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.
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 | $183,031 | $144,633 |
| 15 | 2023 | 6,500 | 88,000 | 131,152 | 199,459 | $217,738 YTD | $167,963 YTD |
| 16 | 2024 | 7,000 | 95,000 | 145,061 | 227,105 | ||
| 17 | 2025 | 7,000 | 102,000 | 159,664 | 257,516 | ||
| 18 | 2026 | 7,000 | 109,000 | 174,997 | 290,967 | ||
| 19 | 2027 | 7,000 | 116,000 | 191,097 | 327,764 | ||
| 20 | 2028 | 7,500 | 123,500 | 208,526 | 368,791 | ||
| 21 | 2029 | 7,500 | 131,000 | 226,828 | 413,920 | ||
| 22 | 2030 | 7,500 | 138,500 | 246,044 | 463,562 | ||
| 23 | 2031 | 7,500 | 146,000 | 266,221 | 518,168 | ||
| 24 | 2032 | 7,500 | 153,500 | 287,407 | 578,235 | ||
| 25 | 2033 | 7,500 | 161,000 | 309,653 | 644,308 | ||
| 26 | 2034 | 7,500 | 168,500 | 333,011 | 716,989 | ||
| 27 | 2035 | 7,500 | 176,000 | 357,536 | 796,938 | ||
| 28 | 2036 | 7,500 | 183,500 | 383,288 | 884,881 | ||
| 29 | 2037 | 7,500 | 191,000 | 410,327 | 981,620 | ||
| 30 | 2038 | 7,500 | 198,500 | 438,719 | 1,088,032 |
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.
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.