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The hottest ETFs on the TSX Add to ...


Leaders among Canadian-listed equity exchange-traded funds (ETFS) this year.

Global stock markets have staged a sharp comeback after last year's market collapse, and ETFs are one way to play the rebound. ETFs are similar to mutual funds but trade like stocks. There are brokerage fees to pay when buying ETFs, but they can be low when dealing with a discount broker.


We screened the year-to-date returns to Thursday of all equity ETFs to rank the best performers. We excluded the Horizons BetaPro bull and bear leveraged ETFs, and ETFs that were launched this year.


The top three performers were Claymore specialty ETFs.

Claymore BRIC ETF, which is invested in Brazil, Russia, India and China, rose to the top with a nearly 75-per-cent gain. Claymore S&P/TSX Global Mining ETF posted a 59-per-cent return.

And Claymore Oil Sands ETF, which is focused on oil sands plays, has risen 54 per cent. While this energy ETF has blasted ahead of the 36-per-cent return by the broader based iShares Energy ETF, the Claymore offering also took a bigger hit in last year's market downturn.

What is also interesting is the performance range among Canadian equity ETFs.

While the iShares CDN Large Cap 60 Index is the grand daddy of ETFs in Canada, and a big draw for many investors wanting exposure to the domestic market, its 31-per-cent return lags some of its peers.

The leader of this group is the Claymore Cdn Fundamental Index ETF, which has gained a more robust 41 per cent. Unlike the iShares Large Cap 60 - whose stocks are weighted by market capitalization - the 65 stocks in the Claymore ETF are chosen using metrics like cash dividends, free cash flow, sales and book value.

The top three stocks in the Claymore ETF are Teck Cominco Ltd., Royal Bank of Canada and Toronto-Dominion Bank. The top three in iShares Large Cap 60 are Royal Bank of Canada, Suncor Energy Inc. and Toronto-Dominion Bank.

"Over 80 per cent are the same firms, but just different weights," said Vlad Tasevski, analyst at Claymore Investments Inc. "By Oct. 31, the Claymore ETF was overweight financials by 15 per cent [compared with the iShares ETF] and underweight energy by 8.8 per cent and 5.6 per cent less in materials."

If the financials outperform, the Claymore ETF will do well, but if this sector does badly, it will underperform the iShares ETF, Mr. Tasevski said. "Also, our metrics would provide our portfolio with a lower price-to-earnings ratio and higher dividend yields versus the iShares ETF."

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