Vanguard Canada ETF changes

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Insomniac
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Re: Vanguard Canada ETF changes

Post by Insomniac » 28 Jun 2016 23:29

couponstrip wrote:For those wanting to simplify their portfolio from VEA + VWO to VXUS, or switch VEA to VPL/VGK due to Canada contamination, it looks like brexit may provide just such an opportunity without the CG tax concern. Check your ACB on VEA vs current market price. It may bring tears to your eyes, but some folks might even be in a position to book a capital loss. :o
Good point. I am thinking I should replace VDU with VIU. No Canada in VIU and it's not simply a wrapper for a US ETF.

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Re: Vanguard Canada ETF changes

Post by ockham » 17 Nov 2016 10:17

Less a change than an update. Vanguard's VXC appears finally to have completed (or nearly so) its transition (announced in the fall of 2015, iirc) from a large-mid cap fund to all cap. As of Oct 30, its median market cap and its number of holdings more or less match its benchmark.

https://www.vanguardcanada.ca/individua ... ##overview

A month earlier, its median market cap was about $10B higher than its benchmark, and it held ~700 fewer stocks.

https://www.vanguardcanada.ca/individua ... docId=3329

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Re: Vanguard Canada ETF changes

Post by Koogie » 17 Nov 2016 10:55

ockham wrote:Less a change than an update. Vanguard's VXC appears finally to have completed (or nearly so) its transition (announced in the fall of 2015, iirc) from a large-mid cap fund to all cap. As of Oct 30, its median market cap and its number of holdings more or less match its benchmark.
https://www.vanguardcanada.ca/individua ... ##overview
A month earlier, its median market cap was about $10B higher than its benchmark, and it held ~700 fewer stocks.
https://www.vanguardcanada.ca/individua ... docId=3329

Still pisses me off a little that they hide the fact VXC is a wrapper comprised of US Vanguard ETFs. On the Vanguard Canada main page they list the top 10 stock "holdings" of VXC... completely disingenuous.

Only in the fine print on the fact sheet do they admit: "VXC invests primarily in the U.S.-domiciled Vanguard Large-Cap ETF, Vanguard Small-Cap ETF, Vanguard FTSE Europe ETF, Vanguard FTSE Pacific ETF, and Vanguard FTSE Emerging Markets ETF, the information displayed represents VXC's exposure to these underlying ETFs."
Buy very little, sell even less.

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Re: Vanguard Canada ETF changes

Post by longinvest » 18 Nov 2016 07:36

ockham wrote:Less a change than an update. Vanguard's VXC appears finally to have completed (or nearly so) its transition (announced in the fall of 2015, iirc) from a large-mid cap fund to all cap. As of Oct 30, its median market cap and its number of holdings more or less match its benchmark,
Great! That means Vanguard probably added US smal-cap stocks, over 1400 stocks (see VB) which were missing.
ockham wrote:A month earlier, its median market cap was about $10B higher than its benchmark, and it held ~700 fewer stocks.
The number of stocks has also changed:

September 2016: VXC 8,416 - Benchmark 9,112
October 2016: VXC 9,831 - Benchmark 9,101

It would be nice is VXC replaced its Vanguard FTSE Europe ETF (VGK) and Vanguard FTSE Pacific ETF (VPL) holdings with the more tax-efficient Canadian-based FTSE Developed All Cap ex North America Index ETF (VIU) which contains the missing Israel stocks (in the index but missing from VXC).
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Re: Vanguard Canada ETF changes

Post by longinvest » 24 Nov 2016 16:54

Vanguard Canada plans to add new bond ETFs according to a preliminary prospectus:
  • Vanguard Canadian Government Bond Index ETF
  • Vanguard Canadian Corporate Bond Index ETF
  • Vanguard Canadian Short-Term Government Bond Index ETF
  • Vanguard Canadian Long-Term Bond Index ETF
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Re: Vanguard Canada ETF changes

Post by peter » 26 Nov 2016 23:21

I tried to read the information on VIU and VDU. Do I understand correctly that VIU holds stocks directly, and therefore would be more tax efficient in a Canadian non-registered account? VDU is the same as VIU but also includes Canada at ~8.%, which isn't what I'm looking for.

For context, my allocation is 20% REIT, 25% Canadian, 22.5% US, 22.5% rest of developed world, 10% emerging. For non-registered, options are VTI (US-based, tax recoverable) or a Canadian ETF that invests directly in US stocks (which should be the same net effect, but VTI is really cheap and I already have it), and Canadian-based ETFs that directly invest in stocks developed world/emerging. I also still have VWO and VEA. I realize we're talking about relatively minor percentages of cost. The cost of VIU is 0.22%, VEA 0.09% (with 15% of the dividend lost, so VIU looks like a better deal).

