Looking Back at 2025
The Vanguard S&P 500 Fund (VFV.TO) returned 11.48 percent over the past year in Canadian dollars. I look at that as a benchmark on which to judge my performance, although that might not be fair. I was hoping to achieve good annual returns without having the risk of a full investment in the stock market.
My own portfolio returned 11.51 percent in the same currency. So overall, I am fairly satisfied that I didn’t underperform the market.
However, all the work I did holding other funds was for nothing. I could have just bought VFV as my only investment and gotten the same result. I didn’t outperform the market. But that strategy would go against my goals.
One of the weirdest things to me is that VUAA (which is an S&P 500 index fund in Europe) did not perform well. It returned 3% for the year (in Euros). Or 7% in Canadian dollars.
So how can the actual S&P 500 do well in US Dollars, OK in Canadian dollars, and so badly in Euros?
The problem is that the Euro strengthened so much against the US dollar. The Euro gained about 13% in 2025.
And most of that happened between January and May, during Trump’s experiment with tariffs.
According to ChatGPT:
The S&P 500 had a strong year in USD, but a weak US dollar erased most of those gains for euro-based investors holding unhedged ETFs like VUAA.
VUAA is 19.8% of my stock holdings.
Another weak performer is VWCE (Vanguard FTSE All-World UCITS ETF).
VWCE is an all-world fund, but it only returned 5% in Euros.
According to ChatGPT:
VWCE’s lower EUR return in 2025 reflects a weaker USD vs EUR plus broader global equity performance, not underperformance of the underlying holdings relative to the S&P 500 measured in USD.
Unfortunately for me, VWCE is about 11.5% of my holdings.
VFV.TO is my third-largest holding at 11.5%.
So I can be pleased that my top holdings are all well-diversified ETFS like VUAA, VWCE, and VFV.
For next year, I am not entirely sure what I want to do. I do have a lot of cash (in absolute dollar terms), but I am not keen to throw it into the market. I picked up a money market fund earning a bit of interest until an opportunity arises.
