The Vanguard S&P 500 Index ETF (TSX:VFV) offers Canadian investors a seamless way to access the broad American market, providing exposure to 500 of the largest U.S. publicly traded companies through a single ticker. It has delivered consistent returns over the last decade by tracking the S&P 500 index, which is heavily weighted toward high-growth technology and consumer sectors. With a management expense ratio of just 0.09%, it stands as one of the most cost-effective instruments for building long-term wealth in a Canadian portfolio.
For investors seeking diversification beyond the financials and energy-heavy Canadian market, this ETF provides essential exposure to global leaders like Apple, Microsoft, and NVIDIA. The fund manages billions in assets, reflecting its popularity as a core holding for passive investors. Its unhedged nature means the value fluctuates with the Canadian-US exchange rate, which can actually boost returns when the Canadian dollar weakens relative to the greenback. This feature acts as a currency diversifier, protecting purchasing power in a portfolio that might otherwise be overly exposed to the loonie.
While the dividend yield is modest at roughly 1%, the primary allure remains capital appreciation. The ETF has weathered volatility to post strong gains historically, driven largely by the ongoing artificial intelligence boom and resilient U.S. consumer spending. By holding this ETF, investors effectively own a slice of the American economy, benefiting from the innovation and scale of global corporate giants without the complexity of managing individual foreign stocks.
This ETF is an ideal choice for long-term growth investors who want low-cost, diversified exposure to the U.S. market and are comfortable with currency fluctuations.
