One of the benefits of an ETF is that it offers you a lot of diversification, but in some cases, it might be too much. The Vanguard S&P 500 Index CAD HDGD ETF (TSX:VSP) allows you to mirror the S&P 500 by just buying one ETF. It has the biggest names that you’ll find on U.S. exchanges, including Apple Inc. (NASDAQ:AAPL), which makes up the largest chunk of the portfolio at over 4%. While the portfolio is a bit skewed toward tech stocks with that sector making up a quarter of the holdings, it also includes bank stocks like JPMorgan Chase & Co. (NYSE:JPM) and Bank of America Corp (NYSE:BAC).
There are many different segments that the ETF covers and it allows you to have a very balanced portfolio, one that will do a very good job of mirroring the market. With a miniscule 0.08% management expense ratio, you are also paying next to nothing for the management of this ETF.
The ETF has a lot of diversification and low fees, but what’s most important are its returns, and this is where investors might see a bit of a let down. While the fund has risen more than 10% in the past year, that is short of the 16% increase in value that the Dow Jones has seen. It’s also well short of the NASDAQ’s 19% returns.
While the S&P may offer investors some solid, stable returns, there are better options out there that can provide you with better growth while still offering a lot of diversification.
