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What’s the objective of XEI ETF?

The iShares S&P/TSX Composite High Dividend Index ETF (XEI) is designed for investors seeking steady income and growth through exposure to Canadian high-dividend stocks. XEI is a Canadian-focused ETF that aims to track the S&P/TSX Composite High Dividend Index, providing exposure to some of Canada’s top dividend-paying companies across various sectors. Here’s a breakdown of why XEI might be an attractive option for Canadian investors, including its methodology, benefits, and key features.

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Why Canadian Investors Should Consider XEI

XEI is well-suited for Canadian investors looking for consistent income through dividends as well as long-term capital appreciation. Here are some primary reasons why XEI may appeal to these investors:

Monthly Dividend Payments: XEI offers monthly distributions, providing a regular income stream that can be attractive for retirees or investors seeking frequent cash flow.

High Dividend Yield: By focusing on high-dividend stocks, XEI generally delivers a higher-than-average yield, making it appealing to income-focused investors.

Sector Diversification: Unlike funds that focus on a single sector, XEI diversifies across major industries in Canada, helping to reduce the impact of downturns in any one sector.

Cost-Effective: With a management expense ratio (MER) of approximately 0.22%, XEI provides a low-cost way to access high-dividend stocks without the need for individual stock selection.

Tax Efficiency for Canadians: Since XEI holds Canadian stocks, it’s tax-efficient for Canadian investors in non-registered accounts, as dividends benefit from the Canadian dividend tax credit.

Best For Whom?

XEI is best suited for:

Income-Focused Investors: Those seeking steady, predictable cash flow through dividends will benefit from XEI’s monthly payouts.

Long-Term Investors: XEI’s focus on high-quality, dividend-paying stocks in Canada supports long-term growth.

Retirees: Monthly dividends and sector diversification can be particularly attractive for retirees looking for a stable income source.

Canadian Tax-Conscious Investors: Canadian investors in non-registered accounts can benefit from tax savings on dividends through the Canadian dividend tax credit.

S&P/TSX Composite High Dividend Index: Structure and Methodology

The S&P/TSX Composite High Dividend Index selects companies from the broader S&P/TSX Composite Index that have strong dividend yields and meet liquidity requirements. Here are some of the key characteristics of this index:

Selection Criteria: Companies are selected based on market capitalization, liquidity, and the stability of dividend payouts. Each stock must represent a minimum weight of 0.04% within the index.

Sector Weight Limits: Each sector is capped at 30% to prevent overexposure to any single industry, ensuring diversification across Canadian market sectors.

Stock Weighting: Each company in the index is limited to a maximum of 5% to maintain a balanced approach and avoid concentration in a few large-cap stocks.

Rebalancing: The index is rebalanced quarterly to adjust for any changes in the composition or weighting of stocks.

VEQT review: Vanguard All-Equity ETF Portfolio

XEI ETF vs VDY vs XDV

In this section, we will compare XEI with Both XDV – Ishares Canadian Select Div Index and VDY Vanguard FTSE CDN High Div Yld Index. See tables below:

Table 1: AUM and MER

ETF	AUM*	MER*
XDV – Ishares Canadian Select Div Index	1,734	0.55
XEI – Ishares S&P TSX Comp High Div Index	1,088	0.22
VDY – Vanguard FTSE CDN High Div Yld Index	1,137	0.21

Looking at the management fees, VDY and XEI are attractive. XDV stands at 0.55% which is the highest MER among our three contenders.

Table 2: Performance comparison and analysis

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Performance updated daily

ETF	Div yld %
XDV	4.64
XEI	4.51
VDY	4.33

Source: Yahoo finance

Best Canadian Bank ETFs

Analysis

Performance:

The tables above indicate that VDY is ahead in terms of short-term performance. VDY’s exceptional performance can be attributed to the financial sector, which makes up almost 60% of its portfolio.

For long term performance, VDY is slightly better than both XEI and XDV.

Diversification, Volatility and Dividend yield:

XDV holds 30 high dividend-paying stocks in its holdings while VDY 39 and XEI 77. Thus, XEI offers better diversification. In terms of volatility, all three ETFs have the exact Beta suggesting the same level of risk. XEI has the highest dividend yield, but VDY and XDV are close.

Conclusion:

XEI has the upper hand when it comes to diversification. This ETF is not biased towards a specific sector, while Canadian banks dominate XDV and VDY.

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Table 3: Dividend schedule and Beta

ETF	Monthly Div	Beta* 5yrs
XDV	Yes	0.9
XEI	Yes	0.9
VDY	Yes	0.9

Source:, Beta is measure of volatility over 5 years period. The higher the Beta / The higher the volatility. A beta of 1 means the stock or ETF is as volatile as the TSX.

XEI dividend history

XEI pays dividends on a monthly basis. Please refer the last column of the table below for the amount of dividend distribution.

Amount	Dividend Type	Ex-Div Date	Pay Date
0.1090	Regular	10/28/2024	10/31/2024
0.1130	Regular	9/24/2024	9/27/2024
0.1130	Regular	8/27/2024	8/30/2024
0.1130	Regular	7/26/2024	7/31/2024

XEI ETF holdings

Name	Weight (%)
CANADIAN NATURAL RESOURCES LTD	5.72
NUTRIEN LTD	5.39
TC ENERGY CORP	5.12
ENBRIDGE INC	5.03
TORONTO DOMINION	5.02
SUNCOR ENERGY INC	4.85
ROYAL BANK OF CANADA	4.83
BCE INC	4.62
BANK OF NOVA SCOTIA	4.43
TELUS CORP	4.18

please consult issuers’s website for up-to-date data

XEI ETF Sectors allocation

Type	Weight %
Financials	29.44
Energy	27.49
Communication	13.61
Utilities	12.17
Materials	7.26
Real Estate	5.59
Consumer Discretionary	2.61
Industrials	0.94
Health Care	0.39
Cash and/or Derivatives	0.32

please consult issuers’s website for up-to-date data

The Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY) is an excellent choice for Canadian investors looking to maximize their passive income through dividends. This fund focuses on large Canadian companies that offer high and stable returns. In this article, we will explore the features of VDY, its historical performance, and why it stands out among the top dividend ETFs in Canada.

This post is available also in Video format!

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10 Best Covered Call ETF Canada – High dividend yield

VDY Overview

Attribute	Details
Symbol	VDY.TO
Issuer	Vanguard Canada
Tracked Index	FTSE Canadian High Dividend Yield Index
Assets Under Management	Over $3 billion
Management Fees (MER)	0.22%
Dividend Yield	Around 4% – 5%
Payment Frequency	Monthly

Why Choose VDY for Dividends?

High and Stable Dividend Yield
One of the main attractions of VDY is its attractive dividend yield, typically around 4% to 5%. Additionally, the dividends are paid monthly, making it an excellent choice for investors seeking regular income.
The Tax Advantage of Canadian Dividends
One of VDY’s major benefits is its high dividend yield, generally around 4% to 5%, combined with favorable tax treatment for Canadian investors. Unlike interest or foreign dividends, eligible Canadian dividends benefit from a tax credit, which reduces the tax owed.

Comparison of Investment Income Taxation

The table below shows how much remains after tax from $1,000 of investment income:

Income Type	Net Cash Flow After Tax (For $1,000 Investment Income)
Interest (GIC, bonds, savings account)	$740
Canadian Dividends (e.g., VDY)	$848*
Capital Gains	$870

📌 Canadian dividends are favored due to the tax credit, reducing the tax paid compared to interest income.

Exposure to Top Canadian Companies

VDY includes solid companies that dominate their industries and are known for their financial stability. Here are the key sectors and some of the companies included in the fund:

Financial Sector (~55%): RBC, TD, BMO, Scotiabank

Energy Sector (~30%): Enbridge, TC Energy, Suncor

Telecommunications (~10%): BCE, Telus, Rogers

These companies have an impressive track record of growth and dividend distribution.

Example Calculation: Investing $10,000 in VDY

Let’s assume you invest $10,000 in VDY with an estimated dividend yield of 4.5% (average value).

Step 1: Calculate Annual Dividends

The dividend yield means you receive 4.5% of the invested amount each year:

📌 $10,000 × 4.5% = $450 per year

Step 2: Monthly Dividends

VDY pays dividends every month, so to find the monthly amount:

📌 $450 ÷ 12 months = $37.50 per month

Scenario with Dividend Reinvestment (DRIP)

If you reinvest your dividends, your capital will grow over time thanks to compound interest.

🔹 Let’s assume an 8% annual growth rate (total return including capital appreciation and dividends).
🔹 After 10 years, your investment could grow to approximately $21,589, with higher monthly dividends.

One of the main attractions of VDY is its focus on high dividend yields. The index it follows is designed to include companies that provide above-average dividend yields, which can result in a more substantial income stream for investors compared to a broader index that includes lower-yielding stocks. Investors should be aware, however, that a focus on high yield may sometimes expose them to companies whose dividend payments may not be sustainable in the long term if underlying earnings weaken.

4. Sector Concentration Risk

While VDY offers high dividends, it comes with concentration risks, particularly in the financial and energy sectors. Roughly half of the ETF’s holdings are in financial companies like banks and insurance firms, while another large portion is in energy companies. Both sectors are key dividend payers in Canada, but their performance can be heavily influenced by macroeconomic factors such as interest rates and commodity prices. Investors should be aware of this risk when considering the ETF for long-term growth and stability.

5. Liquidity and Regular Rebalancing

VDY also ensures that the companies in its index meet liquidity standards, making it easier for investors to enter and exit positions without large price fluctuations. The ETF is periodically reviewed and rebalanced to reflect the most current market conditions, ensuring that only high-yielding, liquid companies remain in the index. This keeps the portfolio aligned with its objective of providing a solid dividend income stream, while maintaining exposure to Canada’s largest, most stable companies.

6. Ideal for Income Investors

For investors seeking regular income, VDY stands out due to its focus on companies that have the capacity to pay dividends over the long term. The ETF is particularly attractive for those looking for exposure to high-yielding Canadian stocks without having to select individual companies themselves. It simplifies the process by offering a basket of dividend-paying companies, thereby spreading out the risk while ensuring a steady flow of dividend income.

Is VDY a good investment?

VDY stock vs XDV and XEI

In this section, we will compare VDY with Both XDV – Ishares Canadian Select Div Index and XEI – Ishares S&P TSX Comp High Div Index. See tables below:

Table 1: AUM and MER

ETF	AUM*	MER*
XDV – Ishares Canadian Select Div Index	1,734	0.55
XEI – Ishares S&P TSX Comp High Div Index	1,088	0.22
VDY – Vanguard FTSE CDN High Div Yld Index	1,137	0.21

Source: Barchart – VDY Stock

Looking at the management fees, VDY is attractive. The MER is only 0.21% in comparison with XDV, which stands at 0.55%.

Table 2: VDY Stock – Performance comparison and analysis

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Updated every 15 minutes – VDY Stock

Analysis:

VDY stands out for its long-term performance, leading both the 3-year and 5-year average returns compared to XDV and XEI. This makes it particularly attractive for investors focused on sustained growth over time, especially if looking for dividend-paying Canadian stocks.

Sector Allocation and Diversification:

It’s important to note that both VDY and XEI have a significant portion of their portfolios concentrated in the banking sector, a common characteristic of high-dividend ETFs in Canada. While financials are strong dividend payers, this concentration can expose your portfolio to sector-specific risks. Investors should keep this in mind and ensure that their overall portfolio is diversified across various industries to mitigate these risks.

Holdings and Volatility:

XDV holds 30 high-dividend stocks, whereas VDY includes 39.
In terms of volatility, both XDV and VDY show a similar Beta of 0.9, indicating that they are slightly less volatile than the broader market.

Conclusion:

While both ETFs offer stable dividend income with comparable risk (Beta), VDY consistently outperforms XDV in terms of long-term returns. However, it’s important not to solely focus on past performance. Factors like sector concentration, your overall portfolio strategy, and income objectives should guide the final decision.

Table 3: Dividend schedule and Beta

ETF	Monthly Div	Beta*
XDV	Yes	0.9
XEI	Yes	1.1
VDY	Yes	0.9

Source: TD Market research, Beta is measure of volatility over 5 years period. The higher the Beta / The higher the volatility. A beta of 1 means the stock or ETF is as volatile as the TSX.

Top 10 Best Canadian Dividend Stocks

How much is the dividend for VDY?

VDY pays dividends on a monthly basis. Please refer the last column of the table below for the amount of dividend distribution.

Amount	Adj. Amount	Dividend Type	Ex-Div Date	Record Date	Pay Date	Declare Date

0.2116	0.2116	Regular	9/27/2024	9/27/2024	10/7/2024
0.1944	0.1944	Regular	8/30/2024	8/30/2024	9/9/2024	8/23/2024
0.1648	0.1648	Regular	7/31/2024	7/31/2024	8/8/2024	7/24/2024
0.1827	0.1827	Regular	6/28/2024	6/28/2024	7/8/2024	6/21/2024

What Holdings are in VDY?

Holding Name	% of Market Value
Royal Bank of Canada	13.86%
Toronto-Dominion Bank	12.62%
Enbridge Inc.	7.46%
Bank of Nova Scotia	7.45%
Bank of Montreal	6.63%
Canadian Imperial Bank of Commerce	4.80%
Canadian Natural Resources Ltd.	4.67%
TC Energy Corp.	4.51%

Please refer to issuers’ website for the most up-to-date data

Best Canadian Bank Dividend Stocks

VDY Sectors allocation

Sector	Fund
Financials	57.1%
Energy	26.3%
Telecommunications	7.8%
Utilities	5.9%
Consumer Discretionary	1.7%

Please refer to issuers’ website for the most up-to-date data

Video

China, the world’s second-largest economy, has become an attractive destination for global investors. Its strong growth over the past few decades and continued expansion in sectors like technology, consumer goods, and renewable energy make it a key player in the global economy. If you’re looking to diversify your portfolio and tap into China’s economic potential, Exchange-Traded Funds (ETFs) are one of the most accessible ways to invest.

In this post, we’ll explore the top six ETFs that provide exposure to China’s economy. These funds are listed on both U.S. and Canadian exchanges, and we’ll focus on those with the largest assets under management (AUM), which often offer better liquidity and lower costs due to their size.

Why Invest in ETFs that Track the Chinese Economy?

1. Diversification

China’s economy operates differently from those in North America and Europe, with growth drivers like a massive domestic market and government-driven initiatives. Investing in China can provide geographical and economic diversification to your portfolio, reducing risks associated with a single region.

2. Growth Potential

Although China’s growth has slowed compared to previous decades, it remains a powerhouse with emerging sectors like tech, e-commerce, and renewable energy, offering significant growth opportunities.

3. Ease of Access

ETFs offer a simple way to invest in a broad selection of Chinese companies without having to deal with the complexities of foreign stock markets or individual stock-picking.

Of course, investing in China comes with risks, including political instability, regulatory uncertainty, and economic slowdowns. But with ETFs, you can manage these risks through diversification.

Top 6 ETFs That Track the Chinese Economy

1. iShares MSCI China ETF (MCHI) – U.S.

Ticker: MCHI
AUM: $7.93 billion
Expense Ratio: 0.59%
Exchange: NYSE Arca

The iShares MSCI China ETF (MCHI) is one of the most popular China-focused ETFs available to U.S. investors. It tracks the MSCI China Index, covering large and mid-sized companies listed both onshore and offshore (e.g., in Hong Kong). This ETF offers a diverse mix of industries, including technology, financials, and consumer sectors.

Key holdings include industry giants like Tencent, Alibaba, and China Construction Bank, offering balanced exposure to both new tech companies and traditional industries.

2. KraneShares CSI China Internet ETF (KWEB) – U.S.

Ticker: KWEB
AUM: $4.85 billion
Expense Ratio: 0.70%
Exchange: NYSE Arca

KWEB focuses on China’s booming internet sector, including companies involved in online retail, social media, and digital services. As China’s internet penetration deepens, this ETF has seen strong growth.

Its top holdings include Alibaba, JD.com, and Pinduoduo, making KWEB a perfect fit for investors interested in China’s fast-growing tech and e-commerce space.

3. iShares China Large-Cap ETF (FXI) – U.S.

Ticker: FXI
AUM: $3.23 billion
Expense Ratio: 0.74%
Exchange: NYSE Arca

FXI is a well-established ETF that focuses on 50 of the largest Chinese companies traded in Hong Kong. It’s heavily concentrated in financials, energy, and telecommunications sectors, primarily in state-owned enterprises (SOEs).

While it may not have the tech focus of MCHI or KWEB, FXI offers exposure to more stable, dividend-paying companies like China Mobile and China Construction Bank, which can appeal to income-seeking investors.

4. BMO China Equity Index ETF (ZCH) – Canada

Ticker: ZCH
AUM: $255 million
Expense Ratio: 0.71%
Exchange: Toronto Stock Exchange (TSX)

For Canadian investors, the BMO China Equity Index ETF (ZCH) offers a direct way to gain exposure to the largest Chinese companies. It tracks the FTSE China 50 Index, which includes 50 of the most prominent firms listed on the Hong Kong Stock Exchange.

This ETF is weighted towards the financial sector but also includes technology leaders like Tencent and consumer companies such as Alibaba, providing a broad snapshot of China’s economy.

5. iShares China A-Shares ETF (XCH) – Canada

Ticker: XCH
AUM: $85 million
Expense Ratio: 0.60%
Exchange: Toronto Stock Exchange (TSX)

The iShares China A-Shares ETF (XCH) offers Canadian investors access to the A-share market, which includes companies listed on China’s domestic stock exchanges in Shanghai and Shenzhen. A-shares have historically been challenging for foreign investors to access, making this ETF an excellent way to gain exposure to Chinese companies that are less influenced by global market movements.

XCH tracks the FTSE China A Inclusion Index and is ideal for those looking to invest in China’s domestic economy. Companies in the ETF span across industries such as consumer goods, financials, and industrials, giving it a more diversified exposure to China’s economy.

Final Thoughts: Which ETF is Right for You?

Investing in ETFs that track the Chinese economy can be a great way to diversify your portfolio and tap into the growth potential of one of the world’s largest economies. However, the right ETF for you will depend on your investment goals and risk tolerance.

