Executive summary VFV vs XIU
In summary, VFV and XIU, with their distinct features and strengths, can be complementary components in building a diversified investment portfolio that spans both the U.S. and Canadian markets. The combination offers a strategic approach to balancing risk and capitalizing on the opportunities presented by the North American economic landscape. Additionally, XIU’s dividend yield and its inclusion of Dividend Aristocrat stocks further enhance its appeal for income-focused investors.
VFV:
Objective: VFV focuses on mirroring the performance of the S&P 500 Index, providing exposure to the 500 largest U.S. companies.
Low Fees: VFV is known for its cost-effectiveness, boasting a management expense ratio (MER) of just 0.08%. With $6.5 billion in assets under management (AUM) and high daily trading volume, VFV is a highly liquid and widely traded ETF.
Currency Fluctuations: As a Canadian-domiciled U.S. ETF, VFV is not currency hedged. This means its value can fluctuate based on the CAD-USD exchange rate. When the USD appreciates vs. the CAD, VFV gains additional value, and vice versa. Over time, these fluctuations tend to even out.
Global Diversification: VFV provides global diversification through its exposure to U.S. large-cap stocks, including technology giants like Apple, Microsoft, and Amazon.
Buffett’s Favorite Index: It’s worth noting that the S&P 500 is Warren Buffett’s favorite index, reflecting its significance and reputation as a key indicator of the U.S. stock market.
XIU:
Objective: XIU seeks long-term capital growth by replicating the performance of the S&P/TSX 60 Index, net of expenses. It offers exposure to the 60 largest and most liquid stocks on the Toronto Stock Exchange (TSX), with a focus on established Canadian companies.
Pioneer Status: XIU holds historical significance as the oldest ETF in Canada, starting trading in 1990. With $11 billion in AUM and high liquidity, XIU remains a widely traded ETF in the Canadian market.
Sector Composition: The S&P/TSX 60, tracked by XIU, is more heavily weighted towards the financial and energy sectors compared to the S&P 500. This provides investors with a unique sectoral exposure, including major Canadian banks and energy companies.
Dividend Yield: XIU pays a respectable yield, thanks to its many underlying Dividend Aristocrat stocks in the energy, banking, telecom, and utilities sectors. The 12-month trailing yield currently stands at 2.41%, paid quarterly. Reinvesting this dividend can significantly boost your returns.
Performance comparison VFV vs XIU
Complementing Each Other:
Investing in both VFV and XIU allows investors to create a balanced North American equity portfolio. VFV offers exposure to the dynamic U.S. market, while XIU provides stability through Canadian blