About VFV
For most Canadians who want simple, low-cost exposure to the US market, VFV is the easy button. It gives you the entire S&P 500 in one trade on the TSX, in Canadian dollars. Furthermore, it has an expense ratio that is around the bottom for Canadian-listed funds, currently with a management expense ratio (MER) of just 0.09%. And the ETF is doing quite well, with shares up nearly 13% year to date.
Moreover, it offers great liquidity, which keeps bid-ask spreads tight. Because the index is large and simple, VFV tends to closely track the index net of fees, and its size and Vanguard’s stewardship help keep trading and operational frictions low. In plain English: you reach the US market cheaply, reliably and without the hassle of currency conversions or US brokerage logistics.
How it works
VFV is not hedged against the US dollar, which is what many long-term Canadian investors prefer. Hedging can add costs and create tracking noise, while maintaining currency exposure gives you an additional source of diversification. Simply put, when the Canadian dollar weakens, often due to risk or commodity declines, the CAD returns of your US investments get a natural boost. This softens the blow to your home market portfolio and the purchasing power of the Canadian dollar. Over several years, that simplicity plus diversification has been a feature, not a bug.
It is also operationally clean. You buy and sell in CAD with any Canadian broker. You can easily set up a Dividend Reinvestment Plan (DRIP) and avoid foreign T1135 reporting that kicks in for large US listed positions. Additionally, the tax picture is what you would expect from a Canadian-listed US stock ETF. At fund level, US dividends are subject to a 15% withholding tax. In a tax-free savings account (TFSA), that barrier is irreparable (this also applies to colleagues). On taxable accounts you can usually claim a foreign tax credit, and on Registered Retirement Savings Plans (RRSP) VFV easily trades in CAD. But to be clear, a US-listed ETF can be more tax-efficient if you’re willing to convert currencies cost-effectively.
Silly takeaway
Compared to other TSX S&P 500 funds, VFV is consistently among the cheapest, most liquid choices, tracking the classic market-cap-weighted index that most investors want. Alternatives can make sense on the margins. But for a broad cross-section of Canadians who value cost, convenience and robustness, VFV achieves the best overall balance. In fact, this is what just $7,000 would make today from an investment in VFV, which currently yields a 0.93% return.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| VFV | $165.80 | 42 | $1.54 | $64.68 | Quarterly | $6,963.60 |
As always, check the latest MER, spreads and your account-specific tax considerations before purchasing. However, if you want the easiest and least frictional way to own America’s largest companies from a Canadian account, VFV is hard to beat.
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