If you want broad exposure to the Chinese economy, MCHI and ZCH are strong choices.
For a more sector-specific play, particularly in China’s fast-growing tech and e-commerce markets, KWEB is ideal.
For a focus on large-cap, dividend-paying Chinese companies, FXI is a more stable option.
If you’re looking to tap into China’s domestic economy, XCH (for Canadian investors)

While China’s economy presents significant growth opportunities, it also comes with risks, including political tensions, regulatory hurdles, and market volatility. ETFs can offer a diversified and relatively low-cost way to access these opportunities while managing risk.

By carefully selecting the right ETF for your portfolio, you can benefit from China’s economic potential while keeping an eye on the broader risks.

Investing in index ETFs has become a go-to strategy for many investors looking for a straightforward and cost-effective way to build wealth. Among the many index ETFs available, the BMO S&P 500 Index ETF, or ZSP, stands out as one of the most popular in Canada. In this post, we’ll break down why ZSP is worth considering for your portfolio, discussing the benefits and risks, along with its fees, historical performance, and how it compares to similar funds.

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What is an Index ETF?

An Index ETF, like ZSP, is designed to track the performance of a specific market index. The goal is simple: to replicate the returns of the index by buying all (or most) of the securities that make up that index. This gives investors exposure to a wide range of stocks or bonds with just one purchase.

One of the key advantages of index ETFs is their low cost. Since these funds are passively managed—meaning they don’t require a team of managers to select individual stocks—fees are usually much lower than those for actively managed funds.

The Benefits of ZSP

1. Low Fees

One of the main reasons to consider ZSP is its very low expense ratio. At just 0.09%, this means that for every $10,000 you invest, you’re only paying about $9 per year in fees. This is much lower than most actively managed funds, where fees can sometimes reach over 1%. Lower fees help preserve more of your investment returns over time.

2. Exposure to the S&P 500

ZSP tracks the S&P 500 Index, which includes 500 of the largest companies in the U.S. These companies are chosen by a committee based on factors like market size, liquidity, and industry representation. By investing in ZSP, you gain exposure to well-established companies across a broad range of industries, including technology, healthcare, and finance.

Historically, the S&P 500 has delivered an average annual return of around 10% over the long term. This kind of performance makes it a solid foundation for any portfolio, especially for investors looking to benefit from the growth of large U.S. companies.

3. Long-Term Growth Potential

ZSP’s greatest strength lies in its ability to deliver long-term growth. While market downturns are inevitable, holding an investment like ZSP over the long haul and reinvesting dividends can lead to substantial gains.

For example, an investor who put $20,000 into a fund tracking the S&P 500 back in 1985 and held it until today would have seen that investment grow to over $1.3 million, assuming dividends were reinvested. While past performance doesn’t guarantee future results, it’s a testament to the power of long-term investing in a diversified fund like ZSP.

4. Simplicity

Another advantage of ZSP is its simplicity. Rather than picking individual stocks, ZSP allows you to invest in a wide array of companies with one purchase. This makes it a great option for investors who want exposure to the U.S. market without the hassle of stock-picking.

The Risks of ZSP

While ZSP offers many benefits, it’s important to understand the risks involved.

1. Market Risk

Since ZSP tracks the S&P 500, it’s heavily influenced by the performance of the U.S. stock market. If the market declines, ZSP will follow suit. This means that during times of economic uncertainty or downturns, the value of your investment could drop.

2. Currency Risk

For Canadian investors, currency risk is another factor to consider. ZSP is denominated in Canadian dollars, but it holds U.S. stocks. If the Canadian dollar strengthens against the U.S. dollar, your returns from ZSP could be lower. This currency fluctuation can add a layer of volatility to your investment.

3. Lack of Active Management

While the low fees of ZSP are a major benefit, the lack of active management could also be seen as a downside. Active fund managers aim to outperform the market by picking stocks they believe will do better than average. ZSP, on the other hand, simply mirrors the S&P 500, so you won’t get the benefit of potential outperformance during market downturns.

ZSP-U vs ZSP which one to choose

If you are uncertain between a hedged, unhedged or US $ ETF, please refer to the table below:

	Scenario 1: Value of Canadian $ appreciated	Scenario 2: Value of Canadian $ depreciated
Non hedged ETF	Index return Minus foreign exchange loss	Index return Plus foreign exchange gains
Hedged ETF	Index return	Index return
US $ ETF	Index Return The investor chooses when to convert	Index Return The investor chooses when to convert

MER and Asset under management

	Name	MER	AUM
VFV	Vanguard S&P 500 Index	0.08%	5,310
XUS	Ishares Core S&P 500 Index	0.10%	4,616
ZSP	BMO S&P 500 Index	0.09%	10,450

VFV has one of the lowest Management Expense Ratio in its category at 0.08%. The difference with other similar ETFs remain really small though.

Historical performance ZSP Stock

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Updated daily

Since all three ETFs track the same index and it’s understandable they will have very close performance.

ZSP ETF Holdings

Weight (%)	Name	Sector
5.98%	APPLE INC	Information Technology
5.54%	MICROSOFT CORP	Information Technology
2.30%	AMAZON.COM INC	Consumer Discretionary
1.73%	BERKSHIRE HATHAWAY INC	Financials
1.63%	ALPHABET INC	Communication Services
1.57%	UNITEDHEALTH GROUP INC	Health Care
1.46%	JOHNSON & JOHNSON	Health Care
1.45%	ALPHABET INC	Communication Services
1.42%	EXXON MOBIL CORP	Energy
1.23%	JPMORGAN CHASE & CO	Financials

ZSP Sector allocation

Information Technology 26.54%
Health Care 15.09%
Consumer Discretionary 11.76%
Financials 10.97%
Communication Services 8.09%
Industrials 7.85%
Consumer Staples 6.90%
Energy 4.51%
Utilities 3.08%
Real Estate 2.72%
Materials 2.49%

Conclusion: Is ZSP Worth It?

For Canadian investors looking for a simple, cost-effective way to invest in U.S. stocks, ZSP is an excellent choice. With its low fees, exposure to 500 of the largest U.S. companies, and long-term growth potential, it offers a solid foundation for most portfolios. However, like any investment, it’s important to be aware of the risks, including market volatility and currency fluctuations.

Ultimately, ZSP’s strengths lie in its simplicity and cost efficiency. If you’re aiming for long-term growth and want to take advantage of the power of compounding over time, ZSP could be a great addition to your investment strategy.

