Re: Investment Opportunities?
Originally Posted by
Axeman33
So one EFT that has been thrown out here a few times is Vanguard. I've noticed a few different ones when I go looking. I see VFV on the TSE. I see VEQT on the TSE as well. There's quite a price difference between the two different Vanguard EFTs. What exactly is the difference? I realize EFT is a collection of investments into one so does that mean the VFV has better, more valuable stocks or is there more of them in there?
Vanguard is not an ETF, it is a company that sell a lot of different ETFs. Some ETFs are actually a combination of Other ETFs.....
https://www.vanguardcanada.ca/adviso...n/overview/etf
There's about 100 or so here to choose from.
Each ETF is a slightly different mix of stocks and bonds, both the actual items held and the percentage of same. By varying the mix of the products you can focus on: a geographic sector (USA, Canada, Europe, China, Emerging markets), a industry (banking, construction, manufacturing,) or any other focus. There are incredibly broad ETFs: Invest in the largest 3,000 companies in the USA. And incredibly specific ETFs: invest in Marijuana stocks.
The reason ETFs were created is to give the average investor a simple way to get broad exposure to an entire geographic market. i.e. the largest 3,000 companies in the USA in one purchase. For that reason, highly specific ETFs are counter-productive IMO and are more a marketing gimmick then a wise investment. Perfect example: the Marijuana ETF; it allows you "broad exposure" to the marijuana market but really that is a teeny tiny piece of the world economy and investing any significant percentage of your assets in same is just gambling.
I see VFV on the TSE. I see VEQT on the TSE as well
VFV is the S&P 500. By buying this you buy the Standards & Poor 500, which is a list of the 500 largest companies in the USA according to S&P. So all stocks, all US companies.
VEQT is 100% Equity with worldwide exposure. Broken down you buy stock in companies with 40% USA based, 30% Canadian based, 22% "developed non-north america" and 8% "emerging markets".
So they are both a ETF of thousands of companies. Buying VFV gives you only USA exposure, VEQT gets you world exposure. Whether you want worldwide exposure or not is a very lengthy and heated argument.
The couch potato writer will tell you you need some exposure to the Canadian market (if you're Canadian). This is one area where I disagree with him.
The reality is that if you buy only USA stocks you still get worldwide exposure because all of the biggest USA based companies are international in sales and the S&P 500 gets around 50% of its business from outside the USA.
Anyways both of VFV and VEQT are great options. They provide a huge diversification to a wide array of companies. VEQT is even more diversified then VFV, some will tell you you need worldwide exposure, others will agree with blayze that the world economy lives and dies with the USA economy.
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