iShares XEG ETF Review 2022: Invest in Canadian Energy

Looking to invest in Canadian energy?

One of the easiest ways to do so without picking your own stocks is using by using an ETF.

This iShares XEG ETF review will show you if this energy investment will be the right fit.

Our Verdict
IShares XEG ETF Review 2021
6/10Our Score

iShares S&P/TSX

All-Equity Exchange-Traded Fund

BlackRock iShares XEG is an all-equity exchange-traded fund (ETF) that provides you with exposure to Canadian oil and gas companies trading on the Toronto Stock Exchange (TSX).

Pros
  • Targeted exposure to companies in Canada’s energy sector
  • Well diversified
Cons
  • Can find other energy ETFs with lower MERs

What Is iShares XEG ETF?

BlackRock iShares XEG ETF tracks the S&P/TSX Capped Energy Index.

Launched on March 19, 2001, the index follows the publicly-traded Canadian companies’ performance in the Toronto Stock Exchange’s (TSX) massive oil and gas industry.

iShares XEG ETF is classified as a high-risk investment.

XEG.TO is currently trading at close to $14.77.

XEG Key Facts

As of June 30, 2022:

  • Ticker Symbol: XEG.TO
  • Exchange: Toronto Stock Exchange
  • Assets Under Management: $2.15 Billion
  • MER: 0.61%
  • 12-Month Trailing Yield: 1.91%
  • Currency Traded: CAD
  • Registered Accounts Availability: Yes

iShares XEG ETF MER and Fees

iShares XEG has a Management Expense Ratio (MER) of 0.61%, which is considerably higher than several other ETFs. 

However, its MER is significantly lower than mutual fund products that provide investors with similar features and benefits.

iShares XEG ETF Dividend Yield

iShares XIU’s dividend yield as of July 14, 2022:

  • 12-month trailing yield: 2.15%
  • Distribution yield: 3.26%
  • Dividend schedule: Quarterly

iShares XEG ETF Performance and Returns

Here is the growth of a hypothetical $10,000 since the inception of iShares XEG:

As of June 30, 2022:

 1y3y5y10yIncept.
Total Return (%) 67.4921.938.942.375.85
Benchmark (%) 68.7022.439.462.916.43
Source: Blackrock.com

What Does BlackRock iShares XEG ETF Invest In?

iShares XEG ETF invests in 14 publicly-traded energy companies, which aims to reflect the Canadian energy industry’s performance overall.

iShares XEG ETF Asset Allocation

As of July 14, 2022, iShares XEG ETF has allocated 99.92% of its funds to equity securities. It holds the remaining 0.08% of its assets in cash and derivatives, making it an all-equity ETF.

Asset ClassInvestment
Canadian Equity99.92
U.S. Equity0.00
International Equity0.00
Fixed Income0.00
Other0.00
Cash0.08
Source: Morningstar.com

iShares XEG ETF Top Holdings

Canadian Natural Resources Ltd. is its most significant holding, accounting for a quarter of its total assets. At 25.04% asset allocation as of July 15, 2022, Canadian Natural Resources is its largest holding. 

Suncor Energy Inc. closely follows it at a 23.83% weighting. Cenovus Energy is its third most significant holding at an 11.31% weighting.

TickerNameWeight (%)
CNQCANADIAN NATURAL RESOURCES LTD25.04
SUSUNCOR ENERGY INC23.83
CVECENOVUS ENERGY INC11.31
TOUTOURMALINE OIL CORP8.56
IMOIMPERIAL OIL LTD4.45
ARXARC RESOURCES LTD4.23
MEGMEG ENERGY CORP2.16
CPGCRESCENT POINT ENERGY CORP2.02
VETVERMILION ENERGY INC1.85
WCPWHITECAP RESOURCES INC1.79
Source: Blackrock.com

iShares XEG ETF Sector Weighting

As of July 14, 2022, here is the sector weighting for XEG:

TypeFund (%)
Oil & Gas Exploration & Production59.02
Integrated Oil & Gas39.45
Oil & Gas Equipment & Services1.05
Oil & Gas Drilling0.39
Cash and/or Derivatives0.08
Source: Blackrock.com

iShares XEG Risk Indicator

XEG is a high risk ETF:

Source: Blackrock.com

iShares XEG vs. Other ETFs

iShares XEG ETF vs. iShares XIC ETF

iShares XIC is an ETF that you can consider investing in if you want to track the overall Canadian stock market’s performance. iShares XIC allocates its funds to the top Canadian companies based on their market capitalization.

Unlike iShares XEG, iShares XIC diversifies across all Canadian economic sectors. To be specific, iShares XEG ETF holds 14 stocks, while iShares XIC ETF invests in a basket of over 200 companies. Clearly, you can count on a lot more diversity from iShares XIC. 

iShares XIC ETF can be a viable alternative to iShares XEG ETF if you want broad exposure to the Canadian equity security market with lower risk tolerance.

You can find out more about iShares XIC in my full iShares XIC ETF review here.

iShares XEG ETF vs. Horizons HXE ETF

Horizons HXE is another ETF to consider investing in if you want to track the Canadian energy sector’s performance.

It is an ETF product offered by Horizons and seeks to replicate the same index’s performance as iShares XEG. Hence, both the ETFs’ holdings are similar.

Take note, however, that while Horizons HXE has the same top ten holdings, its allocation towards individual assets may differ from iShares XEG’s in terms of weighting.

Another notable difference is that Horizons HXE has a substantially lower MER of 0.27% than iShares XEG ETF’s 0.61%. Lastly, Horizons HXE ETF was launched in 2013, making it significantly newer than iShares XEG.

Horizons HXE can be a viable alternative to iShares XEG because of its significantly lower MER.

How to Buy iShares XEG ETF in Canada

The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:

Readers Choice
Qtrade
Qtrade
  • 105 commission-free ETFs to buy and sell
  • Excellent customer service
  • Top-notch market research tools
  • Easy-to-use and stable platform 
Low Fees
Wealthsimple Trade
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
  • Reputable fintech company
  • Fractional shares available
Well-Rounded
Questrade
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

To learn more, check out my full breakdown of the best trading platforms in Canada.

Is iShares XEG ETF a Good Investment for You?

If you want to invest in the energy market in Canada, then XEG might be a good ETF for you. However, it’s hard for me to recommend this due to its high MER.

You can check out some other energy ETFs here with lower MERs.

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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