Thanks,
Peter

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Re: Vanguard Canada ETF changes

Post by longinvest » 27 Nov 2016 07:55

Peter,
peter wrote:Do I understand correctly that VIU holds stocks directly, and therefore would be more tax efficient in a Canadian non-registered account?
That's right, VIU is a newer and more tax-efficient ETF that holds stocks directly. VDU is an older ETF which invests into the U.S.-domiciled Vanguard FTSE Developed Markets ETF.
peter wrote:VDU is the same as VIU but also includes Canada at ~8.%, which isn't what I'm looking for.
Initially, VDU did not include Canada but at some point the U.S.-domiciled ETF it invests into added Canada. As a result, Vanguard Canada changed VDU's index and created VIU. I guess that Vanguard Canada didn't want to cause a big distribution of capital gains, so it let investors choose whether to stick with VDU or to sell and buy VIU.

In my opinion, there's no reason today for an investor to put any money into VDU. The only justification to leave money into an existing VDU position would be the avoidance of capital gains in a non-registered account.
peter wrote:For context, my allocation is 20% REIT, 25% Canadian, 22.5% US, 22.5% rest of developed world, 10% emerging. For non-registered, options are VTI (US-based, tax recoverable) or a Canadian ETF that invests directly in US stocks (which should be the same net effect, but VTI is really cheap and I already have it), and Canadian-based ETFs that directly invest in stocks developed world/emerging. I also still have VWO and VEA. I realize we're talking about relatively minor percentages of cost. The cost of VIU is 0.22%, VEA 0.09% (with 15% of the dividend lost, so VIU looks like a better deal).
In a non-registered account and a TFSA, there's no reason to use U.S.-domiciled ETFs. The Canadian-domiciled VUN (US, 0.16%), VIU (Developed, 0.22%), and VEE (Emerging, 0.24%) have a similar tax cost as their US equivalents. The difference in management fee is not high enough, in my opinion, to justify the added complexity of converting currency (Norbert's gambit).

In a RRSP, the U.S.-domiciled VTI and VWO are more tax-efficient than VUN and VEE. As for VIU, I think that it is more or less equivalent to investing into VEA, as the non-recoverable second-level of tax withholding of VEA is similar to the non-recoverable tax withholding of VIU.

Personally, I keep things even simpler by investing into Vanguard's ex-Canada ETF (VXC, 0.27%). If I was to start again today, I would use iShare's ex-Canada ETF (XAW, 0.21%) which is more tax-efficient (it uses XEF internally for its developed exposure which is similar to VIU) and has a lower MER. I might start directing new money into XAW, but I'm giving Vanguard Canada a chance to improve things by switching from VGK and VPL to VIU and reducing the management fee. During the last year Vanguard has improved VXC by adding small caps, so there's some hope still that things could improve further.
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Re: Vanguard Canada ETF changes

Post by peter » 27 Nov 2016 09:15

Thanks!

Not directly relevant for the VIU question, but just for context:
I'll consider VUN too, and I already use some VEE. However, my finances are basically in 3 currencies anyway, so there is no real added complexity to US-based ETFs because of currency in non-registered accounts. I convert between currencies in an IB account. Besides VTI I also in the past bought VTV and VBR. I'll have to decide if that's still worth trying and more interesting than VUN. In addition, my Canadian stocks and REITs aren't indexed as I have a lower weight in energy/materials/banks than the index and when I started XRE didn't seem worth it. If I wanted to improve simplicity that's a more obvious place to start.

Peter

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Re: Vanguard Canada ETF changes

Post by GuyLafleur » 28 Nov 2016 18:06

How has Vanguard Canada been doing so far?

Any chance that they pack up shop and shut down their Canadian operations anytime in the near future?

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Re: Vanguard Canada ETF changes

Post by AltaRed » 28 Nov 2016 18:25

One Google link I read said Vanguard Canada had $7.9B AUM as of May 31 this year and Vanguard themselves said it was $9.3B as of Sept 30. Lots of momentum I'd say.

By contrast, BMO had $28.9B as of May 31 and BlackRock had $50.2B. I'd suggest Vanguard has enough critical mass and momentum to stay the course but only they would know for sure.
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Re: Vanguard Canada ETF changes

Post by GuyLafleur » 29 Nov 2016 12:59

AltaRed wrote:One Google link I read said Vanguard Canada had $7.9B AUM as of May 31 this year and Vanguard themselves said it was $9.3B as of Sept 30. Lots of momentum I'd say.

