My ETFs

Welcome to my ETFs page.

This blog is about saving and investing my way beyond a $1 million investment portfolio. We will use indexed funds for growth in our semi-retirement plan. 

I believe owning low-cost ETFs can help your portfolio too. Read on. 

ETF Articles

Best ETFs for your TFSA

Best ETFs for your RRSP

Great low-cost all-in-one ETFs from Vanguard

Compare VEQT vs. XEQT vs. HRGO ETFs

Best All-in-One ETFs to own

Should you change your ETF strategy as you get older?

I’ve decided to build my own DIY Canadian Dividend ETF – read why here!

Top Dividend ETFs from Canada and the U.S.

 

Q&A with Mark: If you love dividends so much, why do you like using Exchange Traded Funds (ETFs)?

You’re right.

I do love dividends.

via GIPHY

That said, low-cost, diversified ETFs make sense to me/us for these reasons:

  1. To obtain near-market performance less minuscule money management fees.
  2. To obtain diversification beyond Canada.
  3. To set-and-forget part of our portfolio.

That simple.

 

Q&A with Mark: Do you have any favourite low-cost diversified ETFs?

I sure do!

I’ve sorted some of my favourite ETFs below. 

Canadian equity ETFs

Pick one of these funds and sleep easy for the Canadian portion of your portfolio.

ETFIndexMERMOA Comments
iShares Core S&P/TSX Capped Composite Index ETF (XIC)S&P/TSX Capped Composite Index0.06%Own all the major stocks in the Canadian market, >200 of them and ride their returns less minor fund fees.
iShares S&P/TSX 60 Index ETF (XIU)S&P/TSX 60 Index0.18%Own the biggest names in Canada, get consistent 3% yield + long term growth. Win-win and one of my personal favourites.
Vanguard FTSE Canada All Cap Index ETF (VCN)FTSE Canada All Cap Domestic Index 0.06%Exposure to small, medium and large cap stocks in the Canadian market, similar product to XIC but different provider of course.
BMO S&P TSX Capped Composite Index ETF (ZCN)S&P/TSX Capped Composite Index0.06%
BMO Low Volatility Canadian Equity ETF (ZLB) Uses smart beta/rules based approach0.39%Yes, higher MER but low-volatility fund for any defensive times. Think a better balance of financials, utilities, grocery stores/consumer staples and telcos as top holdings.  

You can read up about low-volatility funds and the rise of any smart beta investing approaches here.

U.S. equity ETFs

Pick one of these U.S. listed ETFs below for the U.S. dollar portion of your RRSP since that’s the most tax-efficient way to invest in the U.S. stock market. 

You can of course just buy a Canadian ETF that holds U.S. stocks or U.S. ETFs too. Very simple. 

ETFIndexMERMOA Comments
Remember with these U.S. listed ETFs below these do not have any 15% withholding taxes applied inside the RRSP, RRIF or LIRA!
Vanguard Total Stock Market ETF (VTI)CRSP US Total Market Index0.03%Own entire U.S. market in one fund, > 3,000 stocks! 
Vanguard S&P 500 ETF (VOO)S&P 500 Index0.03%Own the biggest (~500) stocks in the U.S.
iShares Core S&P 500 ETF (IVV)S&P 500 Index0.03%
iShares Core S&P Total U.S. Stock Market ETF (ITOT)S&P Total Market Index0.03%Similar to VTI, own the U.S. market, > 3,000 stocks including smaller cap stocks. 
Remember with these Canadian-listed ETFs below (that hold U.S. assets) withholding taxes will apply!
Vanguard U.S. Total Stock Market Index ETF (VUN)CRSP US Total Market Index0.16%Canadian equivalent of VTI.
Vanguard S&P 500 Index ETF (VFV)S&P 500 Index0.09%Canadian equivalent of VOO.
iShares Core S&P Total U.S. Stock Market Index ETF (XUU)S&P Total Market Index0.07%“A fund of funds” with mostly IVV and ITOT.
BMO S&P 500 Index ETF (ZSP)S&P 500 Index0.09%Another great Canadian fund to track the U.S. S&P 500 and avoid CDN <> USD $$ currency conversions. Also available in USD units (ZSP.U) and trades in USD on the TSX.

Check out my post about exchanging your Canadian to U.S. dollars for less using Norbert’s Gambit.

What about hedging?

Personally, I don’t like it. 

Read on for this great article when comparing Vanguard products VFV and VSP specifically.

“When investing internationally, investors should consider whether to hedge currency exposure. Through hedging, VSP seeks to eliminate the effects of changes in the foreign exchange rate, while the unhedged VFV allows for positive or negative returns from fluctuations in the value of the Canadian dollar.”

