Broad Canadian equity exposure at a low cost

This ETF well represents the Canadian equity market but investors should be aware of its risks.

Anum Siddiqui 8 November, 2016 | 6:00PM
Facebook Twitter LinkedIn

 Vanguard FTSE Canada All Cap Index ETF (VCN) offers broad, market-cap-weighted exposure to Canadian equities at a razor-thin management expense ratio of 0.06%. The fund accurately represents the Canadian equity market and offers a sizable cost advantage against its peers, which makes it a compelling option within the Canadian equity universe and warrants a Morningstar Analyst Rating of Gold.

The fund's market-cap-weighting approach leads to the majority of its holdings landing in the giant- and large-cap bucket. However, this well-diversified portfolio of more than 200 stocks does have an allocation to both mid- and small-cap companies. The FTSE Canada All Cap Canada Index offers broader exposure of the Canadian stock market and better diversifies risk than the FTSE Canada Index, which is more concentrated and has a greater large-cap bias.

The fund has a relatively short track record. While it has tracked its index well thus far, the fund has underperformed the category average by 23 basis points annualized from its inception in September 2013 through September 2016. This underperformance is partially due to the exchange-traded fund's stock exposure within the energy sector as well as its higher exposure to both the energy and materials sectors.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free
Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Bank of Nova Scotia81.85 CAD1.07Rating
Canadian Natural Resources Ltd52.77 CAD-0.13
Enbridge Inc53.20 CAD0.21Rating
Royal Bank of Canada132.14 CAD0.44Rating
Suncor Energy Inc28.53 CAD-0.52
TC Energy Corp67.97 CAD0.92Rating
The Toronto-Dominion Bank89.11 CAD0.48Rating

About Author

Anum Siddiqui

Anum Siddiqui  Anum Siddiqui is an analyst on Morningstar Canada’s manager research team.

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy