Are you an investor in search of branching out of investing in Canadian and American stocks? The Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) could be an ideal solution for you.
Vanguard is one of the pioneering providers of Exchange-Traded Funds (ETFs) in Canada. It is arguably leading the charge when it comes to facilitating passive investing.
The Vanguard FTSE Developed All Cap ex North America Index ETF presents Canadian investors with a broader scope for investing outside the standard North American stocks.
In this Vanguard VIU ETF review, I will take a closer look at the product to help you understand why it might be an ideal pick for you.
ex-North American ETF
Allows you to diversify your investments in developed economies worldwide besides Canada and North America.
- Diversified exposure beyond Canadian and American stocks
- You don’t need to monitor individual equities
- Manages your funds to track the performance of developed markets beyond North America
- Follows a passively managed full-replication approach
- Cannot leverage growth in North American market movements
What is the Vanguard FTSE Developed All Cap ex North America Index ETF?
The Vanguard FTSE Developed All Cap ex North America Index ETF is a Canadian ETF offered by Vanguard Canada since December 1, 2015. VIU ETF is regarded as one of the best ways for Canadian investors to diversify their portfolio to developed markets outside the Canadian and American stocks they may already own through individual equities or other funds.
VIU is not an all-in-one ETF portfolio. All-in-one ETF portfolios are a portfolio of several ETFs that are designed to align with particular investment goals. Rather, VIU ETF is a single fund that invests in a portfolio of stocks.
It seeks to invest in companies of small, mid, and large market capitalizations. The ETF invests in stocks from only developed nations worldwide, not in any emerging markets. The ETF also excludes North America.
Many all-in-one portfolios trading on the TSX have some holdings from VIU. Tracking the FTSE Developed All Cap ex North America Index to the extent possible, VIU employs a full-replication strategy that is passively managed. It uses cost-effective and efficient index management techniques to align with investing goals. VIU’s net assets as of July 8, 2022, are $2.84 Billion.
VIU.TO is currently trading at close to $25.59.
Vanguard VIU Key Facts
As of June 30, 2022:
- Ticker Symbol: VIU.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $2.594 Billion
- MER: 0.23%
- 12-Month Trailing Yield: 2.52%
- Currency Traded: CAD
- Eligible Accounts: Most registered (TFSA, RRSP, etc) and non-registered available
Vanguard VIU MER
Vanguard VIU has a management fee of 0.20% and a Management Expense Ratio (MER) of 0.23%. The MER is much lower with Vanguard VIU compared to any traditional mutual fund products offered by large financial institutions.
Despite the lower management expense ratio, VIU ETF offers you a professionally managed strategy to track the performance of international markets.
Vanguard VIU Dividends
As of June 30, 2022:
- 12-month trailing yield: 3.10%
- Distribution yield: 5.85%
- Dividend schedule: Quarterly
Vanguard VIU ETF Performance
Vanguard VIU ETF tracks the performance of the FTSE Developed All Cap ex North America Index as closely as possible. The fund has a very low tracking error margin of 0.18% and has managed to track the index very closely since its inception. The performance has been up and down over the five years of the fund since its inception.
Here is a better look at the fund’s performance as of June 30, 2022:
Showing 31 Dec 2015 – 30 Jun 2022:
| Fund Type | Month End | YTD | 1YR | 3YR | 5YR | 10YR | Since Inception |
|---|---|---|---|---|---|---|---|
| VIU (Market Price) | −7.76% | −18.70% | −16.44% | +0.70% | +1.79% | — | + 3.04% |
| VIU (NAV) | −8.11% | −18.89% | −16.41% | +0.64% | +1.79% | — | + 2.96% |
| Benchmark | −8.12% | −18.95% | −16.40% | +0.70% | +1.86% | +7.99% | + 2.97% |
Go to the Vanguard website for real-time performance numbers of VIU.
What does Vanguard VIU Invest in?
Vanguard VIU tracks, as closely as possible, the FTSE Developed All Cap ex North America Index before fees and expenses. The Index is a broad and internationally diversified equity index that includes companies of all market capitalizations from developed nations besides Canada and North America.
The index effectively allows Canadian investors to truly bank on the international market movements of developed countries without exposure to North American markets.
It can be an ideal solution for investors who may already have investments in Canadian and American equities and diversify their investments further.
Vanguard VIU uses a cost-effective strategy to very closely track the performance of the FTSE Developed All Cap ex North America Index.
