VFV vs VEQT: A Look at Two Vanguard Equity ETFs

ETF Jul 17, 2024 2 min read
VFV vs VEQT: A Look at Two Vanguard Equity ETFs

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The main difference between VFV and VEQT is that VFV aims to replicate the performance of the S&P 500 while VEQT is comprised of multiple ETFs that track broad equity performance across the US and Canadian markets, as well as developed and emerging markets internationally.

The S&P 500 is a market capitalization-weighted index that is designed to mirror the returns of the 500 largest companies traded on stock exchanges in the US.

In essence, that means that the higher the market capitalization of a company, the greater its influence on the total return of the index.

As one of the most cited and closely monitored indices in the world, the S&P 500 offers a good proxy for the performance of the overall US equity market.

For that reason, the index is also the most commonly-used benchmark for stocks, ETFs, and other assets.

On the other hand, VEQT is designed to give investors broader geographic exposure to the equity asset class.

Unlike the S&P 500, which is exclusively focused on the American market, VEQT emphasizes both North American and international markets to help investors capture the growth of the global economy in their portfolios.

Both VFV and VEQT are denominated in CAD and are suitable for long-term investors who hold a bullish view on equity markets.

VFV

Launched in 2012, the Vanguard S&P 500 Index ETF (VFV) tracks the performance of the broad US S&P 500 equity index.

Through the ETF, investors get indirect exposure to the growth and returns of the 500 most valuable companies in America.

As a long-term core holding, VFV allows investors to capture the US economy’s natural tendency to move upwards over time without the need for active participation, i.e., buying and selling at frequent intervals.

The VFV ETF is rated as medium risk given that it is entirely comprised of 100% equities, which are classified as ‘risk assets’.

However, the underlying equities in the S&P 500 are diversified by sector, region and customer base, thereby reducing the overall risk of any one company or sector on total returns.

For investors seeking an investment that leverages the potential of the American economy, VFV offers a solid option that has historically delivered strong capital gains with modest dividends (paid on a quarterly basis).

Since inception, VFV has delivered 17.16% annualized growth with a 5-year annual performance of 15.69% (as of June 30, 2024).

As at the same date, VFV had total assets of $14.21 billion.

VEQT

The Vanguard All-Equity ETF Portfolio (VEQT) was launched in January 2019 and is invested into global equity markets across US, Canada, developed economies (excluding North America), and emerging economies.

The fund is primarily deployed into large-cap equities with the remainder split amongst mid- to large-cap, mid-cap, mid- to small-cap, and small-cap.

VEQT is ideal for younger investors with a longer time horizon for goals such as retirement.

With diversified geographic and size allocations, it enables investors to earn steady capital gains and dividend income (paid annually) while minimizing exposure to any one particular region or market.

As of June 30, 2024, the ETF had $4.44 billion in cumulative market value.

Since its inception, the VEQT ETF has delivered 11.25% annualized returns with a 3-year return of 7.45%.

VFV vs VEQT Performance

VFV Annualized Performance (as of June 30, 2024):

  • 3-Year: 13.34%
  • 5-Year: 15.69%
  • 10-Year: 15.29%
  • Since Inception: 17.16%

VEQT Annualized Performance (as of June 30, 2024):

  • 1-Year: 19.07%
  • 3-Year: 7.45%
  • Since inception: 11.25%

 

VFV vs VEQT Fees

VFV offers a Management Expense Ratio (MER) of 0.09% which is largely comprised of its 0.08% management fee.

VEQT offers a Management Expense Ratio (MER) of 0.24% which is largely comprised of its 0.22% management fee.

VFV vs VEQT Holdings

Below were the top security holdings within VFV (top 10 holdings as a % of asset value)

  • Microsoft Corp. (7.22%)
  • NVIDIA Corp. (6.61%)
  • Apple Inc. (6.60%)
  • Amazon.com Inc. (3.85%)
  • Meta Platforms Inc. (2.40%)
  • Alphabet Inc. (2.33%)
  • Alphabet Inc. (1.95%)
  • Berkshire Hathaway Inc. (1.60%)
  • Eli Lilly & Co. (1.57%)
  • Broadcom Inc. (1.52%)

As of June 30, 2024


 

Within VFV, sector and industry concentration recently is as follows:

  • Information Technology (30.6%)
  • Financial Services (12.87%)
  • Health Care (11.99%)
  • Consumer Discretionary (9.86%)
  • Communication Services (9.28%)
  • Industrials (8.55%)
  • Consumer Staples (6.02%)
  • Energy (3.86%)
  • Utilities (2.48%)
  • Materials (2.32%)
  • Real Estate (2.18%)

As of May 31, 2024


 

The top security holdings within VEQT (top holdings as a % of asset value) recently are as follows:

  • Vanguard US Total Market Index ETF (45.28)
  • Vanguard FTSE All Cap Index ETF (29.09%)
  • Vanguard FTSE Developed All Cap ex North America Index ETF (17.94%)
  • Vanguard FTSE Emerging Markets All Cap Index ETF (6.76%)

As of June 30, 2024


 

Within VEQT, sector and industry concentration recently is as follows:

  • Information Technology (20.76%)
  • Financial Services (19.56%)
  • Industrials (12.94%)
  • Consumer Discretionary (11.54%)
  • Energy (8.49%)
  • Health Care (7.69%)
  • Basic Materials (5.87%)
  • Consumer Staples (4.39%)
  • Utilities (3.68%)
  • Telecommunications (2.6%)
  • Real Estate (2.47%)

As of May 31, 2024

Frequently Asked Questions

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Is VFV a good long-term investment?

VFV tracks the performance of the S&P 500 index, a list of America’s 500 largest companies. Historically, the value of the American equity markets has progressively increased over time, so the VFV offers a good long-term investment option for investors that are bullish on the future of the US economy. From a returns standpoint, the VFV is primarily used to earn long-term capital gains that mirror the performance of the US equity market. Dividend yields are generally modest relative to other income-focused ETFs.

Does VEQT pay a dividend?

Yes, VEQT pays a dividend that is distributed annually. Based on the fact sheet available on the Vanguard website, the fund generally targets dividend payouts within 10 days of the calendar year end.

Contributors

Harshil Dhanky
AUTHOR

Harshil Dhanky

Harshil Dhanky is a financial services professional based out of Toronto, Ontario with extensive experience in the Canadian banking industry across Toronto, Calgary, and Vancouver in the capital markets, asset management, and lending sectors.

In the past, Harshil has worked with a range of consumer lending websites, personal finance advisors, investment managers, insurance companies, and other financial institutions to write and edit whitepapers, articles, blog posts, and other collateral read by consumer audiences to help them make better financial decisions.

His work spans a wide range of Canadian personal finance topics including savings and retirement programs, debt management tips, mortgages and personal loans, and other key financial issues for Canadian consumers at each stage of their life.

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