Wednesday, March 8, 2017

My ETF Experiment Continued - Bought More VCN and VXC

In May of 2016, I described my ETF experiment of buying Vanguard FTSE Canada All Cap Index ETF ("VCN") and Vanguard FTSE All-World Ex Canada Index ETF ("VXC") for my son's Registered Education Savings Program ("RESP"). Strangely, given the dividend growth orientation of this blog, that entry is the most popular post. Since I observed that my ETF investments in my son's RESP involve a low time commitment, low cost, low maintenance, and produce returns in-line with their respective indices, I continued the experiment in 2017 adding shares of both VCN and VXC. A quick overview of each ETF is provided below.

Vanguard FTSE Canada All Cap Index ETF (TSE: VCN) 
From Vanguard Canada's website, VCN "seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad Canadian equity index that measures the investment return of large, mid- and small-capitalization, publicly traded securities in the Canadian market." The ETF currently holds 221 companies' stocks, has a P/E of 28.5X, a 1.9X P/B ratio, and a 11.6% ROE. The ETF's top three holdings are Royal Bank, TD Bank and Bank of Nova Scotia. The fund's top 10 holdings account for 39.1% of its net assets. The fund's management expense ratio is 0.06%.

Vanguard FTSE All-World Ex Canada Index ETF (TSE: VXC) 
Also from Vanguard Canada's website, VXC "seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad global equity index that focuses on developed and emerging markets, excluding Canada." The ETF currently holds 9781 companies' stocks, has a P/E of 22.7X, a 2.1X P/B ratio, and a 15.6% ROE. The ETF's top three holdings are Apple, Microsoft, and Exxon Mobil. The fund's top 10 holdings account for 8.3% of its net assets. The fund's management expense ratio is 0.27%.

In order to bring the two positions in-line, I bought 44 additional shares of VCN compared to 37 shares of VXC.  The total transaction costs were $20. I will rebalance the portfolio when I make the 2018 RESP contribution. I continue to feel that an all equity portfolio diversified across the world meets the risk profile and investment objectives of my son who has a 15 year time horizon before he needs to start withdrawing the funds for college or university.

My Investment Holdings page is updated to reflect the additional shares of VCN and VXC I purchased for my son's RESP.

Do you own any index ETFs or index funds?

5 comments:

  1. Vanguard is typically a pretty safe bet. They have nice consistent returns and they definitely know what they are doing

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    1. Agree 100%! Best of all, they keep their costs low.

      Thanks for your comment.

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  2. Why didn't you open the account in Vanguard directly so you can trade these for free?

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    1. I don't think Vanguard has brokerage services in Canada.

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    2. I'm unsure if they have a brokerage service in Canada, and for $20 a year, I don't mind buying the shares through my normal discount brokerage as I can keep track of everything in on place.

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