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Depending on which exchange-traded fund you use to track the Canadian stock market, you could be up 23.6 per cent in the past 12 months or down 0.3 per cent.

Such are the challenges of finding an ETF to do the basic task of tracking our domestic stock market. I set up a Globeinvestor.com watchlist of Canadian market ETFs a while back and it includes 17 funds. There are probably a bunch more to add, but 17 is enough to demonstrate the risks of holding ETFs that don't track the most widely followed indexes.

Right in the middle of the 17 funds when ranked for one-year total return are three that track the broadest, plainest Canadian indexes. The iShares Core S&P/TSX Capped Composite Index ETF (XIC) was up 10.5 per cent on a total return basis for the 12 months to Sept. 9, and both the BMO S&P/TSX Capped Composite Index ETF (ZCN) and Vanguard FTSE Canada All Cap Index ETF (VCN) were up 10.4 per cent. Spread out on either side of these ETFs are competitors that track other indexes.

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Some of these other ETFs have done very well lately. The Horizons S&P/TSX 60 Equal Weight Index ETF (HEW) delivered a total return of 23.6 per, while the PowerShares FTSE RAFI Canadian Fundamental Index ETF (PXC) gained 17.5 per cent. At the other end we have the iShares Canadian Growth Index ETF (XCG), down 0.3 per cent and the First Asset Morningstar Canada Value Index ETF (FXM), up 0.3 per cent.

It's interesting to see both a growth and value fund having a rough go at the same time. Value and growth are usually like the ends of a see-saw – when one is up, the other is down. But we're dealing with investing strategies here that represent attempts to out-think the basic indexes. It's hard to say what kind of outcome to expect unless there's a long track record, and most ETFs are still on the new side.

The way to avoid surprises when buying the Canadian market is to stick to ETFs that track the biggest indexes. These funds tend to be very liquid, so the pricing is competitive when you buy. They also tend to be among the cheapest out there. Plain vanilla Canadian market ETFs probably won't ever lead the performance charts, but they do give you the returns of the benchmark Canadian stock indexes. That's what ETFs are all about.

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