What is the XIU ETF?
The iShares S&P 500/TSX ETF (TSX:XIU) is professionally managed by Blackrock. The exchange-traded fund is a medium-risk investment opportunity that offers investors seeking long-term capital growth. It gives you exposure to blue-chip Canadian companies while providing investors with a forward yield of 2.62%. The XIU ETF is one of Canada’s largest and oldest exchange-traded funds (ETFs).
Some Key Facts:
- Inception Date: September 28, 1999
- Benchmark: S&P/TSX 60 Index
- Net Assets: CAD 11,245,651,075 (as of June 9th)
- MER: 0.18%
- Number of holding: 60
- Distribution Yield: 2.62%
- 12 months Trailing Yield: 2.59%
- Dividend Schedule: Quarterly
- P/E Ratio: 21.09%
- Risk: Medium rated
- Exchange: Toronto Stock exchange
Pros of XIU:
- Access to well-known Canadian corporations
- It is one of Canada’s most popular and liquid ETFs.
- It was the world’s first exchange-traded fund (ETF) when it began trading in 1990.
- Low-cost ETF
Cons of XIU:
- The top three industries account for almost 60% of the ETF’s total assets (financial, energy, and materials). It is not as diverse.
- Geographic variety is limited
- Equity-only ETF
Top 10 holdings
As an all-equity ETF, the XIU invests solely in equities that make up the S&P/TSX 60 Index. As previously stated, financial stocks are significantly weighted in the XIU, with Royal Bank of Canada placed first, Toronto-Dominion Bank in third place, while The Bank of Nova Scotia and the Bank of Montreal are ranked sixth and eighth, respectively.
It’s no surprise that Shopify Inc. is the second-largest holding of XIU with a weightage of 7.34%, owing to its tremendous stock returns in recent years.
The MER (management expense ratio) of XIU is 0.18%, which is lower than the MER of numerous other ETFs with comparable financial sector exposure. As a result, it’s a very low-cost ETF to consider adding to your portfolio.
Performance and return:
The XIU ETF aims to track the TSX and generates returns that are in line with the benchmark. It’s a fantastic way to illustrate the performance of the Canadian banking industry because of its huge financial sector exposure.
Diversification into other businesses, on the other hand, keeps it in line with the stock market. The fund focuses on the top 60 companies in Canada, that are diversified throughout different sectors of the economy, making it a medium-risk investment. It, however, gives investors no exposure to fixed-income assets, which might assist to balance out stock market volatility.
Should you add XIU to your portfolio?
We believe that the ETF iShares XIU could be a great investment to add to your portfolio. As a medium-risk investment item is it great if you are a cautious investor, though, the company’s all-equity exposure may be a cause for concern. Its concentration on the financial and technology sectors, as well as the fact that it is backed by established blue-chip Canadian stocks, make it a safe bet for long-term capital growth investors.