In this post, we’ll review the Vanguard All-Equity ETF Portfolio (VEQT), a growth-focused ETF that invests 100% in equities. We’ll compare VEQT with other popular all-in-one ETFs like HGRO and XEQT, and explain why VEQT stands out as a versatile and smart choice for a variety of investors and accounts.

1. Simplicity and Broad Diversification

One of the major reasons why many Canadians opt for ETFs is their low management fees and built-in diversification. VEQT offers exposure to a globally diversified portfolio of stocks with just one purchase. This means investors are not only investing in Canadian equities but also gaining exposure to U.S., European, and emerging markets, all in one ETF. For beginner investors, this is ideal because it removes the complexity of selecting multiple funds or individual stocks.

2. No Need to Rebalance

Unlike building a portfolio with multiple ETFs, VEQT manages the rebalancing for you. This is perfect for investors who want a “set it and forget it” approach. The ETF provider ensures that the allocations between Canadian, U.S., and international stocks stay aligned with the fund’s long-term goals, freeing investors from the task of periodic rebalancing. This is particularly appealing for new investors who may not be familiar with when or how to rebalance their portfolio.

3. Great for Different Account Types

VEQT is flexible and can fit into various types of investment accounts, whether it’s a RRSP, TFSA, or a taxable account. In a TFSA, VEQT’s growth potential is fully tax-sheltered, which can help maximize gains over the long term. In a RRSP, its global diversification offers growth opportunities that can be crucial for long-term retirement savings. And even in a non-registered account, VEQT’s simplicity and diversification reduce the headache of managing multiple tax forms or tracking different investments.

4. Perfect for Different Risk Tolerances

While VEQT is classified as a growth ETF, there are other all-in-one ETFs designed for different risk tolerances. For example:

Conservative ETFs: focus more on bonds and fixed-income assets, suitable for risk-averse investors.

Balanced ETFs: split between equities and bonds, ideal for moderate risk takers.

Growth ETFs (like VEQT): invest entirely in equities, offering higher risk and potentially higher returns, making it a solid choice for younger investors or those with a long investment horizon.

5. A Safe Option for Beginners

For new investors, picking individual stocks or ETFs can be intimidating, especially when it comes to rebalancing and managing a portfolio. VEQT simplifies this process, offering a one-stop solution with global equity exposure. Its low-cost structure and automatic rebalancing make it a safe, hands-off option for beginners looking to build wealth over time without the stress of active portfolio management.

In summary, all-in-one ETFs like VEQT are designed for convenience, diversification, and growth. Whether you’re new to investing, looking for a long-term strategy, or simply prefer a hands-off approach, VEQT can meet your needs.

VEQT Review: price and graph

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6 Canadian Dividend Stocks with high dividend growth

VEQT: Fund’s objective

Vanguard All-Equity ETF Portfolio seeks to provide long-term capital growth by investing primarily in equity securities.

This ETF is suited for investors:

-Medium to high-risk tolerance investors with long term horizon;
-Investors who seek an all-in-one solution. VEQT is diversified across various economic sectors and geographic markets.

Comparison: VEQT vs HGRO vs XEQT

Name	DivYield	Mgmnt Fee
HGRO – Horizons Growth Tri ETF	1.15	0.16
VEQT – Vanguard All Equity ETF Portfolio	1.23	0.24
XEQT – Ishares Core Equity ETF	1.53	0.20

Source: Barchart – VEQT review and comparison

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HGRO, the Horizons Growth Tri ETF, boasts the most competitive management fees, at just 0.16%. The fee differences among these three ETFs are quite slight.

Each of these ETFs distributes dividends. iShares’ XEQT leads with a 1.53% dividend yield, followed by VEQT at 1.23%. Nonetheless, the main goal of these growth-oriented ETFs is to achieve long-term growth.

If you are looking for ETFs that focus on generating high dividend income, you can consult our previous post.

Performance: VEQT vs HGRO vs XEQT

In assessing performance, the available data is somewhat constrained as all-in-one ETFs are relatively recent additions to the market. Over the past three years, XEQT and VEQT have demonstrated the highest average returns.

VEQT and XEQT exhibit generally comparable performances.

In the realm of liquidity, HGRO trails behind XEQT and VEQT in popularity. Specifically, HGRO’s assets under management (AUM) are around 200 million. The lower AUM indicates reduced liquidity when trading HGRO. VEQT stands out for its excellent liquidity, attributed to its substantial assets under management, totaling 1.1 billion dollars.

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VEQT Review: Geographic diversification

Country	VEQT %	HGRO %	XEQT %
United States of America	42.9	76.2	48.4
Canada	29.3	22.6	24.0
Asia	9.9	0.1	10.1
Europe	5.8	0.2	7
Latin America	0.8	0.2	0.4
Africa	0.3	0	0.2

Consult issuers’ website for up-to-date data

If you are looking for a diversified ETF with exposure to international market, XEQT and VEQT are the best options available. As you can see in the table above, HGRO has a limited exposure to international markets.

VEQT review: Sector diversification

Sector Classs	VEQT	HGRO	XEQT
Financial Services	19.8	10.6	18.9
Technology	17.6	21.1	17.9
Industrials	11.0	5.3	11.1
Consumer Cyclical	9.6	8.1	9.9
Healthcare	8.8	6.3	9.7
Comm. Services	7.8	9.2	7.9
Consumer Defensive	6.0	3.8	6.2
Basic Materials	6.8	2.1	5.8
Energy	5.8	2.9	5.5
Real Estate	3.3	1.0	3.6
Utilities	3.0	1.5	3.0

Consult issuers’ website for up-to-date data

In terms of sector diversification, all three ETFs invest in stocks on companies operating in the various economic sector. XEQT and VEQT are similar, with financial services and technology at the top at around 18% each. On the other hand, HGRO invests 21.1% in the technology sector and only 10.6% in financial services.

