The iShares S&P/TSX 60 Index ETF (XIU) invests in the 60 most valuable Canadian companies.
With many well-known Canadian companies like TD Bank, Canadian Tire, Telus, and Loblaws on the list, XIU allows investors to hold well-established companies with proven track records of success in their portfolios.
Holding these companies through an ETF reduces the time and money required to purchase each one individually.
Using trading platforms like Wealthsimple Trade and Questrade that offer zero-commission can simplify the process even more and can help traders save potentially hundreds of dollars in commissions and fees.
This XIU review covers its asset holdings, performance, dividends, fees, pros, cons, how to buy XIU in Canada, and how it compares to XIC, HXT, VCN, and ZCN.
What is XIU?
iShares S&P/TSX 60 Index ETF, or XIU, is an ETF offered by Blackrock that seeks long-term growth through holding Canadian-based equities.
Specifically, XIU aims to provide long-term growth by replicating the performance of the S&P/TSX 60 index, a collection of the 60 largest Canadian companies listed on the Toronto Stock Exchange, to the highest extent possible.
According to Blackrock, XIU started trading in 1990, making it the oldest ETF in the world. The iShares S&P/TSX 60 Index ETF currently trades on the Toronto Stock Exchange under the ticker XIU.
Key facts for XIU as of February 2022 include:
- Inception Date: September 28, 1999
- Benchmark: S&P/TSX 60 Index
- Net Assets: $12.98 billion
- MER: 0.18%
- 12 Month Trailing Yield: 2.75%
- Distribution Yield: 2.68%
- Dividend Schedule: Quarterly
XIU Asset Holdings
Comprising of nearly 50% of the total assets, the top ten holdings of XIU as of February 2022 are:
|Shopify Inc A (SHOP.TO)||8.97%|
|Royal Bank of Canada (RY.TO)||7.85%|
|Toronto-Dominion Bank (TD.TO)||6.93%|
|Enbridge Inc. (ENB.TO)||4.41%|
|Bank of Nova Scotia (BNS.TO)||4.29%|
|Canadian National Railway Co. (CNR.TO)||4.07%|
|Brookfield Asset Management Inc Class A (BAM.A.TO)||3.89%|
|Bank of Montreal (BMO.TO)||3.61%|
|Canadian Pacific Railway Ltd. (CP.TO)||2.79%|
|Canadian Imperial Bank of Commerce (CM.TO)||2.78%|
XIU ETF Returns and Performance
The XIU ETF has a solid track record of substantial year-over-year returns.
As of January 31, 2022, XIU has achieved a 1-year return of 28.24%, a 3-year return of 14.78%, and a 5-year return of 10.35%.
These returns very closely mirror the total return of the S&P/TSX 60 index as a whole.
The latest dividend distribution was on January 6, 2022, with a distribution of 0.109%. Dividends are distributed quarterly, and the 12-month trailing yield was 2.39%.
With the S&P/TSX 60 index that XIU tracks consisting of Canadian dividend aristocrats like Enbridge, Canadian Natural Resources, Pembina Pipeline Corporation, and Power Corporation, the ETFs dividends have been very consistent over the years.
XIU ETF Fees
The XIU ETF charges a management fee of 0.15% and a management expense ratio (MER) of 0.18%. Compared to other ETFs that track the same index, XIU fees are relatively high.
While XIU fees may seem high compared to other ETFs, they are still quite low when compared to some mutual funds.
For example, the TD Canadian Blue Chip Dividend D mutual fund, which has very similar asset holdings to XIU, charges an MER of 1.19%
Pros and Cons of iShares XIU ETF
- Representation from the largest and most well-established companies in Canada
- Greater liquidity than other competing ETFs
- Long track record of steady performance going back three decades
- Heavily relies on 3 industries that comprise approximately 60% of its total assets (financials, energy, and industrials)
- No exposure to small-cap stocks, and a concentration into only 60 companies.
- Higher fees than other alternatives
XIU vs. XIC
XIC, also known as iShares Core S&P/TSX Capped Composite Index, is an ETF that seeks to provide long-term growth by mimicking the performance of the S&P/TSX Capped Composite Index.
