Vanguard VSP ETF Review 2023: Currency Hedge The S&P 500

Want to invest in an S&P 500 ETF, but you’re worried about the currency risk you’ll be adding to your portfolio.

This ETF might be the right choice for you to solve that problem.

Let’s go over this Vanguard VSP ETF review to see if it’s the right choice for you to currency hedge your portfolio.

Our Verdict
Vanguard VSP ETF Review
9.5/10Our Score

Vanguard VSP ETF

Invest In The Top 500 US Stocks

Invest in the Vanguard VSP ETF to gain exposure to the performance of a broad US equity index that focuses on 500 of the biggest stocks listed in the US.

Pros
  • Diversifies away from the Canadian stock market
  • Offers exposure to the top 500 US-listed stocks
  • Currency-hedged exposure to U.S stocks for Canadians
  • Low-cost exposure to a group of US equity index stocks
Cons
  • Tech heavy
  • Hedging not always the best strategy

What Is Vanguard VSP ETF?

Vanguard S&P 500 Index ETF (VSP) replicates the performance of a broad US equity index that comprises 500 of the largest market capitalization stocks. The fund was started on November 2, 2012.

VSP.TO is currently trading at close to $67.11.

Vanguard VSP Key Facts

As of July 15, 2022:

  • Ticker Symbol: VSP.TO
  • Exchange: Toronto Stock Exchange
  • Assets Under Management: $1.953 Billion
  • MER: 0.09%
  • 12-Month Trailing Yield: 1.32%
  • Currency Traded: CAD
  • Eligible Accounts: Most registered (TFSA, RRSP, etc) and non-registered available

Vanguard VSP ETF MER And Fees

The fund comes with a management fee of 0.08% and a Management Expense Ratio (MER) of 0.09%.

Vanguard VSP ETF Dividend Yield

As of June 30, 2022, Vanguard VUN ETF’s dividend yield is as follows:

  • 12-month trailing yield: 1.32%
  • Distribution yield: 1.32%
  • Dividend schedule: Quarterly

Vanguard VSP ETF Performance And Returns

Here is the performance of a hypothetical $10,000 invested in Vanguard VSP since its inception:

Fund TypeMonth EndYTD1YR3YR5YR10YRSince Inception
VSP (Market Price)−8.64%−20.65%−11.66%+8.92%+9.55%+ 11.79%
VSP (NAV)−8.48%−20.44%−11.38%+9.02%+9.63%+ 11.82%
Benchmark−8.42%−20.43%−11.40%+9.10%+9.82%+12.24%+ 12.16%
Source: Vanguard.ca

Go to the Vanguard website for real-time performance numbers of VSP.

What Does Vanguard VSP ETF Invest In?

Vanguard VSP ETF Portfolio Characteristics

As of 30 Jun 2022:

FundamentalsFund
Number of Stocks503
Median Market Cap$207.8 B
Price / Earnings Ratio 18.5 x
Price / Book Ratio 3.5 x
Return on Equity 21.7%
Earnings Growth Rate 19.9%
Source: Vanguard.ca

Vanguard VSP ETF Market Capitalization

As of 30 Jun 2022:

CapitalizationFund
Large75.66%
Medium/Large4.43%
Medium15.30%
Medium/Small4.35%
Small0.26%
Total100.00%
Source: Vanguard.ca

Vanguard VSP ETF Market Allocation

As of 30 Jun 2022:

CountryRegionFund
United States of AmericaNorth America100.0%
Total100.0%
Source: Vanguard.ca

Vanguard VSP ETF Sector Weighting

As of 30 Jun 2022:

SectorFund
Information Technology26.8%
Health Care15.2%
Financials10.8%
Consumer Discretionary10.5%
Communication Services8.9%
Industrials7.8%
Consumer Staples7.0%
Energy4.4%
Utilities3.1%
Real Estate2.9%
Materials2.6%
Total100.0%
Source: Vanguard.ca

Vanguard VSP ETF Top Holdings

As of June 30, 2022:

