Super Micro Computer, Inc. (SMCI) is a prominent player in high-performance computing solutions, specializing in the design and manufacturing of servers, storage solutions, and data center technologies. Founded in 1993 and headquartered in San Jose, California, the company plays a crucial role in rapidly growing areas such as artificial intelligence (AI) and IT infrastructure. However, SMCI is currently navigating a challenging period marked by financial and regulatory hurdles, as well as increased market volatility.
Recent Stock Performance
Risk of Nasdaq Delisting
Delays in Financial Reporting SMCI has missed several critical deadlines for financial reporting:
-The annual report due on August 29, 2024.
-Several quarterly reports, also pending submission.
The company has until Monday, November 20, 2024, to submit a plan to address these delays and maintain its Nasdaq listing. If approved, SMCI could be granted an extension until February 2025 to comply with regulatory requirements.
Potential Impact of Delisting
A delisting could lead to heightened volatility, as institutional investors like hedge funds and ETFs often liquidate positions in delisted stocks. This typically creates downward pressure on share prices.
Notably, SMCI has experienced a delisting before, in 2018, when its stock fell to $1.31. The company later rebounded dramatically, reaching $120 in March 2023. This history suggests the possibility of significant recoveries if the company resolves its compliance issues.
Current Challenges and Issues
Regulatory and Operational Problems
SMCI faces several allegations, including:
–Accounting irregularities.
–Sanctions violations.
-Employment of personnel linked to related parties.
In 2018, SMCI paid a $17 million fine for accounting violations. While the financial impact of these infractions was limited, they revealed structural weaknesses in governance and risk management.
Management Criticism
Despite its technological achievements, SMCI’s management has faced criticism for:
-Poor operational execution.
-Inadequate handling of compliance issues.
These recurring problems have led to repeated delisting threats, damaging the company’s reputation.
Strengths and Opportunities
Strategic Market Position
SMCI holds a strong position in high-growth sectors like AI and data centers. These markets offer substantial growth potential due to increasing demand for high-performance computing solutions.
Revenue Growth
Despite its challenges, SMCI continues to deliver impressive financial results:
–$25 billion in projected revenue for fiscal year 2024, reflecting 70% year-over-year growth.
-Forecasted $30 billion in revenue for 2025, marking a further 20% increase.
Current Valuation
With a market capitalization of $10.2 billion, SMCI trades at approximately 0.4x its revenue, a ratio significantly below historical averages. This low valuation reflects current uncertainties but could improve with favorable developments.
Future Outlook
Post-Delisting Scenarios
If SMCI is delisted but manages to address its compliance issues, it could potentially return to Nasdaq. This could restore investor confidence and normalize its valuation.
Impact of Corrective Measures
Efforts to improve governance and accelerate financial reporting will be crucial for rebuilding the company’s credibility. Progress on regulatory issues will also be a key factor to monitor.
Conclusion
Super Micro Computer is facing significant challenges, including delays in financial reporting and regulatory concerns. However, its position in high-growth technology sectors and ability to generate strong revenues present an intriguing contrast. The next steps, particularly the submission of a compliance plan and responses to allegations, will be critical in shaping the company’s future trajectory. Investors and observers will be closely watching this situation to evaluate its long-term impact.
Building a portfolio of Canadian dividend stocks is an effective strategy for generating passive income while diversifying your investments. Spreading investments across multiple economic sectors can not only limit the risks associated with fluctuations in a particular sector, but also take advantage of the regular dividends paid by well-established companies in Canada.
This article presents a selection of the best Canadian stocks by sector, with a focus on key sectors such as financials, energy, telecommunications, utilities and consumer goods.
How to Build a Canadian Dividend Portfolio: Sector Allocation
Creating a well-diversified portfolio of Canadian dividend stocks is based on a sector allocation tailored to each investor’s passive income objectives and risk tolerance. This article provides a list of the best Canadian dividend stocks by sector, as well as a suggested sector allocation. The distribution indicated is only a suggestion; It is essential that each investor adjusts the percentages according to their needs. For example, if your priority is revenue stability and predictability, you may want to place greater emphasis on the utilities and telecommunications sectors. Conversely, a more growth-oriented approach could overweight sectors such as consumer goods and energy, which offer the prospect of high returns although they are sometimes more volatile.
