Welcome to my ETFs page.
On this page I will share some popular articles about ETFs, how I use them, what some considerations might be for you.
Why do I like using Exchange Traded Funds (ETFs)?
- To obtain near-market performance less minuscule money management fees.
- To obtain great diversification (from companies and countries from around the world).
- To “set and forget” part of our portfolio.
What are my favourite low-cost diversified ETFs?
- Canadian equity
Any of these funds will give you access to a Canadian market that is largely ~30-40% financials and ~20% energy. Pick one of these funds and sleep easy for the Canadian portion of your portfolio.
- iShares XIC – MER 0.06%
- iShares XIU – MER 0.18% (one of my personal favourites for 3% yield AND long-term growth)
- Vanguard VCN – MER 0.06%
- BMO ZCN – MER 0.06%
- BMO ZLB – MER 0.39% (higher MER but a low-volatility fund for defensive times)
Want income from your portfolio? I do too! These are the top Canadian dividend ETFs.
- U.S. equity
U.S. listed ETFs inside the U.S. dollar portion of your RRSP are the most efficient way to invest in the U.S. stock market. Any of these funds will allow you to ride U.S. equity returns for decades to come.
Alternatively, you can invest in a Canadian-listed ETF that holds U.S. stocks as assets. You’ll pay a bit more (due to withholding taxes) but at least you won’t have to worry about Canadian to U.S. currency conversions. To gain more U.S. exposure in my RRSP I’m considering owning one of the following for long-term growth:
- U.S. Vanguard VTI – MER 0.03% (or own the Canadian equivalent VUN)
- U.S. iShares IVV – MER 0.04%
- U.S. Vanguard VOO – MER 0.04%
- Canadian iShares XUU (mostly a fund of funds including about 50% of IVV) – MER 0.07%
- Canadian Vanguard VFV (holds U.S. VOO) – MER 0.08%
- Canadian BMO ZSP – MER 0.09%
Admittedly there are more choices here as well but VXUS is hard to beat for an all-in-one ex-U.S. international fund at a very low cost. My other favourites in this space if you don’t want to deal with Canadian to U.S. currency conversions are:
- U.S. Vanguard VXUS – MER 0.11% (U.S. listed ETF)
- Canadian Vanguard VXC – MER 0.27% (ex-Canada ETF with > 10,000 stocks)
- Canadian iShares XAW – MER 0.22% (an all-world ex-Canada ETF with >7,000 stocks)
- Canadian iShares XEF – MER 0.22% (broad coverage of Europe and Asia with > 2,500 stocks)
- Canadian Vanguard VDU – MER 0.21% (ex-U.S. ETF)
What are my favourite low-cost dividend ETFs?
Want some income for today sprinkled with some long-term growth?
These are the top funds to consider in Canada, from the U.S. and from international markets:
- Top Canadian dividend ETFs
- Top U.S. dividend ETFs (disclosure: including Vanguard’s VYM that I own).
- Top International dividend ETFs
What is my ETF strategy?
After buying and holding about 30 Canadian dividend paying stocks and about 10 U.S. dividend paying stocks for income and growth – we focus on owning U.S.-listed ETFs in our RRSPs for extra diversification.
Why the RRSP? Why U.S.-listed ETFs in the RRSP specifically?
- I like income from my ETFs.
- I like growth from my ETFs.
- I like diversification beyond individual stock selection with my ETFs.
- The management fee for my low-cost ETFs is next to nothing. Example: If I own $10,000 of VYM for example (and I do), my money management fees are just $6 per year.
- We avoid withholding taxes of 15% using U.S. ETFs inside our RRSP. It’s worth reminding you foreign dividends are taxed at your marginal rate otherwise. Be aware Canada has tax treaties with the U.S. and many other countries. Those tax treaties waive withholding taxes on U.S. stocks or U.S. ETFs in registered accounts like RRSPs, RRIFs and Locked-In Retirement Accounts (LIRAs). TFSAs don’t apply to these tax treaties. In a TFSA you must pay 15% withholding taxes on distributions earned using a U.S. ETF like VYM.
Be tax smart where you can!
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