Looking to invest in the U.S. market? It’s not surprising, considering that American stocks have historically outperformed Canadian ones in the long run.
S&P 500 funds, like XUS ETF, offer a low-risk way to invest with minimal fees.
If you’re looking to round out your portfolio or add some diversity by buying American companies, read this full iShares XUS ETF review.
All-Equity Exchange-Traded Fund
Available on the Toronto Stock Exchange, XUS tracks the S&P 500 Index at a low fee.
- Diversified exposure
- Holds its U.S. listed counterpart, IVV, to reduce transaction costs
- Low cost
- Highly liquid
- Tech heavy
IShares XUS ETF is an excellent way to tap into the vast American stock market. Let’s dive into the key attributes of XUS:
- S&P 500 Tracking: IShares XUS ETF is designed to mimic the performance of the S&P 500, providing investors exposure to the 500 largest U.S. companies.
- Cost-Efficient: With a Management Expense Ratio (MER) of just 0.10%, it offers one of the most cost-effective ways to invest in U.S. large-cap stocks.
- Diversification: By holding its U.S. counterpart, IVV, investors not only gain exposure to the primary American market but also enjoy reduced transaction costs.
- Liquidity: Being listed on the Toronto Stock Exchange means it’s easily accessible for Canadians and is highly liquid.
- Dividend Distribution: Unlike some of its competitors, XUS provides dividends on a semi-annual basis, adding an additional stream of potential income for its holders.
- BlackRock Management: Managed by BlackRock, one of the world’s leading asset managers, it’s backed by a team that’s globally recognized for its expertise.
XUS Key Facts
As of October 12, 2023:
- Ticker Symbol: XUS.TO
- Exchange: Toronto Stock Exchange
- Assets Under Management: $4.66 Billion
- MER: 0.10%
- 12-Month Trailing Yield: 1.29%
- Currency Traded: CAD
- Number of Underlying Stocks: 503 (as of July 18, 2022)
- Eligible Accounts: Most registered (TFSA, RRSP, etc) and non-registered available
What Is the MER for XUS ETF?
Here are the management fees associated with XUS, which are much lower compared to mutual funds:
- Management Fee: 0.08%
- Management Expense Ratio (MER): 0.09%
XUS Dividends
XUS pays out dividends semi-annually, quite different from one of its biggest competitors, Vanguard, which pays out quarterly dividends.
iShares XUS’ dividend yield as of October 12, 2023:
- 12-month trailing yield: 1.29%
- Distribution yield: 1.11%
- Dividend schedule: Semi-Annual
As seen here, the performance of XUS closely matches that of the benchmark S&P 500, which is why it’s a highly regarded fund to invest in.
The potential growth over the long term is another factor to consider when investing.
Here is the growth of a hypothetical $10,000 invested in iShares XUS since inception:
As of September 30, 2023:
| 1y | 3y | 5y | 10y | Incept. | |
|---|---|---|---|---|---|
| Average Annual Return (%) | 19.26 | 10.24 | 10.51 | 14.58 | 14.73 |
| Benchmark (%) | 19.06 | 10.08 | 10.33 | 14.37 | 14.52 |
As of October 12, 2023, iShares XUS has been allocated into the following asset classes:
| Asset Class | Investment |
|---|---|
| Canadian Equity | 0.00 |
| U.S. Equity | 98.59 |
| International Equity | 1.01 |
| Fixed Income | 0.00 |
| Other | 0.00 |
| Cash | 0.40 |
XUS differs from other funds as it has another of Blackrock’s ETFs (IVV) as one of its main holdings. IVV is the U.S. version of iShares Core S&P 500.
Combining it with other companies from the large-cap world, the top holdings add a diverse range of industry sectors, including finance, communication, and information technology.
As of October 12, 2023:
| Ticker | Name | Sector | Weight (%) |
|---|---|---|---|
| IVV | ISHARES CORE S&P 500 ETF | Financials | 96.63 |
| AAPL | APPLE INC | Information Technology | 0.23 |
| MSFT | MICROSOFT CORP | Information Technology | 0.19 |
| AMZN | AMAZON COM INC | Consumer Discretionary | 0.10 |
| USD | USD CASH | Cash and/or Derivatives | 0.07 |
| GOOGL | ALPHABET INC CLASS A | Communication | 0.07 |
| TSLA | TESLA INC | Consumer Discretionary | 0.06 |
| GOOG | ALPHABET INC CLASS C | Communication | 0.06 |
| BRKB | BERKSHIRE HATHAWAY INC CLASS B | Financials | 0.05 |
| UNH | UNITEDHEALTH GROUP INC | Health Care | 0.05 |
As of October 12, 2023, Apple Inc. is its most significant holding at a 7.18% weighting. It is followed closely by Microsoft Corp. at 6.71%. Amazon.com, Inc. is its third most significant holding, accounting for 3.25% of its fund allocation.