To build this sector allocation, you can also take inspiration from popular dividend ETFs such as the Vanguard FTSE Canadian High Dividend Yield Index ETF (ETF: VDY), theiShares Canadian Select Dividend Index ETF (ETF: XDV), and the iShares Core S&P/TSX Composite High Dividend Index ETF (ETF: XEI), which allocate their assets based on the dividend performance of Canadian companies. These ETFs offer an indicative sector allocation that can serve as a starting point, but it’s always best to tailor the allocation based on your analysis and view of each sector’s potential returns.
Popular Canadian Dividend Stocks by Sector
Financial sector (30-35%)
The financial sector is crucial in a Canadian dividend portfolio. While Canada’s largest banks have a significant share, it is recommended to diversify slightly to avoid overexposure. You could allocate about 30% of the portfolio to banks like Royal Bank of Canada (RY),Bank of Montreal (BMO) and Bank of Nova Scotia (SNB). These institutions offer generous and regular dividends, but it makes sense to supplement this allocation with non-bank financial securities, such as insurance or asset management companies, to limit the risks associated with the banking sector.
Ticker
Enterprise
Dividend(%)
Description
RY
Royal Bank of Canada
About 4.1%
Canada’s largest bank by capitalization, known for its consistent dividends.
BMO
Bank of Montreal
About 4.3%
Historic bank with prudent management and more than 190 years of continuous dividends.
BNS
Bank of Nova Scotia
About 6%
Offers a high dividend with significant exposure to international markets.
TD
Toronto-Dominion Bank
About 4.0%
Strong presence in Canada and the United States with steadily increasing dividends.
CM
Canadian Imperial Bank (CIBC)
About 5.5%
Attractive dividend, with a strong track record of financial stability.
NA
National Bank of Canada
About 4.2%
Well positioned in Quebec, with stable dividend growth.
MFC
Manulife Financial
About 5.7%
Insurance company offering a high and diversified dividend internationally.
Energy sector (20-25%)
With Canada being a major producer of oil and gas, the energy sector is a source of high dividends. Companies like Enbridge Inc. (ENB) and TC Energy Corp (TRP), known for their oil and natural gas transportation infrastructure, are offering attractive dividends. To add resilience, you could also include Canadian Utilities (CU), which, while classified as a utility, has diversified businesses in renewable energy. The entire sector offers solid incomes but is also exposed to some volatility related to commodity prices.
Ticker
Enterprise
Dividend yield (%)
Description
ENB
Enbridge Inc.
About 7.5%
Oil and natural gas transportation, leader in energy infrastructure.
TRP
TC Energy Corp
About 6.8%
Natural gas pipeline network and projects, active in North America.
CU
Canadian Utilities
About 4.7%
Diversified into energy and utilities, appreciated for the regularity of its dividends.
SU
Suncor Energy
About 4.9%
Integrated player in the oil industry, present in production and refining.
CNQ
Canadian Natural Resources
About 4.5%
One of the largest independent oil and gas producers.
IMO
Imperial Oil
About 3.2%
ExxonMobil’s Canadian subsidiary, specializing in exploration and refining.
RNW
TransAlta Renewables
About 6%
Producer of renewable energy (wind and hydroelectricity) in Canada.
Services publics (15-20%)
Utilities, such as Fortis Inc. (FTS),Algonquin Power & Utilities Corp (AQN), and Hydro One Ltd. (H), are ideal for a stable portion of the portfolio. These companies provide essential services (electricity and gas) and are known for their resilience in bear market times. With often regular dividends and increased cash flow predictability, utilities form a safe foundation in a dividend portfolio.
Ticker
Enterprise
Dividend yield (%)
Description
FTS
Fortis Inc.
About 4.3%
Well-diversified electric and gas company with assets in North America.
AQN
Algonquin Power & Utilities Corp
About 6%
Focused on renewable energy and traditional utilities.
H
Hydro One Ltd.
About 3.5%
Ontario’s electricity supplier, valued for its financial stability.
EMA
Emera Inc.
About 5.0%
Electricity and gas in North America, which is very involved in clean energy.
CU
Canadian Utilities
About 4.7%
ATCO’s Utilities Division, diversified into utilities.
NPI
Northland Power
About 4.5%
Independent producer of clean energy, including wind and solar.
INE
Innergex Renewable Energy
About 4%
Renewable energy specialist, with assets in Canada and internationally.
Telecommunications (10-15%)
The telecommunications sector is another pillar for generating passive income in Canada.Inc. (BCE),TelusCorporation (T)andRogers Communications (RCI. B)are the main players offering competitive dividends. These companies are benefiting from a constant demand for communication services, particularly with the deployment of 5G. This stability makes the telecom sector an essential component for investors looking for regular income.
Ticker
Enterprise
Dividend yield (%)
Description
BCE
BCE Inc.
About 6.2%
Leading Canadian telecom provider, with stable revenues and a high dividend.
T
Telus Corporation
About 5.5%
Strong presence in mobile and digital health, known for its dividend growth policy.
RCI.B
Rogers Communications
About 3.2%
A player in 5G and mobile telephony, with a growing dividend.
QBR.B
Quebecor Inc.
About 4.5%
Present in Quebec, diversified into cable, internet, and media.
SJR.B
Shaw Communications
About 3.8%
Telecommunications and Internet services provider, recently acquired by Rogers.
MBT
Manitoba Telecom Services (Bell MTS)
About 4.0%
Specializes in telecommunications services in Manitoba.
CGO
Cogeco Inc.
About 2.4%
Internet and cable service provider, expanding in Eastern Canada.
Consumer staples (10-15%)
For further diversification, including consumer staples is essential. Metro Inc. (MRU),George Weston Ltd. (WN), and Empire Company Ltd. (EMP. A) are strong companies operating in essential sectors such as food and basic necessities. Although their dividend yields are often lower than in other sectors, these companies provide resilience to economic cycles. They are therefore a protection against consumption drops in difficult times.
Consumer Goods Sector: Food & Essentials
Ticker
Enterprise
Dividend yield (%)
Description
MRU
Metro Inc.
About 1.5%
Grocery and drug chain is the leader in Quebec and Ontario with stable dividend growth.
WN
George Weston Ltd.
About 1.8%
Parent company of Loblaw, well diversified into food and retail.
EMP.A
Empire Company Ltd.
About 2%
Owner of Sobeys and IGA, well established in the Canadian food sector.
L
Loblaw Companies Ltd.
About 1.6%
Leading food and pharmacy retailer, with FMCG brands.
SAP
Saputo Inc.
About 2.2%
A major producer of dairy products, present in Canada and internationally.
ATD
Alimentation Couche-Tard
About 0.9%
Convenience store chain, very active in acquisitions and global expansion.
DOL
Dollarama Inc.
About 0.4%
Leader in discount stores in Canada, with rapid expansion and low dividend.
How to Select Dividend Stocks: Key Ratios and Stability Criteria
Here are the key elements and ratios to consider, as well as an overview of the “Dividend Aristocrats“, the companies that are particularly reliable for investors looking for dividends.
1. Key Ratios for Valuing Dividend Stocks
Dividend Yield: The dividend yield is a ratio that measures the ratio of the annual dividend per share to the share price. For example, a stock listed at $100 with an annual dividend of $4 will have a yield of 4%. This ratio allows for a comparison of the returns of different stocks, but a return that is too high can signal increased risk, as distressed companies may temporarily maintain a high dividend to attract investors.
Payout Ratio: This ratio indicates the share of profits that a company devotes to dividends. A payout ratio above 80% may indicate that the company is spending a large portion of its profits on dividend payments, which may limit its ability to invest in growth. Ideally, a payout ratio between 40% and 60% is considered healthy.
Dividend Growth: A history of dividend growth is a good indicator of a company’s stability and financial health. Companies that are able to increase their dividends every year often show strong financial management and an ability to generate stable revenue.
