VEQT Review: Vanguard All-Equity ETF Portfolio

A one-fund solution ETF such as the Vanguard All-Equity ETF portfolio (VEQT) eliminates the hassle of rebalancing when you make new contributions or when portfolio assets perform at different levels.

Also known as “one-ticket funds,” these all-in-one solution ETFs are great for beginners and experienced investors alike and also offer:

  • Global diversification
  • Low management fees compared to mutual funds
  • Low-entry barrier with purchase possible using an online discount broker
  • Hands-free portfolio management
  • Accommodation for various risk profiles

This VEQT review covers its holdings, fees, pros and cons, how to purchase VEQT in Canada and how it compares to XEQT.

What is VEQT?

This Vanguard ETF portfolio comprises of 100% equity holdings and is the most aggressive portfolio in their line of all-in-one ETFs.

The Vanguard All-Equity ETF Portfolio “seeks to provide long-term capital growth by investing primarily in equity securities.” It is a fund of funds, meaning that the VEQT basket holds several other Vanguard equity ETF funds.

VEQT is traded on the Toronto Stock Exchange under the ticker symbol “VEQT” and was launched on January 29, 2019. Vanguard rates the risk (volatility) of VEQT as medium.

Some of its key facts as of December 31, 2020 include:

  • Net assets: $570 million
  • Eligible accounts: RRSP, RESP, RRIF, TFSA, DPSP, RDSP, non-registered accounts
  • Management fee: 0.22%
  • MER: 0.25%
  • Listing currency: CAD
  • Return on Equity: 13.7%
  • Price/Earnings ratio: 22.5x
  • Price/Book ratio: 2.3x
  • Earnings Growth Rate: 12.0%

In addition to VEQT, Vanguard Canada also offers the following asset allocation ETFs:

  • Vanguard Balanced ETF Portfolio (VBAL)
  • Vanguard Growth ETF Portfolio (VGRO)
  • Vanguard Conservative ETF Portfolio (VCNS), and
  • Vanguard Conservative Income ETF Portfolio (VCIP)

VEQT Holdings

VEQT is an all-stock ETF and an aggressive portfolio. “Aggressive” in this case refers to the risk profile of the portfolio. it is more sensitive to market fluctuations than a “growth” or “balanced” portfolio.

If VEQT makes up 100% of your portfolio, you’d be expected to have an above-average risk tolerance and an investment plan to hold the ETF long-term.

As of December 31, 2020, VEQT had a 99.98% stock and 0.02% cash allocation. The underlying funds making up the portfolio as of this date are:

ETFAllocation
Vanguard US Total Market Index ETF41.00%
Vanguard FTSE Canada All Cap Index ETF29.90%
Vanguard FTSE Developed All Cap ex North America Index ETF21.00%
Vanguard FTSE Emerging Market All Cap Index ETF8.10%

The top-10 weightings for the stocks held by the funds are in Financials (18.7%), Technology (18.0%), Industrials (12.8%), Consumer Services (13.3%), Healthcare (8.7%), Basic Materials (6.7%), and Oil and Gas (5.8%).

VEQT consists of a total of 12,554 equity holdings with the top-10 as follows:

VEQT top equity holdings
Source: VanguardCanada.ca

Related: Best Investment Accounts in Canada

A look at the geographical distribution or market allocation shows it is widely spread over 50 different markets as of December 31, 2020.

VEQT equity market allocation
Source: VanguardCanada.ca

VEQT Returns

VEQT is very new and has limited historical information to fall back on. As of January 31, 2021, the fund has returned 0.22% year-to-date and 10.91% since inception based on its market price.

VEQT returns and performance
Source: VanguardCanada.ca

It is important to add a disclaimer at this point that historical returns do not guarantee future results.

VEQT Fees

VEQT has a 0.22% management fee and its management expense ratio rounds up to 0.25%.

This fee structure is significantly lower compared to what you pay for a similar equity mutual fund which can top 2% in annual fees.

If you opt for a robo-advisor to help you manage your portfolio, the average fee is approximately 0.70% (e.g. Wealthsimple Invest).

You can save on investment fees by purchasing ETFs directly using a discount brokerage account.

With all-in-one ETFs, you are spared the hassle of rebalancing, however, you should take note of the trading fees. If your broker does not offer commission-free trading, your overall investment costs can become expensive.

Commission-free ETF purchases are offered by Questrade. Wealthsimple Trade extends the no-fee trading to stocks as well.

Review: Questrade vs. Wealthsimple

Benefits and Downsides of VEQT

I hold VEQT and love that is truly hands-free. I don’t have to worry about re-aligning target allocations when I invest new money, and it works for my long-term retirement account.

