Skip to main content

The Globe and Mail

Overwhelmed by the exploding range of ETFs available? Here’s how to meet your needs

A Bay Street sign, a symbol of Canada's economic markets and where main financial institutions are located, is seen in Toronto, May 1, 2013.

Mark Blinch/Reuters

The biggest deterrent to investing in ETFs has to be the process of choosing the funds from among the thousand or more listed on Canadian and U.S. stock exchanges.

You only need four funds to build a diversified portfolio. Add a couple more and you can cover all the bases, while emphasizing a theme or two as well. Need help finding a funds to meet your needs? Consider this list of ETFs chosen as favourites by a new newsletter called The Best ETFs For Canadian Investors (published by The Successful Investor Inc.)

Bonds – iShares Core Canadian Short-Term Bond Index ETF (XSB), iShares Core Canadian Universe Bond Index ETF (XBB)

Story continues below advertisement

The Successful Investor people aren't big on holding bonds right now for two reasons – low interest rates keep their interest payouts low, and the risk of rising rates could depress their future value. Still, it's sensible for investors to hedge their stock market holdings with bonds. XSB is the more conservative choice because it holds short-term bonds, which are somewhat less vulnerable to rising rates. Both funds have low management expense ratios in the 0.12 per cent range.

Canadian Equity – iShares Canadian Select Dividend Index ETF (XDV)

Focuses on the highest yielding stocks that also deliver dividend sustainability and growth. Blue chip financial stocks dominate the portfolio; the management expense ratio is 0.55 per cent.

U.S. Equity – Vanguard S&P 500 Index ETF (VFV)

A tiny MER of 0.08 per cent for a fund that tracks 500 of the biggest U.S. companies. Tech stocks, sadly under-represented in the Canadian market, account for one-quarter of the portfolio.

Theme ETF Number One – Global X Social Media ETF (SOCL-Q)

Suggested for aggressive investors who want exposure to the world's largest social media companies. Holdings are spread across the United States, China, Japan, Germany and the Netherlands. The MER is 0.65 per cent.

Story continues below advertisement

Theme ETF Number Two – iShares S&P/TSX Capped REIT Index ETF (XRE)

Broad Canadian market ETFs typically include exposure to real estate – this fund is a way to add more. Covers REITs in sectors like malls, industrial properties, office space and rental housing. The MER is 0.61 per cent.

Report an error Licensing Options
About the Author
Personal Finance Columnist

Rob Carrick has been writing about personal finance, business and economics for close to 20 years. He joined The Globe and Mail in late 1996 as an investment reporter and has been personal finance columnist since November 1998. Rob's personal finance columns appear in The Globe on Tuesday and Thursday, and his Portfolio Strategy column for investors appears on Saturday. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

Please note that our commenting partner Civil Comments is closing down. As such we will be implementing a new commenting partner in the coming weeks. As of December 20th, 2017 we will be shutting down commenting on all article pages across our site while we do the maintenance and updates. We understand that commenting is important to our audience and hope to have a technical solution in place January 2018.

Discussion loading… ✨