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 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:
|Vanguard US Total Market Index ETF||41.00%|
|Vanguard FTSE Canada All Cap Index ETF||29.90%|
|Vanguard FTSE Developed All Cap ex North America Index ETF||21.00%|
|Vanguard FTSE Emerging Market All Cap Index ETF||8.10%|
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:
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A look at the geographical distribution or market allocation shows it is widely spread over 50 different markets as of December 31, 2020.
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.
It is important to add a disclaimer at this point that historical returns do not guarantee future results.
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.
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.
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.
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.