VEQT Holdings

Please refer below to the top 10 stocks owned by VEQT indirectly (Note: VEQT creates your portfolio by investing in various vanguard ETFs. )

Holding Name	% Weight
Apple Inc.	2.08%
Shopify Inc. Class A	2.04%
Microsoft Corp.	1.98%
Royal Bank of Canada	1.90%
Toronto-Dominion Bank	1.61%
Amazon.com Inc.	1.32%
Enbridge Inc.	1.08%
Bank of Nova Scotia	1.0%
Brookfield Asset Management Inc. Class A	0.95%
Canadian National Railway Co.	0.92%

Consult issuers’ website for up-to-date data

Conclusion

All-in-one growth ETFs present a host of advantages for investors. They typically come with low fees, making them a cost-effective choice. Furthermore, many brokers now offer commission-free trades on ETFs, enhancing their appeal. These funds are particularly well-suited for passive investors who have a long-term investment horizon. They offer the benefit of diversification, spreading investments across various assets to mitigate risk. Additionally, investors need not worry about rebalancing their portfolios, as this is managed by the fund’s professionals.

VEQT, in particular, stands out with its relatively low management fees. It provides broad international exposure, allowing investors to tap into global markets. This ETF has demonstrated excellent performance coupled with low volatility, making it an attractive option for those seeking steady growth.

JEPI vs JEPQ

When considering whether JEPI (JPMorgan Equity Premium Income) and JEPQ (JPMorgan Nasdaq Equity Premium Income) ETFs are good investments, it’s essential to understand the key differences between the two.

JEPI

Investment objective

The JPMorgan Equity Premium Income ETF (JEPI) is an income focused covered call ETF. It’s ideal for conservative investors who are seeking income and moderate growth. The manager of JEPI invests in a portfolio of stocks that combine 3 characteristics:

Part of the S&P 500, so in other word large cap stocks only;

Low volatility stocks, meaning, stocks that fluctuate far less than the market. This is generally the case of defensive stocks operating in stable industries. The main metric used by the fund manager of JEPI to assess volatility is the Beta. Beta is a coefficient risk, for instance a Beta of 0.5 would indicate that the stock exhibits 50% of the volatility of the stock market;

Value stocks: the analysts’ team of JEPI will conduct a fundamental bottom up approach to select only stocks that are considered undervalued.

Advantages

JEPI, an ETF focused on issuing call options, offers several advantages that might appeal to certain investors. Firstly, it boasts an attractive yield derived from the money earned through call option writing. Moreover, JEPI exhibits lower volatility compared to investing directly in an S&P 500 index ETF like SPY, making it a suitable option for conservative investors and income seekers.

Another positive aspect of JEPI is its ability to capitalize on high volatility, which often translates to increased premiums for the fund. Additionally, investors can save valuable time and effort by avoiding the need to personally write call options on the S&P 500, as JEPI handles this strategy on their behalf. Furthermore, with relatively low fees of 0.35% total expense ratio, JEPI presents a cost-effective investment choice. The ETF’s diversification across various sectors adds another layer of appeal, spreading risk across different industries.

However, JEPI does have some drawbacks that potential investors should consider. In bull markets, it is expected to underperform the S&P 500 index due to the call option writing strategy, which reduces volatility but also limits its performance during bullish periods.

Recap

Positives

Attractive yield thanks to money earned issuing call options;
Lower volatility than investing in a S&P500 index ETF such as SPY;
Suits conservative investors and income seekers;
High volatility usually increases the premiums earned by the fund;
Saves you time and effort (if you were yourself interested on writing call options on the S&P 500);
Relatively low fees (0.35% total expense ratio);
Diversification: JEPI is highly diversified across various sectors.

Negatives

In bull market, investors should expect a lower performance than the S&P 500 index. Issuing call options reduces volatility at the expense of higher performance in bull markets;

JEPQ

Investment objective

JEPQ (JPMorgan Nasdaq Equity Premium Income ETF) is a high distribution yield ETF. It focuses on providing investors with a monthly income stream using covered call strategies. These strategies enhance yield by collecting premiums on call options. JEPQ invests in large cap Teck stocks that are part of the NASDAQ. Using a proprietary selection criteria, the manager would select companies with the highest prospects for growth seeking the highest adjusted return possible (low volatility combined with high returns).

Advantages

JEPQ ETF, focused on writing call options on the NASDAQ 100, offers similar benefits to JEPI. It provides an attractive yield from call option writing and boasts lower volatility compared to a NASDAQ 100 ETF like QQQ, appealing to conservative investors and income seekers.

However, JEPQ has some significant negatives that investors need to be aware of. It tends to perform poorly during bullish market conditions, as the covered call strategy curtails the upside potential of the NASDAQ 100.

Furthermore, JEPQ’s lack of diversification is a notable concern, with a heavy concentration in tech firms dominating the fund. This lack of diversification exposes investors to higher risks compared to a more balanced investment approach.

Recap

Positives

Attractive yield thanks to money earned issuing call options;

Lower volatility than investing in a NASDAQ 100 ETF such as QQQ;

Suits conservative investors and income seekers;

High volatility usually increases the premiums earned by the fund;

Saves you time and effort (if you were yourself interested on writing call options in the NASDAQ 100;

Relatively low fees (0.35% total expense ratio).

Negatives

Poor performance (compared to the index in bull markets). You are essentially giving up on the upside potentiel of the NASDAQ 100;

The strategy of covered calls becomes ineffective in an unpredictable market;

JEPQ is dominated by Tech firms so it’s far from being a diversified investment;

Conclusion

Ultimately, whether JEPI or JEPQ is a good investment depends on individual investor preferences, risk tolerance, and market outlook. JEPI’s lower volatility and diversification across sectors could be attractive to those seeking stability and income, while JEPQ’s focus on the NASDAQ 100 may appeal to tech-focused investors. It is crucial for investors to conduct thorough research, consider their financial goals, and consult with a financial advisor to make informed investment decisions.

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Additional info (Video)

Executive summary VDY vs XEI

When contemplating between VDY and XEI, the decision hinges on your investment goals. VDY emphasizes dividend yield, drawing from high-quality Canadian stocks, though it faced challenges due to a banking sector retreat. On the other hand, XEI, with a passive strategy, showcases resilience through the strength of the energy sector. Consider your risk tolerance and investment objectives—consistent growth or robust dividends. While VDY leans towards the latter, be mindful of its heavy exposure to the financial sector. In contrast, XEI offers a more stable trajectory. Weigh the nuances outlined to align your investment strategy with your financial objectives.

