iShares S&P/TSX 60 Index ETF (XIU-T) — Stockchase (2024)

Sep 16, 2024, 7:59 pm

Consensus

Positive

Valuation

Fair Value

Similar

XIU-T,IXJ

Great way to get exposure to Canadian equities. Has performed well the past 5 years. Would recommend buying as a way to get exposure to Canadian economy.

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Oldest ETF in the world (launched in the 1990s). Cheaper ETF's but overall, a great product. Over the long term, good product.

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Excellent growth option. Lots of tech, consumer and healthcare stocks. Would recommend buying for the long term.

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Banks have down poorly this which has limited the TSX, though oil has gone up. You need the financials to do well for XIU to do well. But in the long run, this will outperform in coming years.

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It holds a basket of large cap Canadian names and he likes it for the energy and banks holdings. The TSX 60 is not as far ahead as its counterparts in the U.S.

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Allan Tong’s Discover Picks XIU stock charges only a 0.18% MER but pays a 3.02% dividend yield. Averaging 3,000,000 shares a day, XIU is fairly liquid, over six times more than, say, XIC-T. The biggest holding here is Shopify which has been quietly making a comeback, followed by Royal and TD, the country’s biggest banks. Enbridge, CN, BAM and the other banks are also major holdings and well-regarded by investors. XIU is a cautious trade, one that an investor can enter and exit at a profit. Read 3 Defensive Stocks to Catch the Rebound for our full analysis.

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XIU vs. XIC Correlations and holdings are quite similar. XIC is more diversified, with about 240 holdings. XIC has a 6 bps MER, while XIU is 18 bps. Performance has been very similar. XIU has a bigger weighting in banks, about 28%. XIC has about 23% in banks. Not much diversification if you own both. Also look at XEI, a high dividend ETF, geared towards a higher yield.

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XIU has a slightly higher MER. HXT does not distribute the income but is capitalized into the portfolio holdings. It makes it a capital gain than dividend income. The redemption cost is also a factor. Would prefer HXT all things considered.

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An ETF to buy? There are so many ETFs, so it depends what you're looking for. XIU offers growth and income for retirees. This is a core holding for any investors. There's also a BMO utilities ETF offering a yield and upside. Also, a Canadian bank ETF from any vendor will give you income and growth, like ZWB-T. An ETF reduces volatility vs. owning individual stocks.

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As easy as it gets for passive investment. Broad-based exposure to the Canadian market. Financials, tiny bit of energy, lifecos, pipelines. If you expect returns over time of 6-7%, it's a good holding. Income stream is pretty solid. Markets are a bit overbought right now, so don't go full bolt right now. Instead, dollar cost average in.

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HXT-T vs. XIU-T. They have basically identical holding but one pays a dividend so has different tax treatment. He is indifferent. In a TFSA, there is no reason to not to use the XIU-T.

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What is more tax efficient than the HXT-T for a taxable account? This is good for tax efficiency and cheap, charging around 4 basis points and nearly replicates the HXT-T.

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How to increase dividends. These are all the same thing. You get exposure to Canadian large caps. There is no diversification by being in all three. ZWU-T should replace one of them to get utilities including pipelines and telcos and less reliance on the banks. Still Canada so you need international. ZWE-T is the best international dividend payers yielding 7% with a covered call overlay. ZWS-T is the best in the US. These are the two to add to the three. These should be in a registered portfolios if you are retired because there is no divined tax credit.

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How far out would you write a covered call on this? That's a tough one. He wouldn't write a covered call on this. So, if you believe the US economy will grow above-average in coming years, then Canada will benefit. Sit tight and use it as a core holding. Wait till there's a trade deal--and it will happen. It's all bluster now.

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