Welcome to my ETFs page.
On this page I will share some popular articles about ETFs, how I use them, what some ETF investing considerations might be right 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?
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.|
Want income from your portfolio? I do too! These are the top Canadian dividend ETFs.
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:
*Remember, 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!|
|Vanguard S&P 500 ETF (VOO)||S&P 500 Index||0.03%||Own the biggest (~500) stocks in the U.S. and ride their collective returns including all the tech stocks.|
|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!|
|**Canadian-listed ETFs (that hold U.S. assets)
**Withholding taxes apply
|Vanguard U.S. Total Stock Market Index ETF (VUN)||CRSP US Total Market Index||0.16%||Canadian equivalent of VTI (invests primarily in the U.S.-domiciled Vanguard Total Stock Market ETF).|
|Vanguard S&P 500 Index ETF (VFV)||S&P 500 Index||0.09%||Canadian equivalent of VOO (invests primarily in the U.S.-domiciled Vanguard S&P 500 ETF.)|
|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; great for Canadian-listed access to the U.S. market
*(Disclosure – I own this fund.)
|BMO S&P 500 Index ETF (ZSP)||S&P 500 Index||0.09%||Another 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.|
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%
- 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:
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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