VDY:

VDY is a popular Canadian dividend ETF, offering instant exposure to a high-quality portfolio of high dividend-paying stocks. This Canadian-focused ETF aims to replicate the performance of the FTSE Canada High Dividend Yield Index, which comprises Canadian stocks with a high dividend yield. Managed by FTSE, a global leader in index creation, the index follows a meticulous process. It selects companies from the broad Canadian equity index (FTSE Canada Index) and evaluates their 12-month forward dividend yield using Thomson Reuters’ I/B/E/S. Stocks forecasted to pay no regular dividends in the next 12 months are excluded. The index then ranks and periodically screens for liquidity. In examining VDY’s objective, strategy, volatility, and performance, this post also delves into a comparison with rival ETFs, providing investors with a comprehensive overview of VDY stock in the Canadian dividend landscape.

XEI:

XEI ETF, managed with a passive strategy, aims to replicate the performance of the S&P/TSX Composite High Dividend Index ETF. Ideal for investors seeking long-term capital growth, XEI provides exposure to diversified sectors of Canadian companies. The ETF offers a monthly dividend income, catering to investors desiring frequent payouts. The S&P/TSX Composite High Dividend Index, comprised of 50 to 75 stocks, focuses on dividend income, with constituent issuer weights limited to 5% and sector weights capped at 30%. Managed by Standard & Poor’s, the index considers criteria like market capitalization, liquidity, and domicile on the Toronto Stock Exchange. Rebalanced quarterly, it ensures alignment with its objectives and provides geographic and economic balance across 11 GICS® sectors.

Performance comparison VDY vs XEI

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VDY vs XEI: Full comparison

Objective and Strategy:

VDY, focusing on high-quality Canadian dividend stocks, replicates the FTSE Canada High Dividend Yield Index using a meticulous selection process. Meanwhile, XEI adopts a passive strategy, tracking the S&P/TSX Composite High Dividend Index ETF to provide exposure to diversified sectors of Canadian companies. Both ETFs aim to meet investors’ objectives, with VDY emphasizing high dividend yield and XEI targeting long-term capital growth.

Volatility and Performance:

VDY’s approach involves evaluating 12-month forward dividend yield, excluding stocks forecasted to pay no dividends. XEI, on the other hand, follows criteria such as market capitalization, liquidity, and domicile to ensure alignment with its objectives. Both strategies contribute to overall performance, with VDY emphasizing quality and dividend yield, while XEI offers exposure to a broad market with a focus on high dividends.

VDY.TO, despite its historical strong performance, faced headwinds at the start of the year due to a retreat in the big Canadian banking sector. The negative impact on VDY’s YTD return of -4.56% can be attributed to the significant influence of banking stocks in its portfolio. The retreat is likely associated with the rise in interest rates, a factor that tends to impact banking stocks negatively.

On the other hand, XEI.TO has displayed better performance YTD, with a positive return of 0.21%, mainly attributed to the resilience of the energy sector. The positive performance of the energy sector has acted as a buffer, mitigating the overall impact of sector-specific challenges faced by VDY.

Fees:

In terms of fees, both ETFs are tied, with an identical Management Expense Ratio (MER) of 0.22%. Vanguard, managing VDY, has a reputation for prioritizing investors and has a track record of lowering fees on their ETF lineup.

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Size:

A crucial factor in ETFs is their size, influencing liquidity and trading dynamics. Both XEI and VDY have similar Assets Under Management (AUM) of approximately $1.76 billion and $1.77 billion, respectively, indicating sufficient size for buy-and-hold investors.

Holdings:

XEI tracks the S&P/TSX Composite High Dividend Index with 75 stocks, primarily concentrated in energy, financials, telecommunications, and utilities. VDY tracks the FTSE Canadian High Dividend Yield Index with 39 stocks, concentrated in financials, energy, telecommunications, and utilities. The distribution yields for XEI and VDY are close.

Conclusion

Personally, I lean towards VDY due to its emphasis on high-quality dividend stocks. However, I am mindful of its heavy exposure to the financial sector during portfolio allocation. This awareness allows for a balanced approach, considering both the strengths and potential challenges associated with VDY’s specific sector concentration.

The choice between VDY and XEI depends on investors’ preferences and objectives. VDY’s emphasis on dividend yield may appeal to income-focused investors, while XEI’s broad exposure and resilience in specific sectors may attract those seeking long-term growth.

Portfolio holdings

VDY ETF holdings

Holding Name	% of Market Value
Royal Bank of Canada	13.86%
Toronto-Dominion Bank	12.62%
Enbridge Inc.	7.46%
Bank of Nova Scotia	7.45%
Bank of Montreal	6.63%
Canadian Imperial Bank of Commerce	4.80%
Canadian Natural Resources Ltd.	4.67%
TC Energy Corp.	4.51%

Please refer to issuers’ website for the most up-to-date data

XEI ETF holdings

Name	Weight (%)
CANADIAN NATURAL RESOURCES LTD	5.72
NUTRIEN LTD	5.39
TC ENERGY CORP	5.12
ENBRIDGE INC	5.03
TORONTO DOMINION	5.02
SUNCOR ENERGY INC	4.85
ROYAL BANK OF CANADA	4.83
BCE INC	4.62
BANK OF NOVA SCOTIA	4.43
TELUS CORP	4.18

please consult issuers’s website for up-to-date data

Investment objective

The iShares S&P/TSX Capped Energy Index ETF (XEG) offers an attractive option for Canadian investors who want exposure to the energy sector. The primary goal of XEG is to replicate the performance of the S&P/TSX Capped Energy Index, which tracks the overall performance of the Canadian energy market. This makes XEG an ideal vehicle for those seeking a diversified entry point into the energy sector without the need to buy individual energy stocks.

Investors in XEG gain exposure to a wide array of companies involved in the exploration, production, and distribution of energy. These companies range from large, established oil and gas producers to newer firms that are innovating within the energy space. The ETF allows you to invest across the entire energy value chain, from upstream exploration to downstream distribution, all through a single, low-cost investment.

Why would investors consider XEG?

Diversification in the Energy Sector: XEG includes a variety of companies from different energy sub-sectors, reducing the risks associated with investing in individual companies. Investors can capture a broad range of opportunities across the Canadian energy landscape, from traditional oil producers to more diversified energy firms.

Low-Cost Access: XEG offers an affordable way to gain exposure to the energy sector. Compared to actively managed funds or picking individual energy stocks, XEG’s management fees are lower, making it a cost-effective option for long-term investors.

