VEQT ETF 2024 Review

As one of the Best ETFs in Canada, it made sense to take a deeper dive into one of my favourites with an in-depth VEQT ETF Review.

VanguarD VEQT ETF

 The Vanguard All Equity ETF Portfolio is one of the best deals going in Canadian personal finance.  A super cheap, super efficient way to get instant global diversification.

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VEQT ETF Key Facts:

• MER: 0.24%
• Account Eligibility: RRSP, TFSA, RRIF, RESP, DPSP, RDSP
• Assets Under Management: $4.29 Billion 
• Median Market Cap: $87.8 Billion
• Date Created: January 29, 2019
• Number of Stocks: 13,522
• Number of Bonds: 0
• Price/Earnings Ratio: 19.4
• Price/Book Ratio: 2.5x
• Dividend Yield: 1.71%

What is VEQT ETF – The Vanguard All Equity Fund?

The Vanguard All Equity ETF (VEQT) was created by Vanguard Canada in order to be a one-stop shop for an entire investing portfolio.  Several MDJ authors own VEQT and Robb Engen over at Boomer at Echo has even stated that it is now the only new investment that he buys!

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VEQT Holdings

So, what does this Portfolio ETF have inside of it – what are the VEQT holdings?

What Vanguard has done is squished together four of it’s other ETFs in order to create this all-in-one option. Here’s the rough breakdown.

Each of those ETFs then invests in some of the biggest companies from all around the world – giving you ultimate equity diversification. The biggest VEQT holdings are shown below, but you can see that when you split your investment dollar up in so many ways, even the biggest company in the world (Apple at the moment) is only 3% of your portfolio.

Asset Allocation

Market Allocation

VEQT ETF Performance & Returns

The VEQT ETF is created to get the exact average return of equities from around the world.  It’s not like picking a “hot stock” that you think might outperform its peers.  

Consequently, I wouldn’t be too worried about VEQT ETF performance from month-to-month, as it’s more of a long-term passive investing product. 

Over time, some companies will go up in value, while others will go lower. On average however, the world’s biggest companies are really really good and making money. The Vanguard all-equity fund gives you instant one-click access to that diversified long-term strategy.

You can see from the chart below what the returns have been for VEQT since its inception five years ago.

Obviously the pandemic led to a steep decline as the stock market hit a recession, but the returns have been fairly consistent since the recovery began. If you had invested in VEQT back when it hit the market in 2019, you’d have enjoyed about an 11.2% return.  That’s a pretty amazing returns when you look at stock market averages over the years, and has resulted in excellent compound growth for investors.

That said, I want to reiterate that VEQT returns will go up and down from year to year, as a 100% equities portfolio is essentially guaranteed to be quite volatile. Stock market crashes happen – it’s the nature of owning a fairly risky asset.

VEQT ETF Investment Accounts for Canada

Like all of Vanguard’s all in one portfolio ETFs, the Vanguard all-equity ETF (VEQT) can be purchased in your:

• RRSP
• RRIF
• TFSA
• RESP
• Non-Registered Account
• RDSP
• DPSP

If you’re just getting started with investing, don’t worry about what this alphabet soup of Canadian investment accounts means – just scroll down and read our section “How to buy VEQT ETF”.

VEQT ETF Fees

When comparing VEQT ETF fees to other investment types, it’s important to understand how different products charge you in different ways – so that you can “compare apples to apples”.

All ETFs have what is called a “management fee” – and then a Management Expense Ratio (MER).  They’re almost the same, and the MER actually includes the management fee. The MER is always expressed as a percentage of all the money that you have invested in the ETF. It is charged annually, and it is automatic (you never have to worry about doing anything or tracking anything in order to pay it).

The VEQT ETF management expense ratio (MER) is 0.24%.

That means that for every $10,000 you have invested, you’ll pay $24 each year in fees – a pretty great deal considering you’re instantly invested in over 13,000 stocks!

By comparison, a similar equity mutual fund in Canada (how most Canadians were told to invest over the years) would be 2.5%+.

Even one of Canada’s best robo advisors – while being much cheaper than a mutual fund – is still significantly more expensive to own at around .70% MER.

While some brokerages do charge a small trading fee to buy or sell VEQT ETF, our top Canadian online broker recommendations do not.

How to Buy VEQT ETF

So now you know what the VEQT ETF is, let’s take a look at how to buy units of VEQT ETF.

Step 1: Find The Right Broker

Check out our Best Canadian Online Brokerage article to find out what an online broker is, and our quick comparison on how to choose the best broker for you.

Step 2: Open an Account

Apply to open an RRSP, TFSA, and/or Non-registered account with the brokerage provider that you choose.  Applications can now be done online.  While you may only use one account at the moment, just open these three all at once as you’re likely to use them in the future.

