These two Canadian ETFs track Canada’s best-established indexes and provide low-fee exposure to widely traded blue chip stocks.
When you invest in ETFs, simpler is generally better. And each of these two Canadian ETFs provides a straightforward approach to investing in a selection of Canada’s top stocks.
These two Canadian ETFs hold mostly blue chip stocks traded on the Canadian exchange. Each of them tracks the performance of major stock market indexes as opposed to narrower ones focused on resources or themes, such as alternative energy or biotech.
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In addition, the low management fees of these Canadian ETFs give them a cost advantage over most mutual funds.
Two Canadian ETFs that are a buy
ISHARES S&P/TSX 60 INDEX ETF is a buy.The ETF (Toronto symbol XIU; buy or sell through brokers; ca.ishares.com) is a good low-fee way for you to buy the top companies listed on the TSX. Specifically, the fund’s holdings represent the S&P/TSX 60 Index. It focuses on the 60 largest, most heavily traded stocks on the exchange.
The ETF began trading on September 28, 1999. Investors pay an MER of just 0.18%. The units give you a 2.5% yield.
The S&P/TSX 60 Index mostly consists of high-quality companies. However, it must ensure that all sectors are represented, so it holds a few companies we would not include.
The quality of the ETF’s holdings should drive your future gains: its top stocks are Shopify, 8.9%; Royal Bank, 7.9%; TD Bank, 6.9%; Enbridge, 4.4%; Scotiabank, 4.3%; CN Rail, 4.1%; Brookfield Asset Management, 3.9%; Bank of Montreal, 3.6%; and CP Rail, 2.8%.
ISHARES S&P/TSX 60 INDEX ETF is a buy.
ISHARES CANADIAN SELECT DIVIDEND INDEX ETF is a buy. The ETF (Toronto symbol XDV; buy or sell through brokers; ca.ishares.com) holds 30 of the highest-yield Canadian stocks. The ETF also considers dividend growth and payout ratios to make its selections.
The weight of any one stock holding is limited to 10% of the fund’s assets. Its MER is 0.55%. The ETF, which began trading on September 28, 1999, yields a high 3.9%.
Most market indexes are set up for investors so that the stocks in the index are those with the highest market capitalization and are also the most widely traded. However, the iShares Canadian Select Dividend Index ETF focuses on the 30 stocks that it sees as having the highest dividend yields; it also considers their prospects for dividend growth and sustainability for investors.
That means this ETF is more actively managed than, say, the iShares S&P/TSX 60 Index ETF. As a result, you pay a higher MER.
The fund’s top holdings are CIBC at 8.5%; Canadian Tire, 6.7%; Labrador Iron Ore, 6.3%; Bank of Montreal, 6.3%; Royal Bank, 6.0%; TC Energy, 4.7%; BCE, 4.7%; Bank of Nova Scotia, 4.7%; and TD Bank, 4.3%.
iShares Canadian Select Dividend Index ETF is a buy.
Will you invest in these Canadian ETFs? Why or why not?
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These are great choices for any extra cash you may have on hand. Moderate risk, with a much better yield than bank accounts, GICs etc.
Following your advice on blue chip ETFs. Also advice re selling too soon is valuable.
Thanks for your feedback!