Canada’s top 3 ETFs of the decade

These funds earned gold through simple index investing – with one in the double-digits through an added currency hedge

Andrew Willis 30 December, 2019 | 1:45AM
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Andrew Willis: We like ETFs for their ease of access, cost-efficiency – and performance. Looking back at the last decade, we’ve found that even if you’re only tracking the market, when you consider how low the fees can go, you get some gold-rated returns.

First up, with exposure to the entire Canadian stock market, at a rock-bottom 0.05% in fees, we have the BMO S&P/TSX Capped Composite ETF (ZCN) with a ten-year annualized return of 6.26%.

This market-cap-weighted fund can help control risk – as larger stocks tend to be better established and less volatile. While this fund won’t be topping the leaderboards in the short term, its cost advantage will give it a long-term edge.

Next up, with exposure to a majority of the Canadian market costing only 0.06% in fees, we have the iShares Core S&P/TSX Capped Composite ETF (XIC) with a ten-year annualized return of 6.83%.

This fund also took a cap-weighted approach which helps to mitigate turnover and trading costs. Its process pillar earned a positive rating as stocks are selected by their representation on the index – along with an additional committee review of final selections.

Finally, we have a Canadian-dollar hedged index-trading solution, at a fee of only 0.11%. iShares again took a top spot with its Hedged Core S&P 500 ETF (XSP) returning an impressive 12.24% over a ten-year period.

This fund is a great option for diversified exposure U.S. large-cap stocks while mitigating currency fluctuation risk. This ETF keeps costs down by leveraging Blackrock’s portfolio-management infrastructure and investing directly in its U.S.-listed S&P 500 ETF equivalent.

Now, these three ETFs are only among a relative few considering the exponential growth in other ETF offerings that followed since their inception. However, it is safe to say that these ETF stars of the last decade have proven that investment products offering convenience and low-cost certainly need not come with opportunity lost.

For Morningstar, I’m Andrew Willis


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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
BMO S&P/TSX Capped Composite ETF29.93 CAD0.49Rating
iShares Core S&P 500 ETF (CAD-Hedged)55.65 CAD0.65Rating
iShares Core S&P/TSX Capped Compost ETF35.65 CAD0.48Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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