Step 3: Find the VEQT ETF

Go to the “trade” option.  Type “VEQT” into the search box.  These four letters are called an ETF’s ticker symbol.

Step 4: Decide How Much to Invest

Decide how much money you want to invest at the current time.  Then look up the current price of VEQT.  Divide the overall amount of money by VEQT’s price in order to figure out how many shares you should buy.

Example: If I have $5,000 to invest, and the price of VEQT is $33.45, then I would type 5,000/33.45 into my calculator to get 149.47.  I’d round down because I don’t have quite enough money to buy 150 units.

Step 5: Execute a Market Order

Select “Market Order” as the order you want to make.  A market order just means that you’d like to buy units at the current stock market price. (As you get more advanced you can learn about “Limits Orders” and all sorts of other purchases that you can make using an online broker but for now just keep it simple.)

Final Step: Confirm Your Order

Your broker will show you something that says, “Would you like to confirm the purchase of 149 shares of VEQT for $4,984.05?”  You select yes, and then you’ll see your cash balance go down by that amount.  You are now the proud owner of 149 shares of VEQT ETF.  When you come back in 10+ years, you’ll be able to sell them for more than you bought them!

VEQT Pros vs Cons

When it comes to digging into the pros vs cons of VEQT it’s not really like comparing specific stocks from two separate companies. Because you’re passively investing using an index fund, it’s more of question of fees and diversification.

VEQT Pros:

• Instant worldwide diversification in one easy purpose
• Low MER of only .24% (vs 2.5% for an equivalent Canadian actively-managed mutual fund)
• 30% Canadian stock allocation is consistent with expert recommendations for Canadian residents
• Instant re-balancing based on geographical distribution
• Incredibly easy portfolio-wide solution
• Even lower overall fees than a robo advisor (roughly half as expensive)
• Automatically allows investors to enjoy worldwide market returns

VEQT Cons:

• Can’t micromanage your portfolio if you’re the active management type
• In taxable non-registered accounts, dividends are taxed immediately (unlike HXT)
• 100% stocks can be a lot of volatility to handle – especially for new investors

Overall, VEQT’s cons are a pretty easy tradeoff to make relative to the massive convenience factor on the pros side of the equation.

Is VEQT a Good Buy Now?

If you’re asking whether VEQT is a good buy right now, then you’re asking the wrong questions.

Unlike active investors who always need to consider whether the current valuation of a stock represents an opportunity to buy or sell, folks who invest in VEQT should be passive investors in it for the long haul. When you purchase a unit of VEQT you are effectively saying, “Look, I don’t think that I am able to beat professional investors when it comes to picking the best stocks, but I do know that if I get the average return of all the biggest companies of the world, then I’m going to do quite well over the long term.”

At the moment, VEQT’s price-to-earnings ratio is above 19x. This is mostly due to the mega tech companies in the USA, as their share prices have surged over the last couple of years. Perhaps they are too highly valued and they will bring down the VEQT’s unit price a little over the next few years. On the other hand, what if their earnings actually grow even faster than the current sky-high predictions? The truth is that most investors have no idea how these complex market machinations and innovative new worlds will turn out – that’s why buying VEQT should be more about placing your faith in the asset class as a whole.  

No need to worry about “buy low, sell high.” It’s more like, “Buy all the time in the hopes the companies around the world continue to figure out how to make more money. Today’s share price isn’t really that relevant to the long term anyway!”

VEQT ETF Review: FAQ

VEQT ETF Review: Final Thoughts

I will always be a fan of Vanguard, as you might have guessed from my glowing VEQT ETF review. It certainly deserves a spot on my personal list of best Canadian all in one ETFs.

The VEQT all-in-one (aka: “portfolio ETF”) is really the culmination of what the company (under legend Jack Bogle) started years ago.

It is the ultimate way for investors to capture the returns of the stock market in the simplest, cheapest method possible.  

Pre-2019, I really liked what Canadian Robo Advisors brought to the table when it came to an easy investing solution that worked for the majority of Canadians. There is still a place for the hand-holding nature of a robo advisor. At .6% MER, it’s still not a bad deal at all compared to insanely-expensive Canadian mutual funds. 

But, that all changed when Vanguard released their all-in-one ETFs in 2019. The success of products such as VEQT spurred other fund companies to follow suit, and we may well look back on 2019 as one of the most important years in history for Canadian DIY investors. There is simply no better deal in investing today than getting an automatically rebalanced portfolio for an MER of .24%.

Now that said, you need to make sure that you select the right all-in-one ETF for your goals and risk profile. As an all-equity ETF, VEQT isn’t for the faint-of-heart. There will likely be years where it is down 40%. But, as you’ve seen over the last five years, there are likely to be many more years when the returns are excellent.