Confused between VFV and VOO? Here’s a clear breakdown of their differences. VFV is the Canadian equivalent of the popular Vanguard S&P 500 ETF (VOO), offered by Vanguard U.S., with both VFV and VOO tracking the S&P 500. An important difference between the two is that by investing in VFV, your investment may be subject to a 15% foreign withholding tax on the dividends as VFV is Canadian domiciled, meaning that it trades in CAD despite owning all US holdings.
An index fund is a type of mutual fund or exchange traded fund (ETF) that aims to mirror a particular market. Index funds contain a tiny piece of all the companies included in a particular market index (e.g., S&P 500 or the Dow Jones Industrial Average).
Index funds offer a great vehicle to diversify your holdings, as it spreads out your money across many companies in an index. Instead of placing all your eggs in one basket (one security), you spread them out across multiple baskets.
What is Vanguard?
Vanguard was founded by John Bogle in 1975 and that same year Vanguard launched the first index fund, which tracked the S&P 500. Today, Vanguard is the largest issuer of mutual funds in the world and the second-largest issuer of ETFs as well.
When you purchase VFV, which holds the U.S. ETF VOO, the CAD-USD exchange rate can impact the Canadian ETF’s value, beyond the underlying stocks’ price movement.
Why? Not all ETFs hedge against this currency difference. Hence, if the U.S. dollar strengthens, the ETF gains value, and vice versa. Fluctuations in the Canadian dollar can alter returns over time.
Should I Buy VFV or VOO?
Well, it depends!
If you prefer a lower MER and higher dividend yield, VOO may be the better option, but you will need to bear the currency conversion cost. Or, if you’re familiar with Norbert’s Gambit, you can convert funds without the currency conversion fees (click here to learn about Norbert’s Gambit). As a reminder, you will need to hold VOO in your RRSP to avoid the 15% withholding tax.
If you prefer straightforward and consistent investing, VFV might be the more accessible choice for the majority of investors.
To review the full details of VFV and VOO from Vanguard, click on either one.
Vanguard S&P 500 ETF (VOO) and Vanguard S&P 500 Index ETF (VFV) belong to the same industry segment: US Large Cap. Both ETFs have the same top 3 sector exposures: Information Technology, Health Care and Consumer Discretionary. VOO is less expensive with a Total Expense Ratio (TER) of 0.03%, versus 0.09% for VFV.
Confused between VFV and VOO? Here's a clear breakdown of their differences. VFV is the Canadian equivalent of the popular Vanguard S&P 500 ETF (VOO), offered by Vanguard U.S., with both VFV and VOO tracking the S&P 500.
Does it make sense to have both VTI and VOO? For most investors, it probably doesn't make sense to own both. VTI and VOO both provide great diversification at a low cost. However, you may find that your retirement plan at work doesn't offer a total stock market index fund like VTI.
With an average management expense ratio (MER) of 0.09% and collective assets under management (AUM) approaching $40 billion, exchange-traded funds like the Vanguard S&P 500 Index ETF (VFV), the BMO S&P 500 Index ETF (ZSP) and the iShares Core S&P 500 Index ETF (XUS) are some of the most cost-effective options for ...
While the two ETFs follow the same strategy, they earn different ratings. VOO earns a top rating of Gold, while SPY earns the next best rating of Silver. Almahasneh says the reason is fees and inefficiencies of the unit investment trust structure.
It does pay a dividend, because it contains blue-chip stocks that are often reliable dividend stocks. All of the Dividend Aristocrats, a set of companies that have raised their dividends at least once a year for at least 25 years, are S&P 500 members, and thus VOO has exposure to all of them.
VOO is also a low-cost index fund. VOO invests in the 500 largest U.S. public companies. Like VTI, VOO is often used as a core holding—meaning investors will allocate a large percentage of their overall portfolio to this fund. Let's review the strategy and key features that make VOO so popular.
Vanguard's Total Stock Market ETF (VTI) is similar to VOO in many ways, but the main difference is that it holds a much broader range of stocks. It follows the CRSP U.S. Total Market Index, which includes all the stocks in the S&P 500 plus over 3,000 additional stocks. This represents the entire U.S. stock market.
Despite potential risks like economic downturns and sector weight risks, VOO's diversified exposure to top companies mitigates single stock risks. Time in the market consistently outperforms timing the market; long-term investment in VOO is likely to yield positive returns despite short-term fluctuations.
Once you've enrolled, your distributions will automatically be reinvested into units purchased on the open market in the five business days following the distribution payment date.
VOO and VFIAX are both funds offered by Vanguard and they both seek to track the performance of the S&P 500, which is a market-cap-weighted index of the largest U.S. publicly traded companies. However, there are a few differences, including fees and the way they trade, that may make one a better choice over the other.
SPY is slightly more efficient in terms of withholding tax issues on US dividends, owning its securities directly instead of through another ETF as VFV is. Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV, SPY.
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