The iShares Core S & P / TSX Capped Composite Index (XIC) ETF is a low cost ETF. This ETF offers exposure to a broadly diversified portfolio of Canadian stocks. It tracks the performance of the S & P / TSX Capped Composite Index minus costs.
The ETF represents approximately 95% of the Canadian stock market.
Benefits of iShares XIC ETF
- It is a low-cost ETF.
- It seeks long-term capital growth.
- XIC offers exposure to diversified Canadian stocks, including small, medium and large companies from all manufacturing sectors.
- It is designed as a core long-term position comprised of the most liquid and traded Canadian stocks.
- Thorough and balanced diversification offers greater stability.
Disadvantages of iShares XIC ETF
- It is an all-equity fund and does not offer exposure to any other asset class.
iShares XGRO ETF facts
- Starting time: February 16, 2001
- Benchmark: S & P / TSX Capped Composite Index
- Net worth: $ 7,991 million
- MER: 0.06%
- Distribution income: 2.63%
- Dividend plan: Quarterly
iShares XIC ETF MER – management expense ratio
The management fee is very low at 0.05% and the MER is also low at 0.06%. The contemporaries HXCN ETF and ZCN ETF have a MER of 0.05% and 0.06%, respectively. XIU has a MER of 0.18%.
The MER is what Blackrock needs to run the fund. It’s much cheaper than mutual funds and, in some cases, cheaper than investing on your own.
Mutual funds can charge over 2% and rob you of your returns. It’s time to ditch your mutual funds and switch to ETFs as soon as possible. Many brokers like Questrade offer free ETFs.
iShares XIC ETF performance
With more than 250 Canadian companies as core holdings, the company has done a good job tracking the TSX index over the past five years.
The iShares XIC ETF’s annual return since inception is 6.82%, which is lower than the return of XIU over 7%. However, the S & P500 still beat it. Why leave the extra retun on the table when you can get it.
Take your TFSA account as an example. The rules are the same for everyone and I mean everyone. Ultimately, growth is a factor in your investment performance, provided you meet your TFSA contribution limit each year. The annual performance of an ETF is important as you can see from the 20+ year growth below.
|1||2009||5,000||5,000||5,250||5,500||Not pursued||Not started|
|2||2010||5,000||10,000||10,762||11,550||Not pursued||Not started|
|3rd||2011||5,000||15,000||16,550||18.205||Not pursued||Not started|
|4th||2012||5,000||20,000||22,628||25,525||Not pursued||Not started|
|5||2013||5,500||25,500||29,534||34,128||$ 41,742||Not started|
|6th||2014||5,500||31,000||36,786||43,590||$ 52,820||Not started|
|7th||2015||10,000||41,000||49.125||58.949||$ 56,307||Not started|
|8th||2016||5,500||46,500||57,356||70,984||$ 70,200||Not started|
|9||2017||5,500||52,000||65,999||84.034||$ 78,900||$ 13,308|
|10||2018||5,500||57,500||75,074||98,487||$ 96,937||$ 58,818|
iShares XIC ETF holdings
The weighting ratio may fluctuate each month at the discretion of the fund manager in accordance with the fund objective. It holds approximately 250 stocks that are traded on the TSX.
The XIC ETF is a great way to invest in the top companies listed on the TSX. The Royal Bank of Canada is the most significant holding with a weighting of more than 6%, followed by Shopify with an allocation of ~ 6%. Toronto Dominion is its third largest holding and represents more than 5% of iShares XIC’s fund allocation.
XIC’s top 10 holdings are identical to XIU ETF, holding four of the Big Five banks, two energy stocks, two railroad stocks, and Shopify. These holdings make up around 38% of the ETF. Compare this to the 48% of XIU.
Why hold iShares XIC ETF?
XIC is an ideal ETF for investors who are looking for growth solutions, who want to hold investments for the medium to long term and who are familiar with medium risk.
It’s a great way to track the performance of the largest (by market capitalization) and most liquid stocks listed on the TSX. This ETF not only offers good dividends, but also offers good and more balanced diversification and stability in the face of market volatility. It also reduces the risk of concentration.
You basically have the choice between XIC, XIU and VFV. The XIU ETF has a small advantage over XIC, but VFV shines. I am voting to stick with an S&P500 ETF like VFV.
If you want the dividends, it’s not clear you’re getting the same growth, but the best banks and the best utility stocks will bring you more income.