Over the years, my thoughts and strategy regarding investing has matured. At least I’d like to think so. It started to change after reading Millionaire Teacher by Andrew Hallam and has been evolving ever since, thanks to other books about index investing using Exchange Traded Funds (ETFs).
If you don’t already know, the statistical evidence is overwhelming; indexing your portfolio will beat the pants off most active money management funds over time. In recent years, I’ve been using more indexed funds myself although I still feel holding a diverse basket of dividend paying stocks remains a good way to invest for passive income. My investment strategy could be best described now as “getting more core” (using ETFs) along with holding my “explore” (using dividend stocks). I intend to index invest almost exclusively in my RRSP going forward.
On that theme, for today’s post, I thought I’d share what I consider some top equity ETFs for indexing fans. Be mindful these are considerations only and not recommendations for your portfolio. Your financial plan may lead you to different products for different reasons in various accounts.
- XIC or VCN or ZCN
Honourable mentions go to:
- XIU or VCE
- VTI:US (USD $$) or VUN or VFV or XUS
- VXUS:US (USD $$) or VDU or XEF
Now if you really want just a two-fund equity solution, pick your Canadian equity ETF above (XIC or VCN or ZCN) and pair it with VXC (an all-world ex-Canada ETF). Former dividend investor and indexing convert Robb Engen recently wrote about his two-fund solution here.
*For U.S.-listed equity ETFs like VTI and VXUS above you should consider owing these products in a U.S.-dollar RRSP. This is why:
- U.S.-listed ETFs like these held inside an RRSP escape withholding taxes of 15%.
- U.S.-listed ETFs like these trade in USD $$ so having a USD $$ RRSP minimizes foreign exchange charges and you can take advantage of currency fluctuations.
There are certainly more equity ETFs to consider but these ones are at the top of my list because of their low money management fees, diversification and the great companies that manage these fund products.
For further reading on indexing and potential products for your indexed portfolio check out Dan Bortolotti’s site Canadian Couch Potato. This is one of my favourite investing sites for many reasons. Bookmark it along with mine 😉
What are your top equity ETFs? Do you own any of the ETFs I mentioned above?