Should You Invest in VEQT or VXC/VCN?

If you’re a Canadian investor and looking for a broadly diversified global equity index then Vanguard has two obvious options. One is the All-Equity ETF Portfolio (VEQT), the other is to buy both the Vanguard FTSE Global All Cap ex Canada Index (VXC) and the Vanguard FTSE Canada All Cap Index (VCN) to target the Canadian exposure.

Now VEQT has 30% of the fund invested in Canada. That may not seem like a lot if you’re a Canadian investor, but Canada only makes up around 3% of the global equity market. I sometimes joke that our stock market is a few banks, energy companies and Shopify.

I acknowledge that home bias has some reason to it. It can lower currency volatility and be more tax efficient, but in the end I’m just not sure if that means you should have a 10x overweight to Canada.

So if you’re like me then you can still use Vanguard ETFs and use VXC for your global equity exposure (excluding Canada) and then use VCN to target the Canadian equity exposure you’re more comfortable with.

If you’re interested in how I invest check out my portfolio update. I have simplified the portfolio a bit so I’ll put up a post on that shortly.