VUN ETF Review 2022: Vanguard US Total Market Index ETF

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by Enoch Omololu

Published on

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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 2022:

  • Inception date: August 2, 2013
  • Number of stocks: 4,112
  • Price/Earnings Ratio: 19.4x
  • Price/Book Ratio: 3.6x
  • Return on Equity: 19.6%
  • Earnings Growth Rate: 19.7%
  • Management fee: 0.15%
  • MER: 0.16%
  • Assets under management: $5.15 billion
  • 12-month trailing yield: 1.06%
  • Distribution yield: 0.88%
  • Distribution frequency: Quarterly
  • Eligible accounts: RRSP, TFSA, RRIF, TFSA, DPSP, RDSP
  • Currency: CAD
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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 4,112 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:

Source: Vanguard Canada

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

Source: Vanguard Canada

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

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:

Source: Vanguard Canada

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

Source: Vanguard Canada

Since its inception, VUN has had an average annual return of 14.13% and a cumulative return of 221% to investors.

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

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VUN Fees

VUN has a management fee of 0.15% and a Management Expense Ratio (MER) of 0.16%.

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

The VUN ETF is cheap to own with a 0.16% MER and can be made even cheaper if bought on Canadian discount brokerages.

With that said a total stock market index ETF will include a lot of stocks you don’t really care to own.

It also limits your geographical exposure to only being invested in the United States for the VUN ETF.

A large percentage of the weight in VUN is still tied up in the 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.

XUU has lower rates with an MER of 0.07% which makes it a more cost-efficient option than VUN.

It holds a basket of iShares ETFs and has a total of 99 holdings and 3,627 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).

The XUU ETF has a quarterly distribution yield of 1.33% and a 12-month trailing yield of 1.23%. Get more details in this XUU review.

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.

VFV has a quarterly distribution yield of 1.02% and a 12-month trailing yield of 1.17%.

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 4,112 underlying stocks that compose the US total stock market.

The VTI ETF has a quarterly distribution yield of 1.45% which amounts to about $2.97 annually for each share.

VUN vs VUS

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

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%.

The VUS ETF has a quarterly distribution yield of 0.87% and a 12-month trailing yield of 1.07%.

How To Buy the Vanguard VUN ETF in Canada

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

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Questrade

Questrade is another popular discount brokerage in Canada that was established back in 1999.

In addition to ETFs, this platform also 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.

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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 0.16% 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

Is VUN the same as VOO?

No, VUN is the Total US Stock Market Index ETF for Canadian investors. VOO is the US-domiciled S&P 500 index ETF so it only tracks the S&P 500 index. This means that the number of underlying holders is much higher for VUN than it is for VOO.

While VUN trades on the TSX in Canadian dollars, VOO trades on the NYSE in US dollars. VOO has an MER of 0.03% and a quarterly distribution yield of 1.46%.

Does VUN Pay a Dividend?

Yes, the VUN Dividend is called a distribution since it is from an ETF and not an individual stock. VUN has a quarterly distribution yield of 0.89% and a 12-month trailing yield of 1.06%.

Is VUN Hedged?

No, VUN is not hedged. The CAD-Hedged version of the VUN ETF is traded under the ticker symbol VUS. 

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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. He has been featured or quoted in The Globe and Mail, Winnipeg Free Press, Wealthsimple, Financial Post, Toronto Star, CTV News, Canadian Securities Exchange, Credit Canada, National Post, CIBC, 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.

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