vanguard Canada Infographics

Mutual funds in Canada have gotten a bad reputation in recent years. They are known for having some of the highest fees in the world, at an average Management Expense Ratio (MER) of around 2% per year. 

Vanguard Canada is looking to change the perception of mutual funds by drastically lowering the fees that it charges for them. 

If there is volatility in the market, mutual funds with active managers are supposed to be able to offer downside protection when the market goes down and capture larger gains as it increases. 

In theory, that is how it’s supposed to work, but fees tend to eat away at these gains and make them less attractive for investors. There is also no guarantee that even with no fees, an active manager will outperform the fund’s benchmark.

However, because of the lower fees (between 0.34% – 0.56% MER) for Vanguards mutual funds, it will be interesting to see how they perform against their respective benchmarks in the future. 

Right now, the funds are too new to have much performance data gathered to see the long-term effects of its active managers.

Here are the four Vanguard mutual funds in Canada: 

1. VANGUARD GLOBAL BALANCED FUND (VIC100)

Vanguard Logo Transparent
  • Ticker: VIC100
  • MER: 0.62%
  • Asset Allocation: 62% Equity, 31% Fixed Income
  • Geographical holdings: Worldwide
  • Objective: Provide long-term capital growth

VIC100 invests in a combination of equity securities and fixed-income securities from all economic sectors and industries located anywhere in the world. The fund has exposure to both developed and emerging markets, and its sub-advisor actively manages the portfolio.  

2. VANGUARD GLOBAL DIVIDEND FUND (VIC200)

Vanguard Logo Transparent
  • Ticker: VIC200
  • MER: 0.51%
  • Asset Allocation: 99% Equity
  • Geographical holdings: Worldwide
  • Objective: Provide an above-average level of current income combined with long-term capital growth.

VIC200 invests in equity securities of companies that tend to pay above-average dividend income levels and are located worldwide. At least 80% of the fund’s assets must be invested in equities. 

3. VANGUARD US VALUE WINDSOR FUND (VIC300)

Vanguard Logo Transparent
  • Ticker: VIC300
  • MER: 0.58%
  • Asset Allocation: 100% Equity, 0% Fixed Income
  • Geographical holdings: U.S
  • Objective: Provide long-term capital appreciation and income

VIC300 invests mainly in large- and mid-cap companies in the U.S. The active managers try to find undervalued stocks to purchase.

The fund seeks to provide long-term capital appreciation and income by investing primarily in large- and mid-capitalization companies located in the United States whose stocks are considered to be undervalued.

4. VANGUARD INTERNATIONAL GROWTH FUND (VIC400)

Vanguard Logo Transparent
  • Ticker: VIC400
  • MER: 0.65%
  • Asset Allocation: 100% Equity, 0% Fixed Income
  • Geographical holdings: Worldwide (excluding Canada and U.S)
  • Objective: Provide long-term capital appreciation

VIC400 investments in international companies located outside Canada and the U.S. The fund diversifies its assets across developed and emerging markets. The fund chooses large, mid, and small-cap companies with strong growth potential. 

Related Reading: Best Mutual Funds in Canada

How to Buy Vanguard Mutual Funds in Canada

The mutual funds will be available as Series F funds and can be purchased from:

  • Third-party fee-based financial advisors that don’t charge embedded commissions
  • Self-directed (DIY) through a discount brokerage (usually the cheaper option). I use Questrade to trade mine. I know Qtrade offers the funds as well.

Note that each fund has a minimum initial purchase of $5,000. 

Vanguard Index ETFs

Canadian index funds are Vanguard Canada’s main offerings. Index ETFs are seeing a lot more money flow into them as they provide you with diversification in a low-cost, passive manner. 

An index ETF is constructed to replicate a benchmark such as the S&P/TSX 60 Index or the S&P 500. Vanguard has a wide variety of some of the best index funds in Canada. 

Here’s an overview of Vanguard Index Funds in Canada:

Vanguard Index Equity ETFs 

For Canadian equities, the three largest by AUM Vanguard Index Equities are: 

  • FTSE Canada All Cap Index ETF (VCN)
  • FTSE Canada Index ETF (VCE)
  • FTSE Canadian High Dividend Yield Index ETF (VDY)

Here is a full list of the Canadian equity ETF offerings by Vanguard:

Vanguard Canada Index Funds (Canadian Equity)

Fund nameTickerMER
FTSE Canada All Cap Index ETFVCN.TO0.05%
FTSE Canada Index ETFVCE.TO0.06%
FTSE Canadian Capped REIT Index ETFVRE.TO0.38%
FTSE Canadian High Dividend Yield Index ETFVDY.TO0.22%

Vanguard Canada Index Funds (U.S. and International Equity)

For international equities, the most popular Vanguard Canada ETFs are:

  • FTSE Developed All Cap ex North America Index ETF (VIU)
  • FTSE Emerging Markets All Cap Index ETF (VEE)
  • FTSE Global All Cap ex Canada Index ETF (VXC)

