These two Vanguard ETFs offer low-fee exposure to some of the biggest U.S. and emerging-market stocks.
Pennsylvania-based Vanguard Group is one of the world’s largest investment management companies. In all, it administers almost $3 trillion U.S. across 175 mutual funds and ETFs.
Generally speaking, Canadians can’t buy units of mutual funds that are registered in the U.S., because these investments aren’t registered with provincial securities commissions. Moreover, some Canadian funds are only available in a limited number of provinces.
Simpler is better with ETFs
Here’s when ETFs do the most for you. When you buy the original, easy-to-understand ETFs and avoid complex hybrids created for the greater profit of the investment industry. Pat McKeough explains it all in this new report and recommends 11 ETFs for a stronger portfolio.
Canadians can, however, buy Vanguard exchange traded funds listed on stock exchanges. Here are two ETFs we see as low-fee buys.
VANGUARD GROWTH ETF (New York symbol VUG; buy or sell through brokers) aims to track the Center for Research in Security Prices (CRSP) U.S. Large Cap Growth Index. It’s a broadly diversified index that mainly consists of big U.S. companies.
The $50.6 billion fund holds Apple, Alphabet, Facebook, Amazon.com, Coca-Cola, Home Depot, and Walt Disney. Other top holdings include Philip Morris International, Comcast, Visa, Gilead Sciences and Oracle Corp. Vanguard launched the ETF on January 26, 2004. Its MER is just 0.08%.
The fund’s breakdown by industry is as follows: Technology, 23.6%; Consumer Services, 22.1%; Health Care, 15.0%; Financials, 12.5%; Industrials, 11.3%; Consumer Goods, 11.2%; Oil and Gas, 3.0%; Materials, 0.9%; and Telecom Services, 0.3%.
Recommendation in Canadian Wealth Advisor: BUY
ETFs: 0.15% MER for Vanguard FTSE Emerging Markets ETF
VANGUARD FTSE EMERGING MARKETS ETF (New York symbol VWO; buy or sell through brokers) aims to track the Financial Times Stock Exchange (FTSE) Emerging Markets Index. It’s made up of the common stock of companies in developing countries. The ETF was launched on March 4, 2005. Its MER is 0.15%.
The top holdings of Vanguard FTSE Emerging Markets include Taiwan Semiconductor (Taiwan: computer chips), Tencent Holdings (China: Internet), China Mobile, China Construction Bank, Naspers Ltd. (South Africa: media), Industrial & Commercial Bank of China, Bank of China, Hon Hai Precision Industry (Taiwan: electronics), and Infosys (India: information technology).
The breakdown by country for this $45.1 billion fund is as follows: China, 28.4%; Taiwan, 15.3%; India, 12.5%; South Africa, 8.0%; Brazil, 7.3%; Mexico, 5.0%; Russia, 4.4%; Malaysia, 4.2%; Thailand, 2.9%; Indonesia, 2.6%; Philippines, 2.0%; Turkey, 1.8%; Poland, 1.4%; and others, 4.6%.
Recommendation in Canadian Wealth Advisor: BUY for aggressive investors.
Hi Pat, I have been a client and a fan of yours for many years and have done well with your advice. Lately, there have been many articles written about Warren Buffett. Mr, Buffet recently recommended a portfolio of two holdings: the S&P 500 and a short term US government bond fond and he explicitly recommended the Vanguard ETF products. As a Canadian retiree, would you consider this approach a viable option ? Fred B. Victoria
Thanks for your questions. While we don’t see just those two holdings as all you need – we do see an S&P 500 ETF as a buy if you want to hold a diverse group of U.S. through an ETF. We think most investors are better off holding a well-balanced portfolio of mostly dividend-paying stocks, but if you do want to own bonds, we recommend holding short-term bonds.
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Thanks. I wanted to start my grandson off with an ETF and one of these will do nicely.
I like these two choices. They’re a good way to get some global exposure, without paying the high fees of mutual funds.
Hi Pat, I have been a client and a fan of yours for many years and have done well with your advice. Lately, there have been many articles written about Warren Buffett. Mr, Buffet recently recommended a portfolio of two holdings: the S&P 500 and a short term US government bond fond and he explicitly recommended the Vanguard ETF products. As a Canadian retiree, would you consider this approach a viable option ? Fred B. Victoria
Thanks for your questions. While we don’t see just those two holdings as all you need – we do see an S&P 500 ETF as a buy if you want to hold a diverse group of U.S. through an ETF. We think most investors are better off holding a well-balanced portfolio of mostly dividend-paying stocks, but if you do want to own bonds, we recommend holding short-term bonds.