Exchange-traded funds (ETFs) are one of the most popular forms of investment products. They share characteristic features of both shares and mutual funds. Like stocks, ETFs are generally traded on major exchanges on a real-time basis with their price fluctuating throughout the day. And at the same time, like mutual funds, ETFs pool money from investors to invest in a basket of stocks, bonds, or commodities.
ETFs can be actively or passively managed. Actively managed ETFs are operated by a portfolio manager after carefully building a portfolio of stocks. Passively managed ETFs, on the other hand, only invest in companies listed on a market index.
Globally there are a few actively managed ETFs, as generally, most ETFs are passive funds that track an index. In fact, most of the biggest ETFs are passively managed ETFs. The major reasons for the popularity of these passively managed ETFs are trading flexibility, portfolio diversification, and risk management as well as lower costs.
A look at the VEQT ETF
In addition, if the ETF consists of equity stocks, investors stand a chance to build long-term wealth. One such all-equity passive ETF is Vanguard All-Equity ETF Portfolio (VEQT). Launched in January 2019, VEQT is a low-cost exchange-traded fund (ETF) by Vanguard Canada that seeks to provide long-term capital growth by investing nearly all its money in equity securities.
VEQT is made up of several different Vanguard ETFs – Vanguard US Total Market Index ETF(41.50%), Vanguard FTSE Canada All Cap Index ETF (30.10%), Vanguard FTSE Developed All Cap ex North America Index ETF (20.50%), and Vanguard FTSE Emerging Markets All Cap Index ETF (7.90%).
In total, VEQT holds more than 12,820 stocks in its portfolio. In this article, let’s look at in detail the top 5 stock holdings of VEQT and their business model.
Royal Bank of Canada
Royal Bank of Canada (RBC) is not only Canada’s largest financial institution but also one of the largest banks in the world, based on market capitalization. Back in 2017, the bank was named by the Swiss-based Financial Stability Board as one of the 20 most systemically important banks on the planet.
Royal Bank holds over $1.4 trillion in assets. It has a presence in 36 countries with a client base of over 17 million. Like any bank, the main source of revenue for RBC is lending to individual investors and institutions. Earnings from the capital-markets business (trade of financial securities like bonds, stocks, etc.) is also a major source of revenue for RBC apart from its lending business.
Apple has revolutionized personal technology since 1984 and today it leads the world in innovation with smartphones, personal computers, tablets, wearables, and accessories. Some of its main products include the iPhone, the Mac line of personal computers and laptops, iPad, Apple Watch, and Apple TV.
The company also has a fast-growing services business. Apple’s five software platforms – iOS, iPadOS, macOS, watchOS, and tvOS – aim to provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay, and iCloud.
iPhones are Apple’s biggest source of revenue by product, and the Americas is the largest revenue generator among its geographic regions. Asia is rapidly catching up with the US as the revenue generator. In Q1 FY 2021, markets in China, Japan, and Asia Pacific contributed 37% of operating income and 34% of revenue. That makes the Asia region dramatically more important than Europe to Apple for growth and profits.
Shopify Inc. is a platform that provides a vital service for many small and medium-sized businesses that are looking to establish and expand their presence in the e-commerce space.
In other words, the company’s software and products are designed to run a small to medium-sized e-commerce business as efficiently as possible.
There are a few different shapes and sizes to Shopify’s monthly packages, depending on the given needs of its customers. The two entry-level packages are the Basic and Standard plans. Advanced Shopify and Shopify Plus subscribers generate most of the gross merchandise volume sales.
Shopify’s other key offering is its merchant solutions, which include additional services such as Shopify Payments, Shopify Shipping, Shopify Capital, and Shopify POS. The merchant solutions part of the business has now started to generate more revenue for the company than its subscription offering.
Effectively, Shopify wants to become a one-stop solution for e-commerce, transactions, sales, and marketing-related issues. Everything Shopify does is with the aim of making customers more and more dependent on its services.
Microsoft is one the largest software companies in the world. Whenever anyone buys a new laptop of any brand like HP, DELL, ASUS, etc. the price paid for the laptop includes the OS (Operating System) price in it. This OS is pre-loaded (Windows OS). The Laptop companies pay Microsoft that amount whenever a laptop gets sold.
But that’s not the only source of income for Microsoft, which is one of the world’s leading tech companies. It offers a wide range of software products, services, and devices.
Software products, including OS for computing devices, servers, phones, and other intelligent devices as well as server applications for distributed computing environments, cross-device productivity applications, business solutions applications, desktop and server management tools, and software development tools.
Other Microsoft services include cloud-based solutions, consulting and product solution support services, training and certification services, etc.
Microsoft customers include individual consumers, organizations, OEMs (original equipment manufacturers), and application developers.
Headquartered in Toronto, Canada, the Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group (TD). TD offers a full range of financial products and services to over 26 million customers worldwide through three key business lines:
Canadian Retail – This Segment provides a range of financial products and services to customers in the Canadian personal and commercial banking businesses. Its subsidiaries include TD Canada Trust, Business Banking, TD Auto Finance (Canada), TD Wealth (Canada), TD Direct Investing and TD Insurance
U.S. Retail – This segment consists of the Bank’s retail and commercial banking operations operating under the brand TD Bank, and wealth management services in the United States.
The list of subsidiaries in this segment include TD Bank, America’s Most Convenient Bank, TD Auto Finance (U.S.), TD Wealth (U.S.) and TD’s investment in Schwab
Wholesale Banking – This segment provides a range of capital markets, investment banking, and corporate banking products and services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, and meeting the daily trading, funding and investment needs of its clients.