Vanguard VIU Portfolio Characteristics
As of May 31, 2022:
| Fundamentals | Fund | Benchmark |
|---|---|---|
| Number of Stocks | 3,917 | 3,853 |
| Median Market Cap | $40.1 B | $40.2 B |
| Price / Earnings Ratio | 12.2 x | 12.2 x |
| Price / Book Ratio | 1.5 x | 1.5 x |
| Return on Equity | 11.7% | 11.7% |
| Earnings Growth Rate | 7.9% | 7.9% |
Vanguard VIU Market Capitalization
As of May 31, 2022:
| Capitalization | Fund | Benchmark |
|---|---|---|
| Large | 68.14% | 68.36% |
| Medium/Large | 3.07% | 3.07% |
| Medium | 14.25% | 14.21% |
| Medium/Small | 5.53% | 5.54% |
| Small | 8.71% | 8.77% |
| Total | 99.70% | 99.95% |
Vanguard VIU Region Exposure
As of May 31, 2022:
| Region | Fund | Benchmark |
|---|---|---|
| Europe | 58.50% | 58.90% |
| Pacific | 40.50% | 40.40% |
| Middle East | 0.70% | 0.70% |
| Other | 0.30% | — |
| North America | 0.00% | — |
| Total | 100.00% | 100.00% |
Vanguard VIU ETF Sector Weighting
The Vanguard VIU ETF has a portfolio of investments diversified across market capitalizations and various sectors of the economy. While Industrials account for the most significant portion of its sector weighting, it is followed closely by Financials, Consumer Discretionary, and then Health Care sectors.
Here is a better look at Vanguard VIU’s sector weighting as of the close of May 31, 2022:
| Sector | Fund |
|---|---|
| Industrials | 16.8% |
| Financials | 16.7% |
| Consumer Discretionary | 13.9% |
| Health Care | 12.1% |
| Technology | 9.3% |
| Consumer Staples | 8.5% |
| Basic Materials | 7.4% |
| Energy | 4.7% |
| Real Estate | 4.0% |
| Telecommunications | 3.4% |
| Utilities | 3.2% |
| Total | 100.0% |
Vanguard VIU ETF Market Allocation
Vanguard VIU ETF provides investors with highly diversified exposure to developed markets worldwide. Its most significant exposure is in Japan, followed by the UK, and then Switzerland. Here is a better look at Vanguard VIU’s market allocation as of May 31, 2022.
| Country | Region | Fund | Benchmark |
|---|---|---|---|
| Japan | Pacific | 22.3% | 22.3% |
| United Kingdom | Europe | 15.3% | 15.3% |
| France | Europe | 9.0% | 9.3% |
| Switzerland | Europe | 8.7% | 8.7% |
| Australia | Pacific | 8.1% | 8.0% |
| Germany | Europe | 7.3% | 7.3% |
| South Korea | Pacific | 5.5% | 5.5% |
| Netherlands | Europe | 3.7% | 3.7% |
| Sweden | Europe | 3.4% | 3.4% |
| Hong Kong | Pacific | 2.9% | 2.9% |
| Total | 86.2% | 86.4% |
Vanguard VIU ETF Holdings
Vanguard VIU ETF’s top ten holdings make up approximately 11% of its total holdings. Its most significant holding is Nestle SA, followed closely by Samsung Electronics Co. Ltd., and then Roche Holding AG.
Here is a better look at Vanguard VIU ETF’s top ten holdings.
As of May 31, 2022:
| Holding Name | % of Market Value | Sector |
|---|---|---|
| Nestle SA | 1.76% | Food Products |
| Samsung Electronics Co. Ltd. | 1.35% | Computer Hardware |
| Roche Holding AG | 1.26% | Pharmaceuticals |
| Shell plc | 1.20% | Integrated Oil and Gas |
| ASML Holding NV | 1.15% | Production Technology Equipment |
| AstraZeneca plc | 1.07% | Pharmaceuticals |
| Toyota Motor Corp. | 1.05% | Automobiles |
| Novartis AG | 1.00% | Pharmaceuticals |
| Novo Nordisk A/S Class B | 0.92% | Pharmaceuticals |
| BHP Group Ltd. | 0.84% | General Mining |
Vanguard VIU Risk and Volatility
As of June 30, 2022:
| Fund Type | R-Squared | BETA | ALPHA | Standard Deviation | Sharpe Ratio |
|---|---|---|---|---|---|
| Fund | 1.00 | 1.00 | − 0.01 | 12.70% | 0.29 |
| Benchmark | — | — | — | 12.71% | 0.29 |
Who should buy VIU?
There are several reasons you could consider buying the Vanguard VIU ETF, including:
- You are seeking a low-fee passive investing solution that has nothing to do with the Canadian or American stock markets.
- You understand that the ETF might not help you leverage the growth of local markets when other markets are performing poorly compared to North American stock markets.
- You want to invest solely in markets from developed economies worldwide.
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Conclusion
Vanguard VIU ETF is one of the many unique funds from Vanguard that does what it says: It tracks the FTSE Developed All Cap ex North America Index. If you are a passive investor who wants to diversify beyond equities that you may already own individually or through other funds, VIU could make an excellent pick.
I personally like Vanguard VIU for that very reason. As good as it is to have exposure to Canadian and American equities, I feel it is important to diversify my investment beyond the borders to developed economies elsewhere.
I hope my Vanguard VIU ETF review helped you learn something. Let me know in the comments below if you’re going to give it a go!
Hi Chris
Excellent review and i have placed a limit order for VIU ETF. Your analysis confirms my own research on the ETF. i would like you do a review of VEE etf which includes my birth country of India. My plan is pair VIU with VEE.
Hey here is the review you asked for I already wrote it: https://wealthawesome.com/vee-review/