VWRL – The ETF with the best diversification?
VWRL: a term that you often see and hear. The Vanguard ETF is extremely popular among investors in the Netherlands. But what exactly is the VWRL ETF and why is this ETF so popular? You can read everything you need to know about the VWRL ETF in this blog!
What is VWRL?
VWRL is an abbreviation (ticker) of an ETF offered by the American asset manager Vanguard. The ETF has the full name: ‘ VANGUARD FTSE ALL-WORLD UCITS ETF’ . The idea with the VWRL ETF is that you can invest in the entire stock market worldwide with one transaction. The ETF follows the FTSE All-World index, this index tries to imitate the entire stock market and is traded in Amsterdam. By investing in a VWRL ETF you indirectly follow the entire world economy. The ISIN of the VWRL (traded on the Dutch stock exchange) is IE00B3RBWM25.
VWRL is one of the most popular ETFs among Dutch investors. This while the ETF has not existed for long, it was only founded on 22 May 2012. Nevertheless, it already has over 6.5 billion invested assets.
What makes VWRL so popular?
The VWRL ETF is one of the most popular, if not the most popular ETF among investors. Why? The ETF consists of more than 3,500 shares from almost 50 different countries. If you buy this ETF, you actually buy a very small part of all those companies. This gives an enormous spread and that is what makes this ETF so popular. Because with so many shares and countries, almost the entire global stock market is represented in your portfolio and that with just one transaction. The tracker focuses on a reflection of the entire global stock market. It therefore also focuses on established and emerging markets . The dividend payout is on average between 1.9% and 2%.
The ETF is particularly popular with passive investors. Keeping your portfolio diversified yourself is quite a bit of work. This ETF makes it easier to achieve diversification. It is also very popular among supporters of the FIRE community .
There are also other alternatives available, such as multiple ETFs that are globally spread. Why is VWRL chosen so much by Dutch investors? In short, VWRL is extremely popular due to the following characteristics:
- Huge distribution all over the world
- Low costs (also found in DEGIRO’s core selection)
- Traded in euros
Which shares (companies) are included in the VWRL?
The WRL consists (at the time of writing) of 3,732 stocks. The ETF is rebalanced twice a year, so this number may differ slightly in the future.
The top 10 stocks account for 15% of the invested capital of this ETF. See the table below for the top 10 stocks in the VRWL on May 18, 2022 (source: Morningstar):
| # | Company | Weighing |
|---|
| 1 | Apple Inc | 4,02% |
| 2 | Microsoft Corp | 3,46% |
| 3 | Amazon.com Inc | 2,11% |
| 4 | Tesla Inc | 1,34% |
| 5 | Alphabet Inc Class A | 1,25% |
| 6 | Alphabet Inc Class C | 1,15% |
| 7 | NVIDIA Corp | 0,97% |
| 8 | Meta Platforms Inc Class A | 0,77% |
| 9 | Taiwan Semiconductor Manufacturing Co Ltd | 0,75% |
| 10 | UnitedHealth Group Inc | 0,71% |
The table above shows the top ten companies that own the largest percentage in the ETF, be aware that there are thousands of companies in the ETF. The Top 10 companies do account for 15% and will therefore have more effect on the ETF price. These are very large companies worldwide that also have an effect on the economy, so the ETF tries to follow the world economy development.
In addition to the companies, it is also interesting to know how the ETF is divided in terms of countries, sectors and market capitalization.
Distribution within the VWRL
The VWRL ETF is considered one of the best diversified ETFs on the market. But how exactly is the diversification in the VWRL?
As you may have noticed above, the top 10 stocks in the ETF are mainly American companies. This is because the United States is a very large market (certainly economically).
| # | Region | % of VWRL assets |
|---|
| 1 | United States | 61,55% |
| 2 | Europe – developed | 12,41% |
| 3 | Japan | 6,09% |
| 4 | Asia emerging | 6,00% |
| 5 | Developed Asia | 4,46% |
| 6 | United Kingdom | 4,17% |
| 7 | Australasia | 2,31% |
| 8 | Africa/Middle East | 1,69% |
| 9 | Latin America | 1,18% |
| 10 | Europe – Emerging | 0,15% |
The largest part comes from the US, but Europe and Japan are also well represented. Furthermore, in addition to established countries, emerging markets are also included in the ETF.
If we look at the distribution on market capitalization, it can be said that the VWRL ETF mainly contains very large, large and medium-sized companies. The small and micro companies are almost completely excluded:
- Very large companies: 47.02%
- Large companies: 36.17%
- Medium-sized companies: 16.30%
- Small businesses: 0.27%
- Micro businesses: 0.01%
In addition, it is also interesting to know more about the distribution of the shares over different sectors. The technology sector is best represented. Real estate and utilities, on the other hand, the least. See below for the full distribution:
| # | Sector | % of VWRL assets |
|---|
| 1 | Technology | 19,94% |
| 2 | Financial services | 16,02% |
| 3 | Health care | 12,32% |
| 4 | Cyclical consumer goods | 10,80% |
| 5 | Industry | 9,78% |
| 6 | Communication services | 7,85% |
| 7 | Defensive consumer goods | 7,64% |
| 8 | Raw materials | 4,97% |
| 9 | Energy | 4,62% |
| 10 | Property | 3,10% |
| 11 | Utilities | 2,96% |
All in all, the VWRL can be described in two words: Global & Diversified. The ETF represents thousands of companies in dozens of countries in a variety of sectors and is therefore a very diversified investment.
How much dividend/yield VWRL 2022?
It is now clear what the VWRL is exactly, but what about returns. No one has a crystal ball, so we cannot say anything about future returns, but we can look at past performance. Note that historical performance does not offer guarantees for the future.
Since the ETF is still young (2012) there is not much historical data.
- 2015: 8,43%
- 2016: 11,23%
- 2017: 8,94%
- 2018: -4,67%
- 2019: 27,75%
- 2020: 6,32%
- 2021: 28,51%
- 2022: -4.97% (up to 30-04-2022)
Dividend VWRL
You also get dividends paid out with the VWRL. On average, this is around 2% per year. The ETF is a distributing ETF and therefore also pays out this dividend. This does differ per year.
Costs VWRL
In addition to returns, the ETF also has costs. In addition to the purchase costs (transaction costs) for the ETF, you also have annual costs. So costs are not immediately written off, but are included in the price of the ETF. The annual costs are 0.22%. The transaction costs depend on the broker you use to buy the ETF.
Does VWRL have dividend leakage?
Yes, the VWRL has a small dividend leakage. This can reduce your return somewhat. Read our article on dividend leakage in ETFs for more information.
Investing in the VWRL
Do you want to invest in the VWRL? Then you need a broker that offers ETFs. Check carefully whether this broker also offers the VWRL ETF and with what transaction costs. Use our comparator and broker reviews to help you make your choice!