# XAW vs VXC



## Flash (Nov 25, 2014)

Any significant difference between XAW and VXC?

XAW seems to have a lower MER, and it's newer. They both seem to hold the same holdings weight by country (with a small difference being China altough VXC benchmark is the same as XAW at 2.3%). Another difference is XAW is actually holding 5 separate ETF's vs individually holding each (IVV,XEF,IEMG,IJH,IJR) security like VXC.

So any distinct difference why I should hold one over the other, like tax withholdings, etc?

Unfortunately both are so new they don't really have a good track record of past performance (in terms of length not actual performance). Using google finance, looks like XAW outperformed a bit, but I don't think google takes into consideration distribtion, MER, etc, just the base price of each unit. It has XAW at 0.71% yield and VXC at 1.7% yield. Looking on their respective websites, VXC reports 1.8%, XAW reports 1.53%. XAW distribution is also semi-anually, vs VXC quaterly distribution


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## Moneytoo (Mar 26, 2014)

I went with XAW in my TFSA partially because I already had IEMG (lowest cost emerging markets ETF) and XEF (which holds stocks directly, so is more tax efficient) in my RRSP.


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## GoldStone (Mar 6, 2011)

Flash said:


> Another difference is XAW is actually holding 5 separate ETF's vs individually holding each (IVV,XEF,IEMG,IJH,IJR) security like VXC.


VXC doesn't own stocks directly. It invests in US domiciled Vanguard ETFs. The holdings you see on the Vanguard Canada site are the holdings of underlying US ETFs.


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## Flash (Nov 25, 2014)

GoldStone said:


> VXC doesn't own stocks directly. It invests in US domiciled Vanguard ETFs. The holdings you see on the Vanguard Canada site are the holdings of underlying US ETFs.


Ok so then both XAW and VXC are holding underlying US ETF's for US and the world ex canada.

Still wondering if there is any fundamental advantage owing one over the other, probably in terms of tax and stuff. I guess I can wait until the end of the year and see how the semi-anual performance looks for XAW and compare it with VXC and go from there in terms of overall performance. But any other details I should be aware of before diving into one of them?


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## Rhaegar (Feb 21, 2014)

Flash said:


> Ok so then both XAW and VXC are holding underlying US ETF's for US and the world ex canada.
> 
> Still wondering if there is any fundamental advantage owing one over the other, probably in terms of tax and stuff. I guess I can wait until the end of the year and see how the semi-anual performance looks for XAW and compare it with VXC and go from there in terms of overall performance. But any other details I should be aware of before diving into one of them?


They are both tracking the same index holdings so not really. Lower MER would matter but they are both very similar.


Liquidity can be an issue with newer funds. XAW for example is newer and has a much smaller market cap, and the bid/ask is probably wider on it.

Also as a fund is new and growing the dividend payout can be inconsistent. You aren't losing money or anything, but XAW for example will probably take a while before it settles into a regular dividend payout. iShares usually goes for a smoothing approach where the dividend is the same every time, but you'll notice XAW has only paid one dividend and the info on the ishares site doesn't even say whether the dividend will be monthly or quarterly and there's no way of knowing exactly what the payout amounts will be or when they will get on a regular schedule.


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## cn_habs (Oct 27, 2015)

Rhaegar said:


> They are both tracking the same index holdings so not really. Lower MER would matter but they are both very similar.
> 
> 
> Liquidity can be an issue with newer funds. XAW for example is newer and has a much smaller market cap, and *the bid/ask is probably wider on it.*
> ...


iShares does has the responsibility to reduce that spread and the underlying assets of XAW are liquid the last time I checked. 

The dividend payout is twice a year too so it may not suit someone needing regular withdrawals for example.


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## mf4361 (Apr 11, 2015)

- XAW has slightly lower MER
- XAW holds XEF, which directly holds foreign stocks in Canada and hence has lower withholding tax
- VXC has lower spread and larger daily volume


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## Rhaegar (Feb 21, 2014)

cn_habs said:


> iShares does has the responsibility to reduce that spread and the underlying assets of XAW are liquid the last time I checked.
> 
> The dividend payout is twice a year too so it may not suit someone needing regular withdrawals for example.


Of course, and I'm sure in a matter of time as they attract more money to the fund the liquidity and spreads will become a non issue.