Also, since I have no plans to sell any portion of my holdings soon, I don’t need to worry about incurring trading fees.

On the flip side, you should note that VEQT is an all-equity portfolio. As we have seen in recent times, when the stock markets go crazy, investors with higher weighting in stocks will experience greater fluctuations in the value of their portfolios.

There are opportunities to save a little bit of extra money if you are okay with holding a basket of two or more different low-cost Vanguard index ETFs and rebalance them when needed.

An equivalent all-in-one fund such as the iShares Core Equity ETF Portfolio (XEQT) offered by Black Rock has a lower 0.20% management expense ratio.

How To Purchase VEQT in Canada

You can easily purchase VEQT using Questrade or Wealthsimple.

1. Questrade: ETF purchases are free, however, you incur a trading commission when you decide to sell (up to $9.95 per trade).

Questrade is available via a web interface on your computer, tablet or smartphone. They also have a decent mobile app. Their brokerage platform is very versatile and offers access to real-time stock quotes, multiple financial products including options.

To get started, open an account here and use our promo code SAVVY50 to get $50 in free trades after you fund your account with at least $1,000. You can also learn more in this Questrade review.

2. Wealthsimple Trade: This trading app is offered by Wealthsimple, a leading robo-advisor platform in Canada. They offer free trades (both buy and sell) for thousands of ETFs and stocks.

Wealthsimple Trade is available as a mobile app and desktop platform. In July 2020, the company introduced its Wealthsimple Crypto service which will also allow you to buy and sell Bitcoin and Ethereum using the Trade app.

Sign up for Wealthsimple Trade and get a $25 cash bonus after depositing and trading at least $100 in stocks. You can read more about the platform in this Wealthsimple Trade review.

VEQT vs. XEQT

Launched on August 7, 2019, XEQT is an all-equity ETF portfolio offered by BlackRock. Similar to VEQT, the fund is 100% stocks and seeks to provide long-term capital growth.

XEQT is made up of four underlying ETFs including:

  • iShares Core S&P Total U.S. Stock ETF (ITOT)
  • iShares MSCI EAFE IMI Index ETF (XEF)
  • iShares S&P/TSX Capped Composite ETF (XIC)
  • iShares Core MSCI Emerging Markets ETF (IEMG)

XEQT has a management fee of 0.18% compared to 0.22% for VEQT, and a MER of 0.20% compared to 0.25% for VEQT.

Is VEQT a Good Investment?

VEQT is designed for investors who have an above-average risk tolerance and who are okay with a portfolio that is entirely invested in stocks.

An all-equity portfolio such as VEQT will fluctuate in value with the market, however, the increased risk can result in higher returns over time.

Aggressive portfolios are not suitable for everyone.

Related Reading;

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Author

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Enoch Omololu

Enoch Omololu is a personal finance expert and a veterinarian. He has a master’s degree in Finance and Investment Management from the University of Aberdeen Business School (Scotland) and has completed several courses and certificates in finance, including the Canadian Securities Course. He also has an MSc. in Agricultural Economics from the University of Manitoba and a Doctor of Veterinary Medicine degree from the University of Ibadan. Enoch has a passion for helping others win with their personal finances and has been writing about money matters for over a decade. His writing has been featured or quoted in the Toronto Star, The Globe and Mail, MSN Money, Financial Post, Winnipeg Free Press, CPA Canada, Credit Canada, Wealthsimple, and many other personal finance publications.

His top investment tools include Wealthsimple and Questrade. He earns cash back on purchases using KOHO, monitors his credit score for free using Borrowell, and earns interest on savings through EQ Bank.

4 thoughts on “VEQT Review: Vanguard All-Equity ETF Portfolio”

    • @Manoj: The ETF portfolio that’s better is the one that’s in line with your risk tolerance, returns expectation, and investment timeframe. It is impossible to rank one over the other without taking these three factors into consideration.

      Reply
  1. From your previous VGRO review, you mentioned that there is no exchange fee.

    You also mentioned in this review that you hold VEQT. Do you pay US/CAD Exchange fee on VEQT? If no, then how Wealthsimple Trade earn its money from Vanguard ALL-in-One ETF portfolios ?

    Reply
    • @Jacques: No, you don’t pay currency exchange fees when you buy VGRO, VEQT or VBAL. If you end up buying other investment assets listed in USD, WT makes some money from the FX fees. I guess you could consider the CAD listed products as “loss leaders”. I haven’t checked for Wealthsimple Trade, however, no-commission trading platforms in the U.S. also make money from selling the Order Flow to institutional investors, etc.

      Reply
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