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Top Canadian Equity ETFs for your portfolio

ETFs

Back in April, I shared with you a list of my favourite Canadian dividend ETFs.  Today’s post will highlight some of my favourite Canadian equity ETFs for your portfolio.  Without further delay, here they are:

XIU

The iShares S&P/TSX 60 Index Fund (XIU) seeks to provide long-term capital growth by replicating, where possible, the performance of the S&P®/TSX® 60 Index less minor fees.  This Index is comprised of 60 of the largest (by market capitalization) and most liquid securities listed on the TSX.  You’re not going to receive huge yield with this ETF (just over 3% yield) but holding it should provide long-term capital appreciation.  At the time of this post, 10-year returns for XIU are close to 9%.  The Management Expense Ratio (MER) on this product is a slim 0.18% - to own the biggest 60 companies in Canada and avoid stock picking all together.

XIC

If you want a capped, low-cost, ETF that tracks the Canadian market, this is an excellent product.  The key benefit of XIC (over XIU above) is the built-in diversification, XIC owns 237 companies at the time of this post instead of 60.  More stocks and capping the securities though come with some additional costs.  The MER on this product is low but higher than XIU; 0.27%.  Still, this ETF is one of the best of the best.

CRQ

The iShares Canadian Fundamental Index Fund (CRQ) seeks to track, less fees the FTSE RAFI Canada Index which comprises those Canadian companies with the highest fundamental weightings.”  Yeah, pretty much right from the website.  In English, instead of a more pure indexed play; tracking the index by market size like XIC would, this ETF weights its holdings based on cash dividends, free cash flow and total sales.  So, there is a little more active management involved – and you’ll pay for that.  The MER on this product is 0.72%.  You can read a Globe and Mail article about fundamental indexes here.

VCE

Vanguard’s entrance into the Canada ETF marketplace has been a blessing for indexed investors, since Vanguard products are typically the lowest of the lot.  When investing, fees matter – because the money you pay in management fees is money you never keep for yourself.  Countless studies state active mutual fund management virtually has no hope in beating the market over many investment years, so if you’re in high-priced mutual funds still, be aware you’re losing some serious ground (and money) to the market by not investing with an indexed product instead.  Anyhow, the Vanguard Canada FTSE Index ETF (VCE) offers 78 companies at the time of this post for a dirt-cheap 0.11% MER.   The only downside to this product I see, the top-10 holdings comprise almost 45% of the assets of this fund.  So, as the top-10 holdings go so should your VCE ETF returns.

ZCN

Although iShares and Vanguard tend to take center stage when it comes to ETF publicity in Canada, Bank of Montreal’s suite of ETF products are worthy of consideration – and ZCN is in that list.  The BMO S&P/TSX Capped Composite Index ETF (ZCN) has been designed to replicate returns of the S&P/TSX Capped Composite Index less fees.  It does a very good job of that.  The MER is one of the lowest of the bunch, at 0.15%, to ride the stock market returns of 238 Canadian companies.

HXT

Horizons BetaPro has a neat and cheap product, the S&P/TSX 60 Index ETF (HXT).  Like XIU, it seeks to mirror the performance of the S&P/TSX 60 Index but in a different way.  While the MER is a microscopic 0.07%, HXT uses swap agreements to gain exposure to the index but the upside is, it will reinvest dividends paid.  I’m personally not into “swaps” or “derivatives” when it comes to my ETF products but I am a fan of reinvesting dividends, which HXT does, so HXT might have a fit in an investors’ portfolio if you’re looking for something beyond the plain vanilla products above at a super-low cost.  Not that vanilla is ever bad when it comes to Canadian equity ETFs…

Well, that’s my list, some of my favourite Canadian equity ETFs for your portfolio.  If you want to revisit why I invest in ETFs in the first place, including the XIU product above for my own portfolio, read on here.

What are your favourite Canadian equity ETFs?  Do you own any of these and if so, in what accounts?  Non-registered?  RRSP?  TFSA?  RESP?

Filed in: Exchange Traded Funds (ETFs)

9 Responses to "Top Canadian Equity ETFs for your portfolio"

  1. someguy72 says:

    the only etf I have is XIU and its in my TFSA. Having a pension and not knowing where to invest, most of my TFSA is in REITs.

  2. I think the Canadian market is small enough I don’t need to buy ETFs to track it ;-). Buy a few banks, telecoms and oil stocks and you have the TSX60, lol! If I was going to buy ETFs, it would be to replicate the US market.

    I use XDV to benchmark my Canadian portion of my portfolio (since it’s 100% invested in dividend stocks).

    • You’re probably right…but I think it would take about 20-30 CDN stocks to avoid holding an ETF like XIU.

      That said, you must be following my blog regularly :) I own a few banks, telcos, oil and energy stocks as well.

      I like your call using XDV to benchmark your CDN dividend stock portfolio.

  3. I don’t own any EFTs – my investing has started out just with retirement savings (TFSA, RRSP). I am looking at widening my investment portfolio but I’ll likely start with index or mutual funds.

  4. If I ever go below XDV for a while, I think I’ll sell my stock and resign ;-)

    Having said that, both my portfolio and watch list has been killing XDV for the past two years. Companies such as Andrew Peller and Black Diamond Group may be switched from my watchlist to my holdings ;-) @My Own Advisor

  5. Peter says:

    Hey Mark,

    I have not commented in a long time. Anyways, I thought that VCE has about 100 holdings? Also, if I have to choose a Canadian ETF to buy, I would definitely choose ZCN, because of its diversity and low fee.

    Thanks
    Peter

  1. […] year, I shared my favourite Canadian Exchange Traded Funds (ETFs) on this site along with some top U.S. and international considerations for your portfolio.   The ETF landscape […]

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