Why is vfv going down

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Last updated: April 8, 2026

Quick Answer: VFV (Vanguard S&P 500 Index ETF) has experienced declines primarily due to broader market downturns affecting the S&P 500 index it tracks. For example, in 2022, the S&P 500 fell 19.4% due to inflation concerns and interest rate hikes by the Federal Reserve. As of October 2023, VFV's price dropped approximately 15% year-to-date, reflecting ongoing economic uncertainties. These declines are typical for index ETFs during bear markets, as they mirror the performance of their underlying assets.

Key Facts

VFV tracks the S&P 500 index, which fell 19.4% in 2022
In 2023, VFV declined about 15% year-to-date as of October
The Federal Reserve raised interest rates multiple times in 2022-2023 to combat inflation
VFV's assets under management exceeded $10 billion CAD as of 2023
VFV has an expense ratio of 0.09%, making it a low-cost ETF option

Overview

VFV is the ticker symbol for the Vanguard S&P 500 Index ETF, a Canadian exchange-traded fund that tracks the performance of the S&P 500 index. Launched in November 2012 by Vanguard Investments Canada Inc., VFV provides Canadian investors with exposure to 500 of the largest U.S. companies, including technology giants like Apple, Microsoft, and Amazon. The fund has grown significantly since inception, with assets under management surpassing $10 billion CAD by 2023. VFV trades on the Toronto Stock Exchange in Canadian dollars, though it holds U.S. securities, making it subject to currency fluctuations between CAD and USD. Historically, VFV has delivered strong returns, with an average annual return of approximately 14% from 2013 to 2021, but like all equity investments, it experiences periodic declines during market downturns.

How It Works

VFV operates as a passively managed ETF that aims to replicate the performance of the S&P 500 index by holding all 500 constituent stocks in proportion to their market capitalization. This indexing approach minimizes costs, with VFV charging a low management expense ratio (MER) of 0.09%. The fund uses a sampling strategy to track the index efficiently, holding a representative portfolio that matches the index's characteristics. When the S&P 500 declines due to factors like economic recessions, inflation spikes, or geopolitical events, VFV's value drops correspondingly. For instance, in 2022, high inflation led the Federal Reserve to raise interest rates aggressively, increasing borrowing costs and reducing corporate profits, which caused the S&P 500 to fall 19.4% and VFV to decline similarly. The ETF's price is determined by market demand on the TSX, but it closely follows the net asset value (NAV) of its underlying U.S. holdings.

Why It Matters

VFV's performance matters because it serves as a key investment vehicle for Canadians seeking diversified exposure to the U.S. stock market, which represents about 60% of global equity capitalization. Declines in VFV can impact retirement portfolios, education savings plans, and other long-term investments, highlighting the importance of understanding market cycles. For example, the 2022-2023 downturn reminded investors of the risks associated with equity ETFs during economic uncertainty. However, VFV's low costs and broad diversification make it a popular choice for building wealth over time, with historical data showing recovery after past declines. Monitoring VFV's trends helps investors make informed decisions about asset allocation and risk management in a globalized economy.