Vanguard FTSE Canada All Cap Index ETF (TSX:VCN) 2024 Review

VCN is one of my favourite Canadian equity ETFs. Here’s why.

| More on:
edit Person using calculator next to charts and graphs

Image source: Getty Images.

With the Canadian market featuring hundreds of exchange-traded fund (ETF) options, and even more when you consider those available in U.S. dollars, finding the right investment can seem like a challenge.

Yet, among the myriad choices, certain ETFs stand out for their straightforward appeal to investors, particularly beginners. One such ETF is Vanguard FTSE Canada All Cap Index ETF (TSX:VCN).

VCN is a go-to pick for several compelling reasons, earning its place as a top recommendation for those looking to invest in the Canadian market. As we look ahead in 2024, here’s what you need to know before considering VCN for your investment portfolio.

Why I like it: Low fees

One of the few aspects you can truly control when selecting ETFs is the cost associated with them, particularly the management expense ratio (MER).

The MER is a percentage cost that’s deducted from your investment annually, directly impacting your returns. VCN stands out in this regard, charging a mere 0.05% in MER.

To put this in perspective, for every $10,000 invested in VCN, you’re only paying $5 annually in fees. This rate is exceptionally low, especially within the Canadian ETF market, making VCN an absolute bargain.

Moreover, when you pair this with a zero-commission brokerage like Wealthsimple, the cost savings become even more pronounced.

Why I like it: Dividends!

As a total return investor, dividends aren’t my primary focus since any dividends I receive are immediately reinvested. However, I recognize the appeal of dividends, especially for beginners.

The psychological boost of seeing those quarterly payments arrive in your account can be a powerful motivator. It encourages investors to remain disciplined and hold onto their investments through market ups and downs.

VCN stands out not just for its low fees but also for its dividends. With a 12-month yield of 3.01%, VCN offers a compelling dividend payout that is distributed every quarter.

This consistent income stream can be particularly encouraging for new investors, providing tangible evidence of their investment’s performance and helping to foster a long-term investment mindset.

Why I like it: Diversification

While VCN might appear limited in geographical diversification, focusing solely on Canadian stocks, it excels in providing a broad spectrum of sector diversification.

Canada’s economy, known for its strength in financials and energy, naturally leads VCN to have significant allocations in these areas. However, the ETF doesn’t stop there; it also encompasses a healthy mix across industrials, materials, technology, consumer discretionary and staples, utilities, telecoms, and even real estate sectors.

With a total of 172 stocks within its portfolio, VCN offers a comprehensive overview of the Canadian market. Approximately 80% of these are large-cap stocks, reflecting the backbone of Canada’s economy, while the remaining 20% span mid- to small-cap companies, offering a glimpse into the broader, more nuanced aspects of the market.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks

Where to Invest Your $7,000 TFSA Contribution

Unsure of what to do with a $7,000 TFSA contribution? Stick it in this ETF and chill.

Read more »

Value for money

3 Canadian Value Stocks to Buy Right Now

These three value stocks are excellent to buy in this volatile environment.

Read more »

protect, safe, trust
Dividend Stocks

Income Investors: 2 Safe Dividend Stocks to Own for Passive Income for Years

Long-term passive-income stocks should ideally offer enough dividend growth to counteract inflation while preserving or growing your capital.

Read more »

Businessperson's Hand Putting Coin In Piggybank

New to Investing? 2 Easy Stocks to Start Building Wealth Today

Microsoft (NASDAQ:MSFT) and another great stock are perfect for new investors.

Read more »

analyze data
Dividend Stocks

The 1 Best Growth Stock on the TSX Today

Fairfax Financial Holdings (TSX:FFH) stock took a hit, but it's still a great growth play for the long-term.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Got $10,000? That’s All the Start-Up Funds You Need to Get Money for Doing Nothing 

Have you been delaying long-term investments for later? Investing money while you are working can help money work for you.

Read more »

data analyze research

The Best Stocks to Invest $20,000 in Right Now

These stocks have the potential to create substantial wealth for their shareholders in the long term.

Read more »

A man smiles while playing a video game.
Tech Stocks

3 Top Gaming Stocks to Buy in February

Gaming stocks range from physical gaming locations to companies making computer gaming hardware. Each has its strengths and weaknesses.

Read more »