By contrast, BMO had $28.9B as of May 31 and BlackRock had $50.2B. I'd suggest Vanguard has enough critical mass and momentum to stay the course but only they would know for sure.
Thanks AltaRed. If VG Canada did pack up shop, what would happen to those of who own its index funds. Would we be paid out in cash for our shares?

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Re: Vanguard Canada ETF changes

Post by AltaRed » 29 Nov 2016 14:57

Try this thread for when TD threw in the towel on its suite of ETFs some time ago.

viewtopic.php?t=101718

and this MoneySense article

http://www.moneysense.ca/etfs/when-etfs-wind-down/

The biggest issue would be the cap gains triggered when an ETF is dissolved and the NAV proceeds are distributed as cash. OTOH, a number of ETFs today are wraps of other ETFs, so I imagine in that case, it is possible the investor would/could receive the proportionate shares of underlying ETFs in kind.
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Re: Vanguard Canada ETF changes

Post by retireat50 » 30 Nov 2016 19:08

I know this thread pertains to Vanguard, but how come performance of both XAW and VXC have been poor in the past year relative to underlying markets? The returns are in the 1.5% range YTD.

I assume primarily strength of US currency?

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Re: Vanguard Canada ETF changes

Post by longinvest » 30 Nov 2016 19:28

retireat50 wrote:I know this thread pertains to Vanguard, but how come performance of both XAW and VXC have been poor in the past year relative to underlying markets? The returns are in the 1.5% range YTD.

I assume primarily strength of US currency?
Retireat50,

As of October 31st, both VXC and XAW beat their index YTD (probably due to fair value pricing noise):
  • VXC: 1.49%, index: 0.68%
  • XAW: 1.68%, index: 0.81%
In 2015, VXC had an annual return of 17.04%.

What did you expect?
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Re: Vanguard Canada ETF changes

Post by Peculiar_Investor » 08 Feb 2017 08:11

Add four more to the lineup, Vanguard Introduces Four Canadian Fixed Income ETFs
Vanguard Investments Canada Inc. today announced the listing of four new low-cost and high-quality Canadian fixed income exchange-traded funds (ETFs). All four began trading on the TSX today.

"In an uncertain market, investors and advisors are looking for high-quality fixed income solutions to build broadly diversified portfolios, at a low cost," said Atul Tiwari, managing director for Vanguard Investments Canada Inc. "As a global fixed income leader, we are pleased to meet that need and build on our existing lineup of bond ETFs, which are among the lowest cost in their respective categories."
The essential details:
  • Vanguard Canadian Corporate Bond Index ETF, VCB, 0.23% management expense fee
  • Vanguard Canadian Long-Term Bond Index ETF, VLB, 0.17%
  • Vanguard Canadian Short-Term Government Bond Index ETF, VSG, 0.18%
  • Vanguard Canadian Government Bond Index ETF, VGV, 0.25%
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Re: Vanguard Canada ETF changes

Post by IdOp » 16 Mar 2017 16:47

Up-thread there was discussion about Vanguard Canada's quarterly distributions happening early. Now for March it seems they are not going to be quite so early, although some (e.g., VAB and VRE) will still be about a week earlier than usual.

Record date March 24, payment March 31.

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Re: Vanguard Canada ETF changes

Post by newguy » 12 Jul 2017 11:49

This should be in Blackrock etf changes but it's really Vanguard's fault.

A while ago I sold my XSB/XBB in anticipation of today in order to buy the cheaper VSB/VBB. So doing my DD, I looked up what's what and
https://www.blackrock.com/ca/individual ... -19-en.pdf
Toronto, May 19, 2017 – iShares, the industry-leading exchange-traded fund (ETF) business at BlackRock Asset Management Canada Limited (BlackRock Canada), an indirect, wholly-owned subsidiary of BlackRock, Inc. (BlackRock), announced today that it is lowering the annual management fees on three of its fixed income ETFs. These funds – the iShares Canadian Universe Bond Index ETF (XBB), iShares Canadian Short Term Bond Index ETF (XSB) and iShares Core Canadian Short Term Corporate + Maple Bond Index ETF (XSH) – will each have an annual management fee of 0.09% of such fund’s net asset value, effective as of May 19, 2017.
So I guess I'll just re-buy them a bit cheaper (in mer and price).

newguy

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