In this post, we will reviewing VEQT Vanguard All Equity ETF Portfolio. VEQT is a growth ETF that invest 100% of its funds on equities. We will pit VEQT against other similar All-in-one ETFs such as HGRO and XEQT.
Many Canadians prefer investing in ETFs because of their low management fee and diversification. ETFs now exist for every asset class and sector. The dilemma is to choose the right ones to build your portfolio. The all-in-one ETFs responds directly to this need. By buying one ETF, the investor can have exposure to various types of assets. It does not require rebalancing because the ETF manager takes care of this for you.
So, it’s simply a matter of choosing one and holding onto it. The all-in-one ETFs are marketed based on the investors’ tolerance to risk. There are three main types: Conservative, Balanced, or Growth.
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VEQT: Fund’s objective
Vanguard All-Equity ETF Portfolio seeks to provide long-term capital growth by investing primarily in equity securities.
This ETF is suited for investors:
-Medium to high-risk tolerance investors with long term horizon;
-Investors who seek an all-in-one solution. VEQT is diversified across various economic sectors and geographic markets.
Comparison: VEQT vs HGRO vs XEQT
| Name | DivYield | Mgmnt Fee |
| HGRO – Horizons Growth Tri ETF | 1.15 | 0.16 |
| VEQT – Vanguard All Equity ETF Portfolio | 1.23 | 0.24 |
| XEQT – Ishares Core Equity ETF | 1.53 | 0.20 |
HGRO – Horizons Growth Tri ETF has the lowest management fees at 0.16%. The difference between the three ETFs is minimal.
All three ETFs pay dividends. XEQT from iShares pays the highest at 1.53% and VEQT stands at 1.23%. The primary focus remains long-term growth for these growth ETFs.
If you are looking for ETFs that focus on generating high dividend income, you can consult our previous post.
Performance: VEQT vs HGRO vs XEQT
In terms of performance, the data available is limited since all-in-one ETFs are relatively recent products. XEQT had the highest average return in the past three years.
HGRO short term’s return is much lower than its competitors, it seems, this is due to:
-less geographic diversification: HGRO invests primarily in US equities, as you can see in the comparison tables below;
VEQT and XEQT have overall similar performances.
In terms of liquidity, HGRO is less popular than XEQT and VEQT. For instance, HGRO asset under management (AUM) is less than 200 M. Low AUM means less liquidity when trading HGRO. VEQT has the best liquidity thanks to its significant assets under management (1.1 Billion dollars).
VEQT Review: Geographic diversification
| Country | VEQT % | HGRO % | XEQT % |
|---|---|---|---|
| United States of America | 42.9 | 76.2 | 48.4 |
| Canada | 29.3 | 22.6 | 24.0 |
| Asia | 9.9 | 0.1 | 10.1 |
| Europe | 5.8 | 0.2 | 7 |
| Latin America | 0.8 | 0.2 | 0.4 |
| Africa | 0.3 | 0 | 0.2 |
If you are looking for a diversified ETF with exposure to international market, XEQT and VEQT are the best options available. As you can see in the table above, HGRO has a limited exposure to international markets.
VEQT review: Sector diversification
| Sector Classs | VEQT | HGRO | XEQT |
|---|---|---|---|
| Financial Services | 19.8 | 10.6 | 18.9 |
| Technology | 17.6 | 21.1 | 17.9 |
| Industrials | 11.0 | 5.3 | 11.1 |
| Consumer Cyclical | 9.6 | 8.1 | 9.9 |
| Healthcare | 8.8 | 6.3 | 9.7 |
| Comm. Services | 7.8 | 9.2 | 7.9 |
| Consumer Defensive | 6.0 | 3.8 | 6.2 |
| Basic Materials | 6.8 | 2.1 | 5.8 |
| Energy | 5.8 | 2.9 | 5.5 |
| Real Estate | 3.3 | 1.0 | 3.6 |
| Utilities | 3.0 | 1.5 | 3.0 |
In terms of sector diversification, all three ETFs invest in stocks on companies operating in the various economic sector. XEQT and VEQT are similar, with financial services and technology at the top at around 18% each. On the other hand, HGRO invests 21.1% in the technology sector and only 10.6% in financial services.
VEQT Holdings
Please refer below to the top 10 stocks owned by VEQT indirectly (Note: VEQT creates your portfolio by investing in various vanguard ETFs. )
| Holding Name | % Weight |
|---|---|
| Apple Inc. | 2.08% |
| Shopify Inc. Class A | 2.04% |
| Microsoft Corp. | 1.98% |
| Royal Bank of Canada | 1.90% |
| Toronto-Dominion Bank | 1.61% |
| Amazon.com Inc. | 1.32% |
| Enbridge Inc. | 1.08% |
| Bank of Nova Scotia | 1.0% |
| Brookfield Asset Management Inc. Class A | 0.95% |
| Canadian National Railway Co. | 0.92% |
Conclusion
Pros of all-in-one growth ETFs in general:
low fees;
most brokers offer free commission trades on ETFs;
suited for passive investors with long term horizon;
diversification;
no need to rebalance your portfolio; the managers of the fund take care of it.
Pros of VEQT
relatively low management fees;
international exposure;
excellent performance and low volatility