Performance Linked to the Energy Sector: Since XEG tracks the S&P/TSX Capped Energy Index, its performance is directly tied to the overall health of the Canadian energy sector. As the energy industry remains a significant driver of the Canadian economy, this ETF benefits from the cyclical upsides of oil and gas prices and energy demand.

Easy Entry Point for Sector-Specific Investing: Whether you’re bullish on energy prices or looking to diversify your portfolio, XEG offers an easy way to include a critical sector of the Canadian economy in your investment strategy. It’s particularly attractive for investors with a positive outlook on the future of energy markets or those wanting to hedge against inflation through energy investments.

In summary, XEG is an effective tool for Canadian investors looking to capitalize on the energy sector’s growth. Whether you’re interested in traditional oil and gas or the broader energy market, XEG provides a convenient and cost-efficient way to gain exposure.

Historical performance vs similar funds

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XEG.TO is a standout performer with a YTD return of 11.45%, a 3-year average return of 26.30%, and a 5-year average return of 18.05%. Its combination of solid returns and low fees makes it an attractive option for investors seeking exposure to the energy sector. However, it’s important to keep in mind that XEG has significant concentration risk, with a large portion of the fund invested in just two companies: Canadian Natural Resources and Suncor. This concentration exposes the ETF to potential volatility if either of these companies underperforms.

NNRG.NE shows promise with a YTD return of 6.65% and a 3-year average return of 22.56%. Although it lacks a 5-year history, its focus on mid-cap energy stocks provides diversification away from the larger energy players that dominate the other funds.

ENCC.TO currently lacks sufficient return data, making it difficult to assess its performance. As more data becomes available, it may be worth considering.

NXF.TO has a YTD return of -0.50%, a 3-year average return of 17.02%, and a 5-year average return of 7.87%. Its covered call strategy aims to enhance income generation, which could appeal to dividend-focused investors, though its recent negative YTD performance indicates it might lag in times of market volatility.

ZEO.TO delivers strong returns with a YTD return of 17.60%, a 3-year average return of 22.25%, and a 5-year average return of 16.65%. This solid performance makes it a competitive option, especially for those seeking high returns within the energy sector.

In conclusion, XEG.TO remains a top performer despite the potential risks of concentration, while ZEO.TO and NNRG.NE offer competitive alternatives. NXF.TO, with its income-focused strategy, could be more suitable for dividend-oriented investors, and ENCC.TO is one to watch as it gathers more data.

Fees

Management Fee	0.55%
Management Expense Ratio (MER)	0.60%

Top 10 holdings

Ticker	Name	Weight (%)
CNQ	CANADIAN NATURAL RESOURCES LTD	26.12
SU	SUNCOR ENERGY INC	21.45
CVE	CENOVUS ENERGY INC	11.74
TOU	TOURMALINE OIL CORP	7.71
IMO	IMPERIAL OIL LTD	4.97
ARX	ARC RESOURCES LTD	4.70
MEG	MEG ENERGY CORP	2.67
WCP	WHITECAP RESOURCES INC	2.10
CPG	CRESCENT POINT ENERGY CORP	2.01

Sector allocation

Type	Fund
Oil & Gas Exploration & Production	55.31
Integrated Oil & Gas	38.16
Oil & Gas Drilling	5.08
Oil & Gas Equipment & Services	1.42
Cash and/or Derivatives	0.03

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If you’re seeking enhanced income options, Hamilton ETFs offers two interesting covered call ETFs: HYLD and HDIF. These ETFs share a focus on income generation, but understanding their distinctions is key when choosing which might align better with your portfolio (HYLD vs HDIF).

Executive summary

Feature	HYLD (Hamilton Enhanced U.S. Covered Call ETF)	HDIF (Hamilton Enhanced Multi-Sector Covered Call ETF)
Issuer	Hamilton ETFs	Hamilton ETFs
Focus	U.S. stocks (primarily S&P 500)	Canadian stocks
Strategy	Covered call options for income enhancement	Covered call options for income enhancement
Geographical Exposure	United States	Canada
Currency Risk (for Canadian Investors)	Yes (USD exposure)	No
Potential Sector Differences	Heavier tech weighting typical of S&P 500	May have heavier energy and financials weighting
Considerations	Preference for U.S. market, currency fluctuations	Preference for Canadian market, domestic focus

The Basics

HYLD (Hamilton Enhanced U.S. Covered Call ETF): HYLD targets high income by writing covered calls on stocks primarily within the S&P 500 index, offering investors exposure to the U.S. market.

HDIF (Hamilton Enhanced Multi-Sector Covered Call ETF): Similar to HYLD, HDIF also uses a covered call income strategy but concentrates on equities within the Canadian market.

The Hamilton Approach

Since HYLD and HDIF are both issued by Hamilton ETFs, they likely use similar covered call strategies. However, the differences in their underlying holdings lead to some key considerations:

Geographical Focus: HYLD provides exposure to the broader U.S. market, while HDIF remains within Canada. This impacts potential currency fluctuations and exposure to the unique economic cycles of each country.

Sector Differences: The S&P 500 (HYLD’s focus) and the Canadian market (HDIF’s focus) could have varying sector weights. For example, the Canadian market often has a heavier energy and financials weighting compared to the U.S.

Yield and Risk

Hamilton ETFs are known for their focus on income generation. But remember:

Covered calls can limit upside potential if underlying stocks experience substantial growth.
Market volatility and stock price declines can negatively impact premiums or even lead to distribution reductions.

Considerations for Choosing

The optimal choice for you depends on:

Geographical preference: Where do you want your primary market exposure?

Sector interests: Do you have specific sector preferences that better align with the U.S. or Canadian market composition?

Currency considerations: (for Canadian investors) HYLD has U.S. dollar exposure, introducing currency exchange factors to consider.

Risk tolerance: Are you willing to accept potential distribution fluctuations in pursuit of higher income potential?

Final Word

HYLD and HDIF, as Hamilton ETFs, offer ways to enhance income. However, they’re not designed for massive capital gains. Before investing, do your homework to understand their strategies, risks, and how they fit into your overall financial plan.

Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Seek guidance from a qualified financial advisor for personalized investment recommendations.

Let me know if you have any other aspects you’d like explored further!