Vanguard recently introduced a ETF to capture exposure to the world’s major equity markets weighted by their market capitalization. The ETF, which started trading last week on the NYSE Arca exchange under the ticker symbol VT, charges a MER of 0.25%. While the ETF is an interesting addition to the Vanguard stable, it is hard to get excited about it for the following reasons:
- VT is more expensive: Canadian investors can get exposure to the entire world through a combination of VTI, VEA and VWO for a composite MER of 0.12% or so. At 0.25%, VT is almost twice as expensive.
- VT has no exposure to small caps: The Vanguard Total Stock Market Index Fund has about 20% weighting in small cap equities giving Canadian investors a 8% weighting in small caps in their foreign allocation. VT is almost solely invested in large-cap and mid-cap stocks.
- Like VEU, VT includes Canadian equities: Canadian investors would want to allocate more to our local market than the roughly 3% weighting in VT and this fund faces all the same issues that make VEU unattractive for Canadian residents.
You may also want to check out other posts on this topic by Four Pillars.
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