The Best Canadian Vanguard ETFs To Own in December 2024

ByDan Kent Published On:

Vanguard ranks as one of the world’s most significant fund management firms, and it justifiably earned this status. John C Bogle, a strong proponent for the everyday investor, established the company in 1975. Bogle aimed to design funds that were not only low-cost but also straightforward to possess.

He introduced the first index mutual fund for individual investors, which was designed to replicate the performance of a particular market index. 

This was revolutionary at the time, as it offered a low-cost, diversified option for investors, contrasting sharply with the actively managed funds that were common then, which often came with high costs and inconsistent performance.

Now, Canadian exchange-traded funds have exploded in popularity, and Canadians are looking to find resources that identify the best of the best.

In this article, I’m going to go over 5 of the top Vanguard ETFs here in Canada. These will be a variety of funds, including exchange-traded funds that focus on dividends, Canadian stocks, US stocks, bonds, and so much more.

Let’s get right into it.

What are the best Vanguard ETFs in Canada?

  • Vanguard S&P 500 Index ETF (TSE:VFV)
  • Vanguard US Total Market ETF (TSE:VUN)
  • Vanguard FTSE Canada All Cap Index ETF (TSE:VCN)
  • Vanguard Canadian Aggregate Bond ETF (TSE:VAB)
  • Vanguard Growth ETF Portfolio (TSE:VGRO)

Vanguard S&P 500 Index ETF (TSE:VFV)

The Vanguard S&P 500 ETF (TSE:VFV) fund is arguably the most popular Vanguard fund in the country, and for good reason. It aims to track the S&P 500, which is one of the more notable market indexes in the world. 

If you’re looking for exposure to the United States in a fund that trades in Canadian dollars, it’s hard to deny this one. It has assets under management north of $10B, making it one of the largest funds in the country.

The fund holds VOO, which is Vanguard’s S&P 500 ETF in the United States. So, if you would rather get your exposure by holding USD and buying USD ETFs, you could look into VOO, as you practically own it, but in a different currency, with VFV.

An important note about VFV is the fact that even if you hold this fund in an RRSP, you’ll be charged a withholding tax on the dividends. This is because VFV is a Canadian-domiciled fund that contains US stocks or ETFs. If you want to avoid the withholding tax, VOO can do that for you.

As mentioned, the fund’s top holding is simply VOO, which contains US behemoths like Microsoft (MSFT), Amazon (AMZN), Apple (AAPL), NVIDIA (NVDA), Alphabet (GOOG), Meta Platforms (META), and Tesla (TSLA).

Vanguard sticks to its low-fee promise, offering a management expense ratio of only 0.09% on VFV, meaning you’ll pay just $0.90 per $1000 you have invested in the fund on an annual basis.

If you’re looking for alternatives from BMO or Blackrock, look to the BMO S&P 500 ETF (TSE:ZSP) or the iShares Core S&P 500 Index ETF (TSE:XSP).

Vanguard US Total Market ETF (TSE:VUN)

The Vanguard US Total Market ETF (TSE:VUN) is for investors who not only want exposure to the S&P 500, but the US markets overall.

The S&P 500 is the largest 500 companies in the United States. So, it fails to capture small or mid-market capitalization companies. If you’re looking for exposure to those, then VUN is certainly a fund you’ll want to check out.

It has assets under management of just shy of $7B, so this is still a considerable fund in terms of overall size, but it’s not as big as VFV. It also has higher fees than VFV, coming in at 0.17%. But considering you get complete exposure to the US market, $1.70 annually per $1000 invested is a cheap price to pay.

Even though this is a fund that contains the entire US market, it is still heavily weighted towards the giants of the country, like Apple, Amazon, Google, and Microsoft. The only difference is it will have a smaller allocation to each position. 

Overall, it still contains over 72% exposure to giant or large-cap stocks in the US.

It has a relatively small dividend yield of 0.8%, but this is more so a fund you own for the overall capital gain. It has been one of the best equity ETFs to own for the long term.

Vanguard FTSE Canada All Cap Index ETF (TSE:VCN)

Now that we’ve gone over Vanguard’s most popular US exposure ETFs let’s swap them for Canada. The Vanguard Canada All Cap ETF (TSE:VCN) fund is one of the best ways to get exposure to over 174 of the best Canadian stocks on the market.

It has assets under management of around $6B, making it one of the largest Canadian index funds in the country, and with management fees of only 0.05%, Vanguard lets Canadian investors own one of the best Canadian ETFs for a paltry $0.50 annually for every $1000 you have invested.

The fund tracks large, mid, and small-cap stocks on the Toronto Stock Exchange, and when we look to the top holdings, you’ll see some of the most notable names in the country, like The Royal Bank of Canada (TSE:RY), Toronto Dominion Bank (TSE:TD), Shopify (TSE:SHOP), Enbridge (TSE:ENB), and Canadian Natural Resources (TSE:CNQ).

Canadian stocks tend to pay larger dividends, and for this reason, the fund has the largest dividend yield on this list, typically paying north of 2%. Although it hasn’t returned as much as its US counterparts listed above, it is great for those who want Canadian stock market exposure and diversification outside of the United States.

Vanguard Canadian Aggregate Bond ETF (TSE:VAB)

For the longest time, fixed income was extremely unpopular, and for good reason. With rock-bottom interest rates, bonds didn’t offer much, and real returns remained negative. Now, however, in the high-rate environment we’re in, investors are turning back to bonds and fixed income as they are providing comfortable yields.

The Vanguard Canadian Aggregate Bond ETF (TSE:VAB) is Vanguard’s top fund for exposure to fixed-income investments. The fund has assets under management of $4.5B at the time of writing, and it has a management fee of 0.09%, meaning you’ll pay only $0.90 a year for every $1000 you have invested.

Considering how much of a pain bonds used to be to buy, this fee is about as rock-bottom as it gets.

In terms of holdings, the bulk of the fund is bonds from the Government of Canada or other provincial governments. It has a 75%/25% weighting at the time of writing towards Government and corporate bonds.

In terms of bond maturity, it is mostly intermediate bonds maturing in 1-10 years. However, it does have a reasonable amount of exposure, nearly 30%, to long-term bonds. So, it’s important to note that in terms of your overall risk profile and financial goals. 

Overall, for Canadians looking to add bonds to their portfolios, VAB is a very solid option. For a BMO alternative, you could look to the BMO Aggregate Bond Index ETF (TSE:ZAG).

Vanguard Growth ETF Portfolio (TSE:VGRO) 

The Vanguard Growth ETF Portfolio (TSE:VGRO) is what I would call an all-in-one ETF. This means the fund provides single-click exposure to nearly the entire stock and fixed-income markets.

All-in-one ETFs are relatively new, with this fund debuting in 2019. As a result, it only has assets under management of around $4.5B, but make no mistake about it: this is growing steadily. With management fees of 0.24%, it is the highest fee fund on this list. However, it also provides the broadest exposure at the click of a button.

The fund is 80% equity and 20% fixed income. We can compare this to other all-in-one ETFs from Vanguard, including the Vanguard Balanced ETF Portfolio (TSE:VBAL), which is 60% equity and 40% fixed income, and the Vanguard All-Equity ETF Portfolio (TSE:VEQT), which is 100% equity.

Ultimately, which fund you choose will depend on your overall risk tolerance as an investor and your financial goals.

In terms of holdings, the fund will contain 6-7 Vanguard funds that aim to give you exposure to not only the Canadian and US markets but also developed and emerging markets worldwide and fixed-income investments.

The bulk of the fund is still allocated towards the United States and Canada. However, at the time of writing, it does give an investor 20%~ exposure to international markets if that’s what you’re aiming for.

These all-in-one ETFs aim to give investors single-click exposure to the entire market and are becoming extremely popular. Vanguard continues to provide multiple options for investors with different equity makeups and low MERs.

Overall, your investment preferences and financial goals will determine which Vanguard ETF is best for you

I’ve attempted to include a variety of different funds on this list to make it relevant for every investor. Whether you’re looking for funds for your TFSA, RRSP, or even an unregistered account, you’ll possibly need to make tweaks to mitigate taxes. 

Alternatively, you could consider exchanging your CAD for USD and buying the US-based funds directly.

I hope I’ve given you some solid insight into some outstanding Vanguard funds. Now, find one that suits your investing style and goals.