vsp etf

VSP ETF Review (2022): Vanguard S&P500 Canadian Hedge

In this post, we will review a popular index ETF on the TSX: the Vanguard S&P500 Canadian Hedge (VSP ETF). We will first explain what’s an index ETF. Then, we will discuss VSP’s historical performance, fees and holdings. Finally, we will compare VSP against similar ETFs.

What’s an index ETF

There are several types of ETFs. Index ETFs are the king of the hill. The first-ever ETF introduced to a North American Exchange was an index ETF. Index ETFs offer exposure to many securities and sometimes to a whole stock exchange at a meager cost. Their main goal is to acquire, on your behalf, all the securities that constitute a specific index to achieve the same return of the tracked index minus the fees.

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Advantage of Index ETFs

One significant advantage of owning an index ETF is low fees. The manager is simply replicating the index’s performance either by acquiring directly or indirectly (using derivatives) the constituents of the index. There is no additional effort involved in the selection process, thus no need to generously compensate the portfolio manager. It might also be pertinent to know that empirical studies have consistently shown that active portfolio managers rarely beat the S&P 500 index in the long term. In other words, only a few managers can outguess the market in the long run.