VUN ETF Review 2024: Vanguard US Total Market Index ETF

Exchange-Traded Funds (ETFs) allow investors to gain exposure to diversified investment portfolios while saving on fees.

They also have much lower management fees and management expense ratios or MERs than traditional mutual funds.

Lower fees can drastically improve your returns over the long term because trading fees eat away at gains you might make from capital growth.

Stocks and ETFs like the Vanguard US Total Market Index ETF (VUN) are easy to buy at a Canadian discount brokerage.

Using platforms like Wealthsimple Trade or Questrade, your returns can be even greater because of no-commission trading.

This VUN ETF review covers its holdings, performance, pros and cons, and how to purchase it in Canada.

What is VUN?

VUN is the Vanguard US Total Market Index ETF. It was established in August of 2013 and trades on the Toronto Stock Exchange.

It invests primarily in the US-domiciled Vanguard Total Stock Market ETF (VTI). 

VUN seeks to track the CRSP US Total Market Index using a passively managed ETF, and this ETF is a great way for Canadian investors to gain exposure to the US stock market without paying foreign exchange fees at their brokerage.

Here are some key facts for VUN as of June 2023:

• Inception date: August 2, 2013
• Number of stocks: 3,883
• Price/Earnings Ratio: 20.6x
• Price/Book Ratio: 3.5x
• Return on Equity: 22.3%
• Earnings Growth Rate: 18.6%
• Management fee: 0.15%
• MER: 0.17%
• Assets under management: $5.95 billion
• 12-month trailing yield: 1.20%
• Distribution yield: 1.19%
• Distribution frequency: Quarterly
• Eligible accounts: RRSP, TFSA, RRIF, TFSA, DPSP, RDSP
• Currency: CAD

Buy ETFs Free on Questrade ($50 Trade Credit)

VUN Holdings

VUN is an all-stock portfolio which means it can be exposed to the volatility of the total US stock market and holds no cash or bonds.

VUN tracks the US-domiciled Total Markets Index ETF (VTI) as 100% of its holdings. VUN holds 3,883 underlying stocks through VTI.

As can be expected in a US total market index ETF, 100% of the allocation of the fund is to US stocks.

Here are the top ten holdings in VUN as of June 2023:

And here is the sector breakdown for the holdings in VUN:

As you can see, technology stocks make a major component of the VUN US Total Market Index ETF with a 27% weighted allocation. 

VUN Returns and Performance

The Vanguard VUN website allows you to track the performance of VUN since its inception back in 2013.

Below are the returns from VUN based on the market price as well as the NAV:

We can also see how the VUN ETF has performed against the benchmark CRSP US Total Market index:

Since its inception, VUN has had an average annual return of 13.61% and a cumulative return of 250% to investors.

Note that the historical performance of the VUN ETF is not indicative of future gains.

Buy ETFs Free on Questrade ($50 Trade Credit)

VUN Fees

VUN has a management fee of 0.15% and a Management Expense Ratio (MER) of 0.17%. This means that for every $10,000 you have invested in VUN, you will pay about $17.00 in fees. 

This is significantly lower compared to what you pay the average equity mutual fund manager in Canada (1.98%).

Pros and Cons of VUN

VUN provides exposure to the total US stock market and can be bought in Canadian dollars with no foreign exchange fees for investors.

It would nearly be impossible to hold the same assets in VUN as individual stocks.

The VUN ETF is cheap to own with a 0.17% MER and can be made even cheaper if bought on Canadian discount brokerages.

With that said, a total stock market index ETF may include a lot of stocks you don’t really care to own. For the VUN ETF, your geographical exposure is also limited to the United States.

A large percentage of VUN’s allocation is tied up in mega-cap tech stocks.

VUN vs XUU

XUU is the Blackrock iShares Core S&P US Total Market Index ETF for Canadian investors. It has an inception date of February 2015 and is traded on the Toronto Stock Exchange.

This iShares ETF has lower fees with an MER of 0.08%, which makes it a more cost-efficient option than VUN.

It holds a basket of iShares ETFs and has a total of 115 holdings and 3,305 underlying holdings. The two largest holdings are the iShares Core S&P 500 ETF (IVV) and the iShares Core S&P Total US Stock Market ETF (ITOT).

VUN vs VFV

VFV is the Vanguard Canada S&P 500 Index ETF and trades on the Toronto Stock Exchange. It has a management fee of 0.08% and an MER of 0.09%.

The VFV ETF holds 500 of the largest US companies that compose the benchmark S&P 500 index. The top holdings for VFV.TO are Apple, Microsoft, Amazon, NVIDIA, and Alphabet. 

Learn more in this VFV review.

VUN vs VTI

VTI is the US-domiciled Vanguard Total Stock Market ETF. It trades on the NYSEARCA exchange in US dollars. It has a very low MER of 0.03%, which is much more appealing than the MER charged by VUN.

It holds 3,883 underlying stocks that compose the US total stock market from the NASDAQ and the New York Stock Exchange. 

VUN vs VUS

VUS is the US Total Market Index ETF and trades on the Toronto Stock Exchange in Canadian dollars.

It is identical to VUN, except that the former is hedged to the Canadian dollar. This means VUS holds some Canadian currency to hedge against foreign exchange volatility.

VUS has identical fees to VUN, with a management fee of 0.15% and an MER of 0.16%.

How To Buy the Vanguard VUN ETF in Canada

You can easily purchase VUN using either Wealthsimple Trade, Questrade, or other online brokers in Canada.

Questrade

Questrade is the best discount brokerage in Canada which was established in 1999.

In addition to ETFs, this platform supports options, stocks, mutual funds, currencies, precious metals, and bond trading.

Questrade has no fees for buying ETFs but does charge a low fee when you sell.

Wealthsimple Trade

Wealthsimple Trade is an all-in-one financial solution for Canadian investors with zero-commission fees for buying or selling stocks and ETFs.

It is available on all devices, and your account is protected by the Canadian Investor Protection Fund (CIPF). The company is majority-owned by the Power Corporation of Canada.

To avoid FX fees on USD trades and access to real-time trading data, you can subscribe to Trade Plus for $10 monthly.

Is VUN a Good Buy?

VUN is an excellent investment for Canadians looking for a passively managed fund that provides diversified exposure to the US stock market.

It has a reasonable MER of 0.17% and a small quarterly distribution of 0.89%.

Some investors might find that owning every stock on the US market is not ideal. If that is the case, an S&P 500 index ETF like VFV might be a better investment.

VUN has a steady performance and provides both stability to your portfolio and long-term capital growth opportunities.

VUN ETF Review FAQs