| Ticker | Name | Weight (%) |
|---|---|---|
| AAPL | APPLE INC | 7.18 |
| MSFT | MICROSOFT CORP | 6.71 |
| AMZN | AMAZON COM INC | 3.25 |
| NVDA | NVIDIA CORP | 3.14 |
| GOOGL | ALPHABET INC CLASS A | 2.26 |
| META | META PLATFORMS INC CLASS A | 1.98 |
| TSLA | TESLA INC | 1.97 |
| GOOG | ALPHABET INC CLASS C | 1.94 |
| BRKB | BERKSHIRE HATHAWAY INC CLASS B | 1.73 |
| UNH | UNITEDHEALTH GROUP INC | 1.32 |
As of Oct 11, 2023, its most significant asset allocation is towards the Information Technology sector at 28.03%.
Its second most significant sector exposure is towards health care at 15.01%. The consumer discretionary sector comes in third at a 10.85% weight.
| Type | Fund |
|---|---|
| Information Technology | 28.03 |
| Health Care | 13.17 |
| Financials | 12.55 |
| Consumer Discretionary | 10.57 |
| Communication | 9.12 |
| Industrials | 8.33 |
| Consumer Staples | 6.24 |
| Energy | 4.45 |
| Materials | 2.41 |
| Utilities | 2.38 |
| Real Estate | 2.36 |
| Cash and/or Derivatives | 0.37 |
| Other | 0.01 |
iShares XUS has a medium risk factor.
Is XUS Hedged?
In plain terms, hedging is a strategy employed to offset losses by taking the opposite position on a related asset. It’s done to reduce the risk of price movements associated with investments.
Currently, XUS is not a hedged fund. However, it is a part of a twin foreign index fund. These funds are each almost identical, except one is hedged, and one is not.
Learn more about hedged ETFs vs unhedged ETFs here.
XUS vs XSP
XSP is its twin and is hedged against currency fluctuations.
XSP tries to replicate the performance of the S&P 500 hedged to the Canadian Dollar index. In order for XSP to work in your favour, the value of the U.S. dollar needs to drop in relation to the Canadian dollar.
If the U.S. dollar were to rise while you have an investment hedged, you would see either a smaller gain or an expanded loss.
Often, hedged funds can be more expensive than non-hedged funds simply because of the management needed to monitor currency swings. However, XSP includes the same management fee and expense ratio as XUS, which is somewhat surprising to me.
XUS Vs IVV
IVV is the U.S. version of Blackrock’s iShares S&P 500 Index Fund. XUS is the Canadian version. While it’s possible to buy IVV, it’s only available in U.S. dollars, and you’ll incur foreign exchange fees when buying and selling it.
However, as noted above, IVV is the top holding within XUS, which makes it easier for Canadians to diversify their portfolio and buy a Canadian ETF with U.S. stocks in it. The fees for IVV are lower though, so some investors still buy it over XUS.
XUS Vs VFV
VFV is Vanguard’s fund that tracks the S&P 500. The funds are very similar, with very little to distinguish themselves.
XUS typically has a higher management fee and MER, but not by much. The dividend payout is also fairly close, with XUS paying out just a bit more.
VFV does have quarterly dividend payments as opposed to semiannually for XUS.
Overall, the funds are very similar, and you can’t go wrong with either.
Read the full Vanguard VFV review here.
XUS Vs XUU
XUU tracks the entire U.S. stock market, including small, middle, and large-cap stocks. XUS tracks only large-cap stocks in the U.S.
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XUS Review by Morningstar
Because of its affordability and diversity, iShares Core S&P 500 ETF XUS is a highly regarded fund. Morningstar, a U.S.-based financial services firm, independently analyzes and rates funds across the board to help investors make solid financial decisions.
The gold standard is the highest-rated and top recommendation within Morningstar’s categories. iShares Core S&P 500 ETF XUS received this rating, with the review noting its “competitive expense ratio provides a durable performance edge over Morningstar Category peers.”
If you’re looking for added diversity and effective long-term performance, XUS ETF is a solid choice that allows Canadians low-risk exposure within the U.S. large-cap market.
XUS is affordable and makes up one of the best options for those looking to invest in the S&P 500
If you’re looking for other S&P 500 funds to complete your portfolio, check out these other top ETFs.
