VEE Review 2022: Vanguard FTSE Emerging Markets All Cap Index ETF

Looking to invest in up-and-coming countries? Consider an emerging market ETF as an easy way to get access.

The Vanguard FTSE Emerging Markets All Cap Index ETF (VEE) is one of the ETFs that are used in the all-in-one Vanguard ETF portfolio series.

Let’s take a closer look at Vanguard VEE’s ETF here.

Our Verdict
Vanguard VEE ETF
9/10Our Score

Vanguard VEE ETF

Emerging Market ETF

Vanguard VEE is a low-fee solution to invest in emerging markets.

Pros

  • Low Fees
  • Excellent diversification
  • Get exposure to countries that would be hard to buy individual stocks in

Cons

  • Not ideal for risk-averse investors in volatile markets

What is Vanguard FTSE Emerging Markets All Cap Index ETF

VEE is an ETF that seeks to track the performance of a broad emerging market index. Currently, it tracks the performance of the FTSE Emerging Markets All Cap China A Inclusion Index. VEE is primarily geared towards international equities.

VEE uses its fund to directly or indirectly invest in large-, mid-, and small-capitalization stocks of companies in the emerging market.

Vanguard introduced the ETF on November 30, 2011. It pays quarterly dividends to its investors and is managed by the Vanguard Equity Index Group.

VEE is currently trading close to a price of $31.16.

VEE Key Facts

As of June 24, 2022:

  • Ticker Symbol: VEE.TO
  • Exchange: Toronto Stock Exchange
  • Assets Under Management: $1.491 Billion
  • MER: 0.24%
  • 12-Month Trailing Yield: 2.45%
  • Currency Traded: CAD
  • Eligible Accounts: Most registered (TFSA, RRSP, etc) and non-registered available

VEE Management Expense Ratio

VEE has a management fee of 0.23% and a management expense ratio of 0.24%. The MER is significantly lower than what you can get with a mutual fund product offered by large banks.

VEE Dividends

As of May 31, 2022:

  • 12-month trailing yield: 2.45%
  • Distribution yield: 0.77%
  • Dividend schedule: Quarterly

VEE Performance

VEE has been around for awhile, so it has a lot of performance history that you can see:

Source: Vanguard.ca

Showing 30 Nov 2011 – 30 Jun 2022:

Fund TypeMonth EndYTD1YR3YR5YR10YRSince Inception
VEE (Market Price)−2.40%−13.66%−18.49%+0.97%+2.46%+5.08%+ 4.74%
VEE (NAV)−2.28%−13.61%−18.43%+0.98%+2.46%+5.09%+ 4.75%
Benchmark−3.48%−13.61%−17.95%+1.66%+3.01%+5.81%+ 5.77%
Source: Vanguard.ca

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

What are the investments inside VEE?

VEE is an ETF that primarily invests in international companies situated in emerging markets. Currently, it seeks to track the performance of the FTSE Emerging Markets All Cap China A Inclusion Index.

The FTSE Emerging Market Index is a market-cap-weighted index. It represents the performance of large-, mid-, and small-market capitalization companies in various emerging markets.

VEE Market Allocation

VEE invests primarily in Asian countries such as China, Taiwan, and India.

As of May 31, 2022:

CountryFundBenchmark
China32.9%33.0%
Taiwan19.0%19.1%
India15.7%15.7%
Brazil6.8%6.8%
Saudi Arabia4.9%4.9%
South Africa4.3%4.3%
Thailand3.0%3.0%
Mexico2.6%2.6%
Malaysia2.0%2.0%
Indonesia2.0%2.0%
Total93.2%93.4%
Source: Vanguard.ca

Incorporated in the US, VWO’s holdings primarily consist of Chinese companies and other emerging markets, including Taiwan, India, Brazil, and others. It is a diversified mix of companies across various sectors that are performing well.

VEE Portfolio Characteristics

Here are some key ratios and statistics for VEE’s stocks and bonds.

As of May 31, 2022:

FundamentalsFund
Number of Stocks5,442
Median Market Cap$27.3 B
Price / Earnings Ratio 10.6 x
Price / Book Ratio 1.8 x
Return on Equity 14.8%
Earnings Growth Rate 12.8%
Source: Vanguard.ca

VEE Market Capitalization

As of May 31, 2022:

CapitalizationFundBenchmark+/- Weight
Large58.15%58.01%+ 0.14%
Medium/Large3.35%3.23%+ 0.12%
Medium16.94%17.59%− 0.65%
Medium/Small8.25%8.52%− 0.27%
Small11.92%12.66%− 0.74%
Total98.61%100.01%− 1.40%
Source: Vanguard.ca

VEE Region exposure

As of May 31, 2022:

RegionFundBenchmark+/- Variance
Emerging Markets99.60%99.60%0.00%
Europe0.40%0.40%0.00%
Pacific0.00%
Other0.00%
Total100.00%100.00%
Source: Vanguard.ca

VEE Sector Weighting

As of May 31, 2022:

SectorFundBenchmark
Technology22.6%22.8%
Financials21.4%21.3%
Consumer Discretionary12.5%12.5%
Basic Materials8.5%8.5%
Industrials8.1%8.1%
Energy6.2%6.2%
Consumer Staples6.0%6.0%
Telecommunications4.3%4.3%
Health Care3.9%3.9%
Utilities3.3%3.3%
Real Estate3.2%3.1%
Total100.0%100.0%
Source: Vanguard.ca

VEE Holdings

As of May 31, 2022:

Holding Name% of Market ValueSector
Taiwan Semiconductor Manufacturing Co. Ltd.4.96%Semiconductors
Tencent Holdings Ltd.3.70%Consumer Digital Services
Alibaba Group Holding Ltd.2.31%Diversified Retailers
Reliance Industries Ltd.1.49%Oil Refining and Marketing
Meituan Dianping Class B1.23%Consumer Digital Services
Taiwan Semiconductor Manufacturing Co. Ltd. ADR1.20%Semiconductors
Vale SA0.93%Iron and Steel
China Construction Bank Corp. Class H0.93%Banks
Infosys Ltd.0.92%Computer Services
Al Rajhi Bank0.69%Banks
Source: Vanguard.ca

VEE Risk And Volatility

As of June 30, 2022:

Fund TypeR-SquaredBETAALPHAStandard DeviationSharpe Ratio
Fund0.961.02− 0.0913.58%0.13
Benchmark13.01%0.22
Source: Vanguard.ca

Who should buy VEE?

If you have faith in the progress of emerging markets and want exposure in your portfolio, VEE could be an ideal ETF for you to consider.

I would recommend not investing too much into VEE because it is a very volatile fund. A range of between 2-10% of your overall portfolio should be enough to get the diversification you’re seeking.

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Conclusion

I think Vanguard VEE is an excellent option for Canadian investors who want more exposure to international emerging markets without the risk of maintaining a portfolio of companies themselves.

Because of the riskiness of the fund, think of Vanguard VEE as the seasoning to your portfolio, and not the main course.

Learn more about the other top emerging market ETFs in Canada here.

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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.

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