For U.S equities, the most popular Vanguard ETFs are: 

  • S&P 500 Index ETF (VFV)
  • U.S. Dividend Appreciation Index ETF (VGG)
  • U.S Total Market Index ETF (VUN). 
Fund nameTickerMER
FTSE Developed All Cap ex North America Index ETFVIU.TO0.23%
FTSE Developed All Cap ex North America Index ETF (CAD-hedged)VI.TO0.22%
FTSE Developed All Cap ex U.S. Index ETFVDU.TO0.21%
FTSE Developed All Cap ex U.S. Index ETF (CAD-hedged)VEF.TO0.21%
FTSE Developed Asia Pacific All Cap Index ETFVA.TO0.22%
FTSE Developed Asia Pacific All Cap Index ETF (CAD-hedged)VAH.TO0.20%
FTSE Developed Europe All Cap Index ETFVE.TO0.22%
FTSE Developed Europe All Cap Index ETF (CAD-hedged)VEH.TO0.20%
FTSE Developed ex North America High Dividend Yield Index ETFVIDY.TO0.31%
FTSE Emerging Markets All Cap Index ETFVEE.TO0.24%
FTSE Global All Cap ex Canada Index ETFVXC.TO0.21%
S&P 500 Index ETFVFV.TO0.09%
S&P 500 Index ETF (CAD-hedged)VSP.TO0.09%
U.S. Dividend Appreciation Index ETFVGG.TO0.30%
U.S. Dividend Appreciation Index ETF (CAD-hedged)VGH.TO0.30%
U.S. Total Market Index ETFVUN.TO0.16%
U.S. Total Market Index ETF (CAD-hedged)VUS.TO0.16%

Vanguard Bond Index ETFs

The most popular bond offerings by Vanguard are:

  • Canadian Aggregate Bond Index ETF (VAB)
  • Canadian Short-Term Bond Index ETF (VSB)
  • Canadian Short-Term Corporate Bond Index ETF (VSC)

Here’s an overview of Vanguard Canada index funds (bonds):

Fund nameTickerMER
Canadian Aggregate Bond Index ETFVAB.TO0.09%
Canadian Corporate Bond Index ETFVCB.TO0.17%
Canadian Government Bond Index ETFVGV.TO0.17%
Canadian Long-Term Bond Index ETFVLB.TO0.16%
Canadian Short-Term Bond Index ETFVSB.TO0.11%
Canadian Short-Term Corporate Bond Index ETFVSC.TO0.11%
Canadian Short-Term Government Bond Index ETFVSG.TO0.18%
Global Aggregate Bond Index ETF (CAD-hedged)VGAB.TO0.33%
Global ex-U.S. Aggregate Bond Index ETF (CAD-hedged)VBG.TO0.39%
U.S. Aggregate Bond Index ETF (CAD-hedged)VBU.TO0.22%

Vanguard Active ETFs

Vanguard’s active ETFs aren’t the most popular Vanguard ETFs in Canada. It might be because many investors are not aware that Vanguard offers active ETFs. 

Investors can get active ETFs by Vanguard through Equity Factors ETFs. Vanguard’s active management is managed by the Quantitative Equity Group (QEG).

The Vanguard active ETFs are diversified globally, which gives you increased currency and market diversification. This could potentially lower volatility versus a single-country fund, all else remaining equal. 

Here’s an overview of all the Vanguard active ETFs in Canada:

Fund nameFund code/ TickerManagement fee*
Global Liquidity Factor ETFVLQ.TO0.37%
Global Minimum Volatility ETFVVO.TO0.40%
Global Momentum Factor ETFVMO.TO0.38%
Global Value Factor ETFVVL.TO0.38%

Challenges and Opportunities for Vanguard Canada

Vanguard’s entry as an international giant challenges the status quo. Some older Canadian investors might be skeptical of new entrants, especially those that challenge traditional high-fee models.

However, these challenges also point to significant opportunities. The younger generation of Canadian investors is more financially literate, more globally focused, and more cost-conscious than ever before.

With increasing access to information, many are becoming aware of the detrimental effects of high fees on long-term investment growth. This demographic is ripe for Vanguard’s message of low-cost, broad diversification.

How does Vanguard Canada compare to BlackRock Canada?

While Vanguard places a significant emphasis on cost-efficiency and simplicity, BlackRock’s iShares provides a more comprehensive range of strategies, catering to various investment needs and preferences. In terms of size, BlackRock is larger globally, but both entities hold substantial influence in the Canadian market.

How to Buy Vanguard ETFs in Canada

Conclusion

If you are wondering where to invest money in Canada, Vanguard is a fantastic option to consider. 

Vanguard funds in Canada have some of the lowest fees and diverse ETF products for Canadians. 

Mutual fund companies are scared because companies like Vanguard could potentially push fees lower and, along with it, their profit margins. 

But Canadian investors should celebrate the increase in competition and lowering of fees that companies like Vanguard bring.

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