A Magnificent ETF I’d Buy for Relative Safety

Markets love to test patience. One week, investors chase artificial intelligence (AI) winners. The next, everyone worries about rates, inflation, tariffs, or recession risk. That swing can make stock picking feel exhausting. So, for Canadians who want growth without leaning too hard on one company, Vanguard FTSE Global All Cap ex Canada Index ETF (TSX:VXC) looks like a magnificent ETF to consider for relative safety.

VXC

The keyword there is relative. VXC still owns stocks, so it can fall when global markets fall. It won’t protect investors like cash or guaranteed investment certificates (GICs). Yet it can reduce one big risk many Canadians carry without noticing: owning too much Canada.

Canada has great companies. But the TSX leans heavily toward banks, energy, materials, and a few industrial names. That concentration can work well in some markets. It can also leave investors underexposed to the world’s largest technology, healthcare, consumer, and industrial leaders. VXC helps fill that gap by investing outside Canada across developed and emerging markets.

That makes it relevant right now. The market remains narrow in many places, with large U.S. technology names still driving much of the global conversation. Instead of trying to guess which winner lasts, VXC gives investors exposure to thousands of companies in one fund. Its benchmark covers large, mid, and small-cap stocks outside Canada. That means investors get the United States, Europe, Japan, and emerging markets, without needing to build a complicated portfolio.

Numbers don’t lie

The fund’s latest Vanguard factsheet showed a management expense ratio (MER) of 0.22%, a management fee of 0.20%, and total net assets of about $3.23 billion as of Apr. 30, 2026. It also pays quarterly distributions and qualifies for tax-beneficial accounts and non-registered accounts. For a Tax-Free Savings Account (TFSA), the appeal is simple. Any growth can compound tax-free, and investors don’t need to chase the next hot stock to participate in global gains.

VXC isn’t a dividend machine. Yahoo Finance recently showed a yield near 1.3%, so income investors may prefer Canadian dividend ETFs or individual dividend stocks. But that’s not the main job here. VXC’s job is diversification and long-term growth. It can sit beside Canadian dividend holdings and give the portfolio a wider engine.

The recent performance also shows why investors notice it. It recently boasted a one-year return of 27% and five-year returns of 75%. Those numbers look excellent, but investors shouldn’t assume the next five years will match them. Strong past returns can pull future returns forward. If U.S. technology stocks cool, VXC could slow down fast.

Considerations

Currency also cuts both ways. VXC gives Canadians exposure to foreign currencies, especially the U.S. dollar. That can help when the Canadian dollar weakens, but it can also hurt when the loonie strengthens. Investors who want less currency movement may need a hedged product instead. Personally, for a long-term TFSA, I don’t mind some unhedged global exposure because it adds another layer of diversification.

The biggest risk is still market risk. VXC owns equities across the world, so a global bear market would hit it. It also excludes Canada, which means investors still need Canadian exposure elsewhere if they want a balanced home-country allocation.

For investors who already own Canadian banks, pipelines, utilities, and telecoms, it’s a solid building block. VXC can add the pieces missing at home, from global tech to healthcare to consumer brands. It keeps the portfolio broader without turning investing into another job, and easier to stick with when headlines get loud.

Bottom line

That’s why I like VXC for relative safety. It doesn’t promise safety from losses, but from overconfidence. Instead of betting everything on one sector, one country, or one stock, investors can own a broad slice of the global market. For Canadians building a TFSA meant to last for decades, that kind of simplicity can look magnificent.

The post A Magnificent ETF I’d Buy for Relative Safety appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has positions in Vanguard Ftse Global All Cap Ex Canada Index ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.