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.
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 $32.67.
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:
Showing 30 Nov 2011 – 30 Jun 2022:
| Fund Type | Month End | YTD | 1YR | 3YR | 5YR | 10YR | Since 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% |
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:
| Country | Fund | Benchmark |
|---|---|---|
| China | 32.9% | 33.0% |
| Taiwan | 19.0% | 19.1% |
| India | 15.7% | 15.7% |
| Brazil | 6.8% | 6.8% |
| Saudi Arabia | 4.9% | 4.9% |
| South Africa | 4.3% | 4.3% |
| Thailand | 3.0% | 3.0% |
| Mexico | 2.6% | 2.6% |
| Malaysia | 2.0% | 2.0% |
| Indonesia | 2.0% | 2.0% |
| Total | 93.2% | 93.4% |
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:
| Fundamentals | Fund |
|---|---|
| Number of Stocks | 5,442 |
| 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% |
VEE Market Capitalization
As of May 31, 2022:
| Capitalization | Fund | Benchmark | +/- Weight |
|---|---|---|---|
| Large | 58.15% | 58.01% | + 0.14% |
| Medium/Large | 3.35% | 3.23% | + 0.12% |
| Medium | 16.94% | 17.59% | − 0.65% |
| Medium/Small | 8.25% | 8.52% | − 0.27% |
| Small | 11.92% | 12.66% | − 0.74% |
| Total | 98.61% | 100.01% | − 1.40% |
VEE Region exposure
As of May 31, 2022:
| Region | Fund | Benchmark | +/- Variance |
|---|---|---|---|
| Emerging Markets | 99.60% | 99.60% | 0.00% |
| Europe | 0.40% | 0.40% | 0.00% |
| Pacific | 0.00% | — | — |
| Other | 0.00% | — | — |
| Total | 100.00% | 100.00% |
VEE Sector Weighting
As of May 31, 2022:
| Sector | Fund | Benchmark |
|---|---|---|
| Technology | 22.6% | 22.8% |
| Financials | 21.4% | 21.3% |
| Consumer Discretionary | 12.5% | 12.5% |
| Basic Materials | 8.5% | 8.5% |
| Industrials | 8.1% | 8.1% |
| Energy | 6.2% | 6.2% |
| Consumer Staples | 6.0% | 6.0% |
| Telecommunications | 4.3% | 4.3% |
| Health Care | 3.9% | 3.9% |
| Utilities | 3.3% | 3.3% |
| Real Estate | 3.2% | 3.1% |
| Total | 100.0% | 100.0% |
VEE Holdings
As of May 31, 2022:
| Holding Name | % of Market Value | Sector |
|---|---|---|
| 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 B | 1.23% | Consumer Digital Services |
| Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 1.20% | Semiconductors |
| Vale SA | 0.93% | Iron and Steel |
| China Construction Bank Corp. Class H | 0.93% | Banks |
| Infosys Ltd. | 0.92% | Computer Services |
| Al Rajhi Bank | 0.69% | Banks |
VEE Risk And Volatility
As of June 30, 2022:
| Fund Type | R-Squared | BETA | ALPHA | Standard Deviation | Sharpe Ratio |
|---|---|---|---|---|---|
| Fund | 0.96 | 1.02 | − 0.09 | 13.58% | 0.13 |
| Benchmark | — | — | — | 13.01% | 0.22 |
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.
FAQs
What is the best performing ETF in Canada that is similar to VEE?
The iShares Core MSCI Emerging Markets IMI ETF (XEC) was among the top-performing ETFs in Canada that offers exposure to emerging markets, making it somewhat comparable to Vanguard VEE.
XEC, like VEE, aims to track a broad emerging market index, providing diversified exposure to several countries and sectors within the emerging market space.
You should note that the “best performing” tag can change over time due to various market dynamics.
What is the liquidity of Vanguard VEE?
Liquidity refers to how quickly and easily an asset or security can be bought or sold in the market without affecting its price. For ETFs, liquidity can often be gauged by looking at its trading volume and bid-ask spread. Vanguard VEE, being a product of one of the world’s largest investment management firms, generally boasts good liquidity.
Its presence on the Toronto Stock Exchange, combined with its popularity among Canadian investors, ensures that there’s a healthy trading volume most days. This means that investors can typically buy or sell VEE shares without significant price discrepancies or long waiting periods.
Nevertheless, it’s always advisable to check current trading volumes and bid-ask spreads before executing large trades.
How to Buy Vanguard VEE ETF
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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.