Just like XIU, XIC is also managed by Blackrock, one of the largest investment management companies in the world.
Rather than investing in just the top 60 companies, XIC is much more diverse, with 241 companies held in the fund that represents over 95% of Canada’s stock market.
Its top-five asset holding categories are concentrated in financials at 33%, energy at 14%, industrials at 11%, materials at 11%, and information technology at 8%.
As of January 2022, XIC had an MER of 0.06% and a management fee of 0.05%.
XIU vs. HXT
HXT, also known as Horizons S&P/TSX 60 Index, is an ETF that seeks to track the performance of the S&P/TSX 60 Index.
As both ETFs track the same index, XIU holdings, and HXT holdings are virtually identical.
The main difference lies in the fees, with HXT charging a 0.04% management fee and 0.04% MER (as of June 2021). These fees are quite lower than the 0.15 and 0.18% charged by XIU respectively.
XIU vs. VCN
VCN, also known as Vanguard FTSE Canada All Cap Index, is an ETF that seeks to track the performance of the FTSE Canada All Cap Domestic through investments in small, medium, and large-cap Canadian stocks.
Like XIU, the fund also invests in Canadian equities. The fund is listed as having medium risk and has seen volatility over the past several years.
Over the seven-year span between 2014 and 2020, VCN saw positive year-over-year returns five times and negative year-over-year returns two times.
As of December 2021, VCN held 181 stocks across different sectors of the Canadian market. Despite having many more holdings than XIU, the two ETFs are actually more similar than they may appear.
The top 10 holdings in VCN and XIU are exactly the same. With companies accounting for over 40% of VCNs total assets, it is not surprising that the performance of the two ETFs is similar.
These concentrated holdings mean that while VCN does consist of many small and medium cap companies, changes in the price of those stocks do not impact VCN as much.
As of February 2022, VCN has a 0.05% management fee and 0.05% MER, making it a potentially more attractive option than XIU.
XIU vs. ZCN
ZCN, also known as BMO S&P/TSX Capped Composite Index, is an ETF that looks to replicate the performance of the S&P/TSX Capped Composite Index.
Similar to XIC, this ETF is much more diverse and holds many more companies beyond the 60 held by XIU.
In total, the S&P/TSX Capped Composite Index which ZCN attempts to replicate represents over 95% of all Canadian companies on the Toronto Stock Exchange.
The ETF tracks a capped index, which means no company can surpass 10% of the ETFs total value.
ZCN has a 0.05% management fee and 0.06% MER as of February 2022, making it an attractive option when compared to the higher fees charged by XIU.
How To Buy XIU ETF in Canada
Traders can purchase shares of XIU on any major Canadian brokerage platform.
If you are looking to save on commissions, the most-recommended options are Questrade and Wealthsimple Trade.
Questrade is a great platform that provides access to a wide range of tradable securities, including bonds, stocks, foreign exchange, ETFs, and options.
Purchases of ETFs such as XIU are free, but there are commissions when selling.
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Wealthsimple Trade provides users with quick and simple access to thousands of ETFs and stocks at no cost to traders.
Simply browse for the ticker symbol and enter a preferred price (limit) or accept a market order, enter the number of shares of XIU you wish to purchase and place the trade.
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Is XIU a Good Investment?
For those who believe in the Canadian market, XIU is a great choice.
Many investors may prefer to have more exposure in their portfolio to the U.S. market, which has traditionally seen higher returns than their Canadian counterparts
While the Canadian market as a whole may lag behind the U.S., the top 60 large-cap companies that are held in the XIU ETF have had a long track record of success – in some cases spanning back almost a century.
While XIU fees may seem high, the peace of mind gained from investing in some of the largest and most well-established companies in Canada is usually worthwhile.
Investors like myself who are interested in steady, long-term growth will see XIU as a great option.
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iShares S&P/TSX 60 Index ETF XIU Review
iShares S&P/TSX 60 Index ETF comprises top Canadian companies trading on the TSX. This XIU ETF review covers its holdings, return, fees, how to buy it in Canada and how it compares to HXT, VCN, XIC, and ZCN.