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.
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.
- 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
- 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 $74.67.
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 Type | Month End | YTD | 1YR | 3YR | 5YR | 10YR | Since 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% |
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:
| Fundamentals | Fund |
|---|---|
| Number of Stocks | 503 |
| 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% |
Vanguard VSP ETF Market Capitalization
As of 30 Jun 2022:
| Capitalization | Fund |
|---|---|
| Large | 75.66% |
| Medium/Large | 4.43% |
| Medium | 15.30% |
| Medium/Small | 4.35% |
| Small | 0.26% |
| Total | 100.00% |
Vanguard VSP ETF Market Allocation
As of 30 Jun 2022:
| Country | Region | Fund |
|---|---|---|
| United States of America | North America | 100.0% |
| Total | 100.0% |
Vanguard VSP ETF Sector Weighting
As of 30 Jun 2022:
| Sector | Fund |
|---|---|
| Information Technology | 26.8% |
| Health Care | 15.2% |
| Financials | 10.8% |
| Consumer Discretionary | 10.5% |
| Communication Services | 8.9% |
| Industrials | 7.8% |
| Consumer Staples | 7.0% |
| Energy | 4.4% |
| Utilities | 3.1% |
| Real Estate | 2.9% |
| Materials | 2.6% |
| Total | 100.0% |
Vanguard VSP ETF Top Holdings
As of June 30, 2022:
| Holding Name | % of Market Value | Sector |
|---|---|---|
| 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 A | 2.06% | Interactive Media & Services |
| Alphabet Inc. Class C | 1.90% | Interactive Media & Services |
| Tesla Inc. | 1.78% | Automobile Manufacturers |
| Berkshire Hathaway Inc. Class B | 1.55% | Multi-Sector Holdings |
| UnitedHealth Group Inc. | 1.52% | Managed Health Care |
| Johnson & Johnson | 1.47% | Pharmaceuticals |
| NVIDIA Corp. | 1.19% | Semiconductors |
Vanguard VSP ETF Region Exposure
As of 30 Jun 2022:
| Region | Fund |
|---|---|
| North America | 100.00% |
| Total | 100.00% |
Vanguard VSP ETF Risk and Volatility
As of: 30 Jun 2022:
| Fund Type | R-Squared | BETA | ALPHA | Standard Deviation | Sharpe Ratio |
|---|---|---|---|---|---|
| Fund | 1.00 | 1.00 | − 0.01 | 18.79% | 0.45 |
| Benchmark | — | — | — | 18.76% | 0.45 |
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.
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
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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.
