Canadian Index ETFs – XIU vs XIC

Tom Drake — Tue, 10 Mar 2009 10:00:28 +0000

When looking for an Exchange Traded Fund (ETF) that indexes Canadian equities, the two most suitable choices are from iShares.

The iShares CDN LargeCap 60 Index Fund (XIU) tracks the S&P/TSX 60 Index. This index is composed of S&P’s selection of 60 of the largest, most liquid stocks on the TSX. The Management Expense Ratio (MER) on this ETF is a very low 0.17%.

The iShares CDN Composite Index Fund (XIC) tracks the S&P/TSX Capped Composite Index. This index includes over 200 companies listed on the TSX. It’s MER is 0.25%.

I believe XIC is worth the extra 0.08% MER as is provides much more diversification, including some exposure to small cap stocks. Ultimately, either of these ETFs will provide a better return than the majority of actively managed funds, which are dragged down by higher MERs.

Money Sense

Tom Drake — Tue, 03 Feb 2009 18:00:13 +0000

Money Sense has been a very inspirational magazine to me. Whenever I find the latest magazine in my mailbox I stop whatever I’m currently reading to read it from cover to cover. Their articles cover everything related to your money, including leveraged investing, financial makeovers, real estate and rating stocks. They also have interesting articles on buying cars, surviving the current recession and rating the best places in Canada to live. One of the most eyeopening articles has been their Couch Potato strategy.

When I first read about the Couch Potato I realized how simple investing can and should be. The basic premise is that by investing in ETFs or TD’s eFunds you can build a portfolio that equals the various indexes, 20% in Canadian equities, 20% in US equities, 20% in international equities and 40% in Canadian bonds. All with management expense ratios (MER) under 0.5%. While you won’t do any better than the market, you also won’t do any worse, just average. This is better than it sounds since, as a whole, the market is the average, but in regular mutual funds you’re getting the average minus expenses that equal more than 2%.

I highly recommend that you have a look at Money Sense magazine.

Canadian Finance Blog » Asset Allocation

Canadian Index ETFs – XIU vs XIC

Money Sense