Holding Name% of Market ValueSector
Apple Inc.6.63%Technology Hardware, Storage & Periphera
Microsoft Corp.6.06%Systems Software
Amazon.com Inc.2.93%Internet & Direct Marketing Retail
Alphabet Inc. Class A2.06%Interactive Media & Services
Alphabet Inc. Class C1.90%Interactive Media & Services
Tesla Inc.1.78%Automobile Manufacturers
Berkshire Hathaway Inc. Class B1.55%Multi-Sector Holdings
UnitedHealth Group Inc.1.52%Managed Health Care
Johnson & Johnson1.47%Pharmaceuticals
NVIDIA Corp.1.19%Semiconductors
Source: Vanguard.ca

Vanguard VSP ETF Region Exposure

As of 30 Jun 2022:

RegionFund
North America100.00%
Total100.00%
Source: Vanguard.ca

Vanguard VSP ETF Risk and Volatility

As of: 30 Jun 2022:

Fund TypeR-SquaredBETAALPHAStandard DeviationSharpe Ratio
Fund1.001.00− 0.0118.79%0.45
Benchmark18.76%0.45
Source: Vanguard.ca

What Is The Difference Between VFV And VSP?

Vanguard VFV and Vanguard VSP are essentially the same funds because both ETFs provide you with exposure to the same stocks trading on the US stock market.

However, the only difference between the two is that VSP ETF uses currency hedging for the US dollar exposure of the securities back to the Canadian dollar.

The fund uses currency hedging to mitigate any volatility caused by currency exchange rates.

Is VSP Hedged?

Yes, indeed. Vanguard VSP ETF is a currency-hedged version of Vanguard VFV ETF.

The fund uses derivative instruments to hedge the US dollar exposure of the constituent securities held by the fund back to the Canadian dollar to reduce currency volatility risks.

Vanguard VSP ETF Alternatives

This section of my Vanguard VSP ETF review will discuss a few funds that you could consider as alternatives to investing in VSP ETF.

Vanguard VSP ETF Vs. Vanguard VFV ETF

Vanguard VFV ETF is the most obvious choice to compare VSP ETF to if you’re considering alternatives to the fund.

Vanguard VFV ETF and VSP ETF are twin funds, with the only difference between them being the currency hedging strategy used by VSP ETF.

Vanguard VSP ETF comes at an equal cost with an MER of 0.09%, the same as VFV ETF’s 0.09% MER.

Vanguard VSP ETF Vs. iShares IVV ETF

iShares IVV ETF is another fund that tracks the S&P 500 index like VSP ETF. However, the fund does not hedge the US dollar exposure of its constituent securities back to the Canadian dollar.

iShares IVV ETF could be seen as a better alternative to Vanguard VSP ETF because it comes at a very low cost compared to VSP ETF.

IVV ETF has an expense ratio of just 0.03% compared to VSP ETF’s 0.09% – effectively a third of the cost.

Vanguard VSP ETF Vs. Vanguard VUN ETF

Vanguard VUN ETF is another fund that lets you invest in a broad US equity index.

However, VUN ETF tracks the US Total Market Index. It means that the fund invests in the entire US stock market, including small- and mid-cap stocks.

VSP ETF focuses on the top 500 large-cap stocks in the US, offering you a narrower exposure to high-quality stocks. Vanguard VUN ETF comes with an MER of 0.16%, making it more expensive to own than VSP ETF.

How To Buy Vanguard VSP ETF In Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
  • 105 commission-free ETFs to buy and sell
  • Excellent customer service
  • Top-notch market research tools
  • Easy-to-use and stable platform 
Low Fees
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
  • Reputable fintech company
  • Fractional shares available
Well-Rounded
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada.

Conclusion – Is VSP A Good ETF?

If you’re looking to invest in the S&P 500 but don’t want exposure to US currency movements, then Vanguard VSP is a great choice.

Check out my breakdown of the best S&P 500 ETFs in Canada to explore more funds you can consider for this purpose.

Check out my Vanguard VXC ETF review if you want to invest in an internationally diversified portfolio of stocks.

Photo of author
Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

Check Out These Posts:

Leave a Comment