 

International equity ETFs

There are certainly a gazillion choices but these are my favourites:

ETFIndexMERMOA Comments
iShares Core MSCI EAFE IMI Index ETF (XEF)MSCI EAFE Investable Market Index0.22%Owns > 1,500 international stocks directly from mainly Europe, Asia and Australia developed markets.
Vanguard FTSE Emerging Markets All Cap Index ETF (VEE)Tracks FTSE Emerging Markets All Cap China A Inclusion Index (or any successor to)0.24%Invests primarily in the U.S.-domiciled Vanguard FTSE Emerging Markets ETF VWO.
Vanguard FTSE Developed All Cap ex-North America Index ETF (VIU)Tracks the FTSE Developed All Cap ex North America Index (or any successor to).0.22%More diversified than XEF, owns > 3,500 stocks.
Want diversification away from just the U.S.? Check out these ex-U.S. ETFs below
Vanguard Total International Stock ETF (VXUS) – U.S.-listed ETFFTSE Global All Cap ex US Index, which measures the investment return of stocks issued by companies located outside the United States.0.08%In one fund, own the world of stocks outside the U.S.
Vanguard FTSE Developed All Cap ex U.S. Index ETF (VDU)Tracks the FTSE Developed All Cap ex US Index (or any successor to).0.22%Owns >3,800 stocks outside the U.S.

 

Ex-Canada ETFs

Excellent idea! I believe there are two (2) low-cost ETFs in particular that can help you out:

ETFIndexMERMOA Comments
iShares Core MSCI All Country World ex Canada Index ETF (XAW)*MSCI ACWI ex Canada IMI Index0.22%· Global diversification, beyond Canada, in one fund and ideal for TFSA, RRSP/RRIF for long-term growth. *I/we own this ETF.
Vanguard FTSE Global All Cap ex Canada Index ETF (VXC)FTSE Global All Cap ex Canada China A Inclusion Index0.21%· Greater U.S. exposure than XAW.

 

All-in-One ETFs

Forget about rebalancing your portfolio. Pick one of these for all your investing needs.

There are some great all-in-one ETFs to consider owning:

All-in-one fundTickerRationale to Own
Vanguard All-Equity ETFVEQTLong-term investing time horizon for growth
Vanguard Growth ETF VGROA bias to growth over fixed income
Vanguard Balanced ETF VBALBalanced for growth and fixed income
iShares Core Equity ETF XEQTLong-term investing time horizon for growth
iShares Core Growth ETF XGROA bias to growth over fixed income
iShares Core Balanced ETF XBALBalanced for growth and fixed income
BMO Growth ETFZGROA bias to growth over fixed income
BMO Balanced ETFZBALBalanced for growth and fixed income
Horizons All-Equity ETFHEQTLong-term investing time horizon for growth (used to be HGRO)

This is a key post on that subject – I compared VEQT vs. XEQT vs. HGRO ETFs.

VEQT vs. XEQT vs. HGRO Equity ETFs

 

Q&A with Mark: Do you have any favourite dividend ETFs?

I sure do. 

Get cash for life using these top dividend ETFs.

Top Canadian dividend ETFs.

Top U.S. dividend ETFs.

Top International dividend ETFs.

 

Q&A with Mark: What do you own?

Well, given I own lots of Canadian stocks I have a few equity ETFs to invest beyond Canada’s borders. Namely:

  1. XAW for ex-Canada investing (including the U.S.)
  2. QQQ for a tech-growth kicker.

In owning these funds:

  1. I gain higher equity diversification beyond my basket of Canadian and some U.S. stocks.
  2. I can ride global equity returns using low-cost XAW
  3. I feel I can get the best returns from the U.S. market by owning QQQ since the S&P 500 has become dominated by tech stocks ~ 25%-30% sector weight. 

Notes:

QQQ or any U.S.-listed ETF for that matter won’t have foreign withholding taxes applied held inside your RRSP, RRIF, LIRA or LIF. So, consider owning it there if you do decide to buy it. Not tax advice, just some ideas. 🙂

XAW will also have some tax implications depending on asset location.

*Remember that foreign withholding taxes (*FWT) will apply to Canadian ETFs that own U.S. ETFs.

Additional costs are estimates only:

ETFCost – TFSACost – RRSPCost – Non-Reg
XAW0.53% (0.22% MER + 0.31%*)0.53% (0.22% MER + 0.31%*)0.26% (0.22% MER + 0.04%*)

 

 

Q&A with Mark: Can you share more about withholding tax considerations when it comes to ETFs?

Sure thing.

Be aware Canada has tax treaties with the U.S. and many other countries.  

Those tax treaties waive foreign withholding taxes on U.S. stocks or U.S. ETFs in registered accounts like RRSPs/RRIFs or LIRAs/LIFs.

TFSAs and assets held inside TFSAs don’t apply to these tax treaties. In a TFSA you must pay 15% withholding taxes on distributions earned owning a U.S. ETF or a U.S. stock.

Consider this older post on asset location to be tax efficient.

Let’s look at some examaples…

Own a U.S. ETF that holds stocks

iShares S&P 500 (IVV) or Vanguard Total Stock Market (VTI)

  • In a taxable account, US withholding taxes apply, but are recoverable.
  • In a TFSA, US withholding taxes apply and are not recoverable.
  • In an RRSP, US withholding taxes do not apply.

Own a Canadian ETF that holds a U.S.-listed ETF that holds U.S. stocks

iShares S&P 500 (XSP) or Vanguard MSCI U.S. Broad Market (VUS)

  • In a taxable account, US withholding taxes apply, but are recoverable.
  • In an RRSP or TFSA, US withholding taxes apply and are not recoverable.

 

Thanks for visiting and make sure you subscribe to my site for free newsletter content every week!

Comments are closed.