Creating a portfolio of equity securities that diversifies your asset allocation is not easy. It requires a lot of hard work, research, time, and an expert understanding of financial markets.
If you want to capitalize on the returns of top Canadian companies trading on the Toronto Stock Exchange (TSX), an ETF like iShares XIU might be suitable for you.
In this iShares XIU ETF review, I will help you determine whether it aligns with your investment goals.
All-Equity Exchange-Traded Fund
BlackRock iShares XIU is an Exchange-Traded Fund (ETF) that provides you with exposure to the largest Canadian companies trading on the TSX.
- Is a low-cost ETF
- Is one of the largest and most liquid ETFs in Canada
- Is the one of the first ETFs in the world
- Is not as diversified as some other ETFs
BlackRock iShares XIU is an ETF designed to replicate the performance of the S&P/TSX 60 Index.
Launched in 1990, it is one of the first ETFs that marked the emergence of a viable alternative to mutual fund products.
There are several other all-equity ETFs in Canada that you can check out in my list of the best Canadian ETFs here. However, BlackRock iShares XIU follows the performance of the top 60 Canadian companies that are trading on the TSX based on their market capitalization.
XIU.TO is currently trading at close to $31.52.
XIU Key Facts
As of October 5, 2023:
- Ticker Symbol: XIU.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $10.82 Billion
- MER: 0.18%
- 12-Month Trailing Yield: 3.42%
- Currency Traded: CAD
- Registered Accounts Availability: Yes
Comparison with Other ETFs
Investors often face choices when building their portfolios, and comparing ETFs can be a vital part of that decision-making process. Two notable alternatives to iShares XIU are iShares XIC and Horizons HXT, both of which seek to track the performance of the same underlying index as iShares XIU—the S&P/TSX 60 Index.
iShares XIC, like iShares XIU, holds the same top ten companies based on market capitalization. However, it differentiates itself by offering exposure to over 200 companies, providing a more diversified basket of Canadian stocks. Investors seeking greater diversity may find iShares XIC an attractive alternative.
On the other hand, Horizons HXT also replicates the same underlying index as iShares XIU but stands out with a substantially lower Management Expense Ratio (MER) of 0.03%. Additionally, its inception in 2010 makes it a newer option compared to iShares XIU.
Comparing these alternatives can help you determine which ETF aligns best with your investment objectives and risk tolerance. Each ETF offers unique advantages, and understanding these differences is crucial when making investment decisions.
iShares XIU has a Management Expense Ratio (MER) of 0.18%, which is lower than several other ETFs with similar exposure to this index.
Its MER is also significantly lower than any mutual fund product that provides investors with similar features and benefits.
With the average mutual fund fees being at least 2%, low-MER ETFs like iShares XIU are also a crucial reason why many Canadians have preferred ETFs over mutual funds in recent years.
iShares XIU’s dividend yield as of October 5, 2023:
- 12-month trailing yield: 3.42%
- Distribution yield: 3.37%
- Dividend schedule: Quarterly
Here is the growth of a hypothetical $10,000 invested in iShares XIU since its inception:
As of September 30, 2023:
| 1y | 3y | 5y | 10y | Incept. | |
|---|---|---|---|---|---|
| Average Annual Return (%) | 8.54 | 8.54 | 7.57 | 7.57 | 7.14 |
| Benchmark (%) | 8.75 | 10.08 | 7.71 | 8.14 | 8.14 |
iShares XIU is an all-equity ETF, so its entire asset allocation is towards stocks that constitute the S&P/TSX 60 Index.
As of October 06 2023:
| Ticker | Name | Sector | Weight (%) |
|---|---|---|---|
| RY | ROYAL BANK OF CANADA | Financials | 7.17 |
| TD | TORONTO DOMINION | Financials | 6.55 |
| CP | CANADIAN PACIFIC KANSAS CITY LTD | Industrials | 4.15 |
| ENB | ENBRIDGE INC | Energy | 4.11 |
| CNQ | CANADIAN NATURAL RESOURCES LTD | Energy | 4.10 |
| SHOP | SHOPIFY SUBORDINATE VOTING INC CLA | Information Technology | 3.92 |
| CNR | CANADIAN NATIONAL RAILWAY | Industrials | 3.86 |
| BMO | BANK OF MONTREAL | Financials | 3.53 |
| BNS | BANK OF NOVA SCOTIA | Financials | 3.18 |
| BN | BROOKFIELD CORP CLASS A | Financials | 2.72 |
The ETF provides investors with exposure only to equity securities trading on the TSX. Its most significant asset allocation is towards the financial sector, with several Canadian banks making a substantial part of its top ten assets.
As of Jul 12, 2022:
| Type | Fund |
|---|---|
| Financials | 33.51 |
| Energy | 18.01 |
| Industrials | 12.87 |
| Materials | 9.92 |
| Information Technology | 8.21 |
| Consumer Staples | 4.65 |
| Communication | 4.65 |
| Consumer Discretionary | 3.93 |
| Utilities | 3.27 |
| Real Estate | 0.70 |
| Cash and/or Derivatives | 0.49 |
iShares XIU has a medium risk factor.
iShares XIC is another ETF that you can consider investing in if you want to track Canadian stock markets’ performance.
Because the top ten holdings for iShares XIC and iShares XIU are identical, you can get exposure to the same ten companies. Additionally, the weights in both ETFs are based on market capitalization.
However, there’s a significant difference between the two: iShares XIC holds over 200 companies in the portfolio. Compare that with the 60 companies for iShares XIU, and you can count on a lot more diversity for XIC.
Hence, iShares XIC could be a viable alternative to iShares XIU if you want greater exposure to a diversified basket of Canadian stocks.
Horizons HXT is another ETF to consider if you want to track the Canadian stock markets’ performance.
As an ETF product offered by Horizons, it also seeks to replicate the performance of the same underlying index as iShares XIU. Hence, the ETF’s holdings are similar to iShares XIU.
Horizons HXT also has a substantially lower MER of 0.03%. Lastly, Horizons HXT’s inception in 2010 means that it is significantly newer than iShares XIU.
iShares XIU is a medium-risk investment asset that you can consider adding to your portfolio.
Its focus on the financial and tech sectors and the backing of proven equity securities show that it is a reliable investment for investors seeking long-term capital growth.
It’s a great way to get exposure to the TSX index in your DIY ETF portfolio.
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Conclusion
iShares XIU provides an easy way for you to invest in 60 of the top Canadian companies without breaking a sweat.
Compared to a mutual fund that tracks the TSX index, I would choose the XIU ETF any day over that.
Learn more about iShares ETFs here.
