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.

Related Posts:

• I Should Have Bought An Index Fund
• TD e-Series Funds
• Dividend Funds That Don’t Pay Dividends

Canadian Index ETFs – XIU vs XIC originally appeared on Canadian Finance Blog on March 10, 2009.

When I first read about the Couch Potato strategy 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.

Related Posts:

• Dividend Funds That Don’t Pay Dividends
• Turning Your Passion Into A Money Making Dream
• Book Review – Benjamin Graham On Investing

Money Sense originally appeared on Canadian Finance Blog on February 3, 2009.