Price-to-earnings (P/E) ratio: While the P/E ratio is primarily a valuation indicator, it can help identify stocks that are reasonably priced relative to earnings. A P/E that is too high could signal a risk of a price correction, which could affect the value of the investment, even if dividends remain stable.
2. The Importance of Dividend History
The history of paying dividends is another essential criterion. Companies that have paid dividends regularly over several decades are often perceived as stable and resilient to economic crises. This history indicates financial strength and a management policy aimed at rewarding shareholders. For example, Canadian companies such as the Royal Bank of Canada and Enbridge have demonstrated consistency in their dividends, even during a recession.
3. The ‘Dividend Aristocrats’
In Canada, aristocratic stocks have slightly different criteria than their U.S. counterparts. Here, the minimum required to be considered an Aristocrat Dividend is to have increased its dividends for at least 5 consecutive years. Although this threshold is less demanding than the 25-year threshold in the United States, it remains a sign of solidity and consistency for companies that meet this criterion. These companies are often leaders in their respective industries, with prudent financial management and a stable business model that allows them to reward their shareholders year after year.
The Canadian Dividend Aristocrats are mainly present in stable and well-established sectors, such as financials, utilities, and energy. Among them are companies like Fortis Inc., which has increased its dividend for more than 45 consecutive years, BCE Inc., and Canadian Utilities, all of which are recognized for their consistency in dividend payments. These companies offer investors peace of mind, as they are able to generate stable cash flows even in periods of economic volatility.
Investing in Canadian Aristocratic Dividends can therefore be an attractive strategy for investors looking for stable and growing sources of income over the long term, while having a portfolio that is less vulnerable to market fluctuations.
Conclusion
Building a diversified portfolio of Canadian dividend stocks is a smart strategy for generating passive income while minimizing risk. By allocating their investments across different sectors, each investor can tailor their portfolio to their goals, whether it’s stability, growth, or dividend optimization. While this article offers a sector allocation and a selection of popular stocks in key sectors like financials, energy, telecommunications, utilities, and consumer goods, it is essential that each investor adjusts these recommendations based on their own financial goals and risk tolerance. By drawing on the allocations of popular Canadian ETFs such as VDY, XDIV and XEI, and regularly re-evaluating the performance of each sector, it is possible to build a balanced portfolio that can generate strong income and withstand market fluctuations.
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.
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.
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.
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
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.
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:
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.
Please refer to issuers’ website for the most up-to-date data
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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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
You want to get a bank account that would be used both to pay your bills and to accumulate interest! It is now entirely possible; Neo financial savings account is a hybrid product managed entirely online. In this article, we will go over all the advantages of this type of account!
Neo Money account advantages
Here are the main advantages of choosing the Fintech Neo Financial service:
Opening a Neo Money account is done in just 3 minutes. The registration process is 100% online from the mobile application. The saver completes the contact form and creates his user profile. From the app, the customer simply sends a proof of address and a proof of identity to validate his account;
100% management possible from your smartphone
Neo financial is developing a practical everyday solution to save with complete peace of mind from your mobile. This is truly the guideline of the Fintech service which presents a quality user experience thanks to a powerful app, both in terms of interface and ergonomics;
Note: please note the Neo Money accounts are not available yet in Quebec.
Summary Neo Money account
Sign in process
online in minutes
Pre-requisites
– Canadian resident – SIN number
Interest earned rate
3.0% on every dollar plus 30$ Bonus
Minimum Deposit
0$
Availibility of funds
Immediate
Fees
No monthly fees or minimum balances, with unlimited free transactions.
Neo credit card is a unique cashback card that offers both great discounts and more flexibility. Instead of just having a fixed cashback rate, the Neo card offers a list of popular merchants with special cashback rates. The merchant community that Neo does business with offers an average of 3% unlimited cash back on all purchases made. This reward formula is more interesting than a classic cash back card.
*This site uses affiliate links and sponsored content to offset costs associated with running the blog. If you click and/or make a purchase through affiliate links on this site, I may receive a small payment at no additional cost to you. All opinions are mine. I only link to products and services that I currently use or have used in the past. Thank you for helping to make this site work, by providing you with free and valuable content!
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).
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!