I actually kind of like twice a year distributions as it makes Drip's a lot easier in smaller accounts. It's hard to find many etfs anymore that even do quarterly, especially from ishares who really like their tiny but consistent monthly distributions. If XAW really is twice a year (still doesn't say that on the ishares site) I'll probably look at it over VXC


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## Flash (Nov 25, 2014)

Rhaegar said:


> Of course, and I'm sure in a matter of time as they attract more money to the fund the liquidity and spreads will become a non issue.
> 
> 
> I actually kind of like twice a year distributions as it makes Drip's a lot easier in smaller accounts. It's hard to find many etfs anymore that even do quarterly, especially from ishares who really like their tiny but consistent monthly distributions. If XAW really is twice a year (still doesn't say that on the ishares site) I'll probably look at it over VXC


VXC is quaterly as per their website (


> Dividend schedule : Quarterly


XAW is semi-anually, as per their website


> Distribution Frequency Semi-Annual


Personally I like a more often distribution as it keeps the flow going more nicely. XIC is quaterly as is VCN.



mf4361 said:


> - XAW has slightly lower MER
> - XAW holds XEF, which directly holds foreign stocks in Canada and hence has lower withholding tax
> - VXC has lower spread and larger daily volume


So then with XAW you are taxed more favorably then? That means the distribution should be slightly more advantageous if both track the same holdings. Also slightly lower MER if again they track the same holdings and the underlying performance is suppose to be the same.

Correct?


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## AltaRed (Jun 8, 2009)

XAW would/should be better longer term. It wil just take awhile to build its asset base as occurs with all new ETFs. Best to buy with a limit order until it is well established and trading at higher volumes.


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## mf4361 (Apr 11, 2015)

Flash said:


> VXC is quaterly as per their website (
> So then with XAW you are taxed more favorably then? That means the distribution should be slightly more advantageous if both track the same holdings. Also slightly lower MER if again they track the same holdings and the underlying performance is suppose to be the same.
> 
> Correct?



In theory, yes. I don't know how much saving you are getting, probably small enough to ignore unless you have 10000 shares of it. You'd offset it in the bid/ask spread.


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## Flash (Nov 25, 2014)

Curious. Why does google finance shows XAW yield at 0.78% and VXC at 1.78%? Is it because google finance does not take into consideration distribution? According on each webpage, XAW has a yield of 1.55% and VXC one of 2.56%

Since XAW and VXC contain mostly the same underlying securities, any reason why VXC yield is 1% higher? If the price per share stays similar between the 2 in terms of percentage (as it shows on google finance presumably without taking into consideration distributions), wouldn't that mean the total return of VXC is higher considering the +1% yield?


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## GoldStone (Mar 6, 2011)

Ignore Google Finance, Yahoo Finance, et al. They often show garbage data. Always go to the source, i.e. ETF providers' web sites.

XAW number is easy to reverse-engineer. Google shows 16c dividend payment on Jun 17. Divide 16c by today's close, you get 0.78% yield. Google annualized one dividend payment. LOL.

VXC number is harder to explain. Google doesn't show any dividend payments.


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## mf4361 (Apr 11, 2015)

Let's not be too harsh on Google finance/Yahoo finance. They are a bunch of computer codes that takes in information and spit out plotted data. But yes XAW's "low" yield is simply because we don't have a full year of distribution to calculate it. So always be careful of misleading data when reading these charts.


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## Flash (Nov 25, 2014)

Good to know. But since VXC yield is +1% (altough they seem to be holding mostly the same securities), if both perform similarly (the price/unit), would VXC provide a bigger return?


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## GoldStone (Mar 6, 2011)

+1% is wrong. Double-check your yield numbers.


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## Flash (Nov 25, 2014)

This is weird. I swear I've seen VXC at 2.56%. Now it's down to 1.77%. Vanguard also reports trailing.


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## fisher14 (Jan 30, 2013)

I'm also looking to add one of the two ETFs. Flash, did you end up buying into Xaw?


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## larry81 (Nov 22, 2010)

Have you all considered VUN/VIU/VEE combo ?

+ Diversification: VXC has 8,953 holdings vs 10,666 for VUN/VIU/VEE
+ Tax optimization: VXC hold US ETF's, VIU hold stocks directly, you save a level of tax for international holding (between 0.30% - 0.40%)
+ Lower MER: VUN/VIU/VEE would result in a slightly lower MER vs VXC
- Complexity: 3 ETF's instead of 1


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## fisher14 (Jan 30, 2013)

You make very valid points...I think I may just forget XAW and go with the 3 vanguard fund strategy. One thing that stands out to me is trading volume. It's fairly low for one of those ETFs, is that something to be worried about?


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## larry81 (Nov 22, 2010)

fisher14 said:


> You make very valid points...I think I may just forget XAW and go with the 3 vanguard fund strategy. One thing that stands out to me is trading volume. It's fairly low for one of those ETFs, is that something to be worried about?


You are probably referring to VIU which was launched just a couple week's ago. Just make sure you use Limit order when purchasing and there will be no problem.


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## Rising Tide (Jun 5, 2019)

This isn't super new but I saw that VXC's MER was just lowered to .20% and it sounds like they will also be changing some structure to help with withholding taxes, probably to bring it closer in line with XAW.

Anyways, it should bring the two closer in total cost comparison.

https://www.vanguardcanada.ca/indiv...mentary/etf-information/vxc-fee-reduction.htm


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