XIU ETF Review: One of the BEST

XIU ETF, or Blackrock’s iShares S&P/TSX 60 Index ETF, is one of the most liquid ETFs in Canada providing exposure to top blue chip Canadian companies.

XIU is one of the largest and earliest ETFs in Canada.

The fund was created in 1990 with the intention to replicate the performance of the S&P/TSX 60 Index, net of expenses. Not many indexes are following the TSX60 and it happens to be a good one to follow like the S&P500.

Pros of iShares XIU ETF

  • It is a low-cost ETF.
  • iShares XIU is a diversified fund across 60 large-cap companies and all ten industries.
  • It seeks long-term capital growth.
  • XIU has more liquidity when compared to other Canadian ETFs.

Cons of iShares XIU ETF

  • Heavy weightage on the top three industries that make up ~60% of the ETF’s total assets.

iShares XIU ETF Facts

  • Inception Date: September 28, 1999
  • Benchmark: S&P/TSX 60 Index
  • Net Assets: $9,908M
  • MER: 0.18%
  • 12 Month Trailing Yield: 2.72%
  • Distribution Yield: 2.68%
  • Dividend Schedule: Quarterly

iShares XIU MER – Management Expense Ratio 

At 0.18%, XIU has an excellent MER but you can have a cheaper MER with the Horizon HXT ETF at 0.03%.

The MER is what Blackrock takes to manage the fund for you. It’s much cheaper than mutual funds and in some cases cheaper than investing on your own.

Mutual funds can charge over 2% and it robs you of your returns. It’s time to ditch your mutual funds and switch to ETF ASAP. Many brokers such as Questrade offer free ETFs.

iShares XIU Performance

iShares XIU has a good performance compared with the TSX index but still falls short of the SP500.

XIU vs TSX vs SP500
Dividend Adjusted Chart by Stock Rover - Try it out.

The annual rate of return for iShares XIU ETF since inception is 7.39%. When you compare with my annual ROR of 14.40%, there is a big difference. Just look at the S&P500 index to get a different perspective.

Take your TFSA account as an example. The rules are the same for everyone and I mean everyone. The growth is ultimately a factor of your investment performance provided you make your TFSA contribution limit every year. The annual performance of an ETF matters as you can see below the growth over 20+ years.

wdt_ID Year Yearly Limit Cumulative 5% Growth 10% Growth Dividend Earner Spousal
1 2009 5,000 5,000 5,250 5,500 Not Tracked Not Started
2 2010 5,000 10,000 10,762 11,550 Not Tracked Not Started
3 2011 5,000 15,000 16,550 18,205 Not Tracked Not Started
4 2012 5,000 20,000 22,628 25,525 Not Tracked Not Started
5 2013 5,500 25,500 29,534 34,128 $41,742 Not Started
6 2014 5,500 31,000 36,786 43,590 $52,820 Not Started
7 2015 10,000 41,000 49,125 58,949 $56,307 Not Started
8 2016 5,500 46,500 57,356 70,984 $70,200 Not Started
9 2017 5,500 52,000 65,999 84,034 $78,900 $13,308
10 2018 5,500 57,500 75,074 98,487 $96,937 $58,818
11 2019 6,000 63,500 85,128 114,986 $129,467 $82,596
12 2020 6,000 69,500 95,684 133,030 $153,993 $95,906
13 2021 6,000 75,500 106,769 152,933 $181,601 $113,194
14 2022 6,000 81,500 118,407 174,827 $169,702 YTD $128,018 YTD
15 2023 6,500 88,000 131,152 199,459
16 2024 6,500 94,500 144,536 226,555
17 2025 6,500 101,000 158,587 256,361
18 2026 6,500 107,500 173,342 289,147
19 2027 7,000 114,500 189,359 325,762
20 2028 7,000 121,500 206,177 366,038
21 2029 7,000 128,500 223,836 410,342
22 2030 7,500 136,000 242,902 459,626
23 2031 7,500 143,500 262,923 513,838
24 2032 7,500 151,000 283,944 573,472
25 2033 7,500 158,500 306,016 639,069
26 2034 7,500 166,000 329,192 711,226
27 2035 7,500 173,500 353,526 790,599
28 2036 7,500 181,000 379,078 877,909
29 2037 7,500 188,500 405,906 973,950
30 2038 7,500 196,000 434,077 1,079,595

iShares XIU ETF Top 10 Holdings

Below are the holdings part of the XIU ETF at the time of writing sorted by market capitalization. The ratio of weigth can fluctuate on any months at the discretion of the fund manager in accordance with the fund target.

At the time of writing, Shopify is the most significant constituent in the XIU ETF.

The top 10 holdings account for almost 50% of the fund. So this ETF also provides a good way to invest in the Canadian banking sector.

iShares XIU ETF Sector Allocation

iShares XIU is heavily weighted towards the financials which is technically how the TSX is weighted. As a high dividend yield ETF, you should compare it with other dividend ETFs.

wdt_ID Sector Ratio
1 Financials 35.54
2 Utilities 3.22
3 Communication Services 5.79
4 Consumer Cyclical 4.31
5 Energy 14.14
6 Basic Materials 11.02
7
8 Industrials 10.30
9 Consumer Defensive 3.57
10 Real Estate 0.77
11 Cash 0.16
12 Technology 10.37
13 Healthcare 0.80

Why hold iShares XIU ETF

XIU beats all other Canadian Dividend ETF which makes it the best and you also get a decent yield.

In fact, if you look at the non-dividend reinvested chart, this is your TSX performance.

XDV vs VDY vs XIU Dividends 2021
Without Dividend Re-Invested
XDV vs VDY vs XIU 2021
With Dividend Re-Invested

If you want the dividends, it’s not clear you will get dividend growth the same way the best banks and the best utility stocks will do for you.

DISCLOSURE: Please note that I may have a position in one or many of the holdings listed. For a complete list of my holdings, please see my Dividend Portfolio.

DISCLAIMER: Please note that this blog post represents my opinion and not an advice/recommendation. I am not a financial adviser, I am not qualified to give financial advice. Before you buy any stocks/funds consult with a qualified financial planner. Make your investment decisions at your own risk – see my full disclaimer for more details.