Welcome to my ETFs page.
This blog is about saving and investing my way beyond a $1 million portfolio and we use low-cost Exchange Traded Funds (ETFs) on our path to fund semi-retirement.
While I’m a dividend growth investor, I also invest in low-cost ETFs for extra diversification.
I believe owning ETFs can help your portfolio too.
Great low-cost all-in-one ETFs from Vanguard
Compare VEQT vs. XEQT vs. HRGO ETFs
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.
That said, low-cost, diversified ETFs make sense to me/us for these reasons:
- To obtain near-market performance less minuscule money management fees.
- To obtain great diversification (from companies and countries from around the world), including beyond Canada, and
- To set-and-forget part of our portfolio.
Mind you, not all ETFs are indexed funds and not all ETFs are worth owning. Read on!
Q&A with Mark: Do you have any favourite low-cost diversified ETFs?
I sure do!
Canadian equity ETFs
Any of these funds will give you access to a Canadian market that is typically dominated by financials and energy stocks. Pick one of these funds and sleep easy for the Canadian portion of your portfolio.
|iShares Core S&P/TSX Capped Composite Index ETF (XIC)||S&P/TSX Capped Composite Index||0.06%||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 Index||0.18%||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 Index||0.06%|
|BMO Low Volatility Canadian Equity ETF (ZLB)||Uses smart beta/rules based approach||0.39%||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
U.S. listed ETFs inside the U.S. dollar portion of your RRSP are the most tax-efficient way to invest in the U.S. stock market.
Alternatively, you can invest in a Canadian-listed ETF that holds U.S. stocks as assets.
|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 Index||0.03%||Own entire U.S. market in one fund, > 3,000 stocks! *I/we own it.|
|Vanguard S&P 500 ETF (VOO)||S&P 500 Index||0.03%||Own the biggest (~500) stocks in the U.S.|
|iShares Core S&P 500 ETF (IVV)||S&P 500 Index||0.03%|
|iShares Core S&P Total U.S. Stock Market ETF (ITOT)||S&P Total Market Index||0.03%||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 Index||0.16%||Canadian equivalent of VTI.|
|Vanguard S&P 500 Index ETF (VFV)||S&P 500 Index||0.09%||Canadian equivalent of VOO.|
|iShares Core S&P Total U.S. Stock Market Index ETF (XUU)||S&P Total Market Index||0.07%||“A fund of funds” with mostly IVV and ITOT.|
|BMO S&P 500 Index ETF (ZSP)||S&P 500 Index||0.09%||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?
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.”
Personally, I don’t mind the currency fluctuations and could live with them.
International equity ETFs
Admittedly there are more choices here as well but these are my favourites.
|iShares Core MSCI EAFE IMI Index ETF (XEF)||MSCI EAFE Investable Market Index||0.22%||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 ETF||FTSE 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.|
I believe there are two (2) low-cost ETFs in particular that can help you out:
|iShares Core MSCI All Country World ex Canada Index ETF (XAW)*||MSCI ACWI ex Canada IMI Index||0.22%||· 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 Index||0.21%||· Greater U.S. exposure than XAW.|
Either ETF is an outstanding choice for an all-equity growth component for your portfolio beyond Canada.
That’s why I own XAW.
This way I get:
- Built-in global equity diversification, beyond my Canadian stocks.
- A low-cost fund that is eligible for TFSAs, RRSPs/RRIFs, LIRAs/LIFs, and RESPs and taxable accounts.
- You can own XAW or any of these ETFs on your own, without an advisor, by managing your own brokerage account.
- You can set-and-forget part of your investment portfolio.
|ETF||Cost – TFSA||Cost – RRSP||Cost – Non-Reg|
|XAW||0.53% (0.22% MER + 0.31%*)||0.53% (0.22% MER + 0.31%*)||0.26% (0.22% MER + 0.04%*)|
*Remember that foreign withholding taxes (FWT) will apply to Canadian ETFs that own U.S. ETFs. Read on.
There are other ETFs to consider owning and I profiled some of the best of the best below:
|All-in-one fund||Ticker||Rationale to Own|
|Vanguard All-Equity ETF Portfolio||VEQT||Long-term investing time horizon for growth|
|Vanguard Growth ETF Portfolio||VGRO||A bias to growth over fixed income|
|Vanguard Balanced ETF Portfolio||VBAL||Balanced for growth and fixed income|
|iShares Core Equity ETF Portfolio||XEQT||Long-term investing time horizon for growth|
|iShares Core Growth ETF Portfolio||XGRO||A bias to growth over fixed income|
|iShares Core Balanced ETF Portfolio||XBAL||Balanced for growth and fixed income|
|BMO Growth ETF||ZGRO||A bias to growth over fixed income|
|BMO Balanced ETF||ZBAL||Balanced for growth and fixed income|
|Horizons Growth TRI ETF Portfolio||HGRO||Holds 6 Horizons’ 100% equity funds for global growth exposure|
This is a key post on that subject – I compared VEQT vs. XEQT vs. HGRO ETFs.
Q&A with Mark: Do you have any favourite dividend ETFs?
Get cash for life using these top dividend ETFs.
Top International dividend ETFs.
Q&A with Mark: What is your ETF strategy?
After buying and holding many Canadian and U.S. stocks for income we focus on owning a few ETFs to set-and-forget part of our portfolio.
We do this since we largely hold Canadian stocks in our taxable accounts and we desire diversification beyond Canadian borders in other accounts.
Q&A with Mark: Can you share some withholding tax considerations?
Before that, know that you and I can avoid foreign withholding taxes (FWT) of 15% using U.S. ETFs inside our RRSPs/RRIFs or LIRAs/LIFs.
It’s worth reminding you again that 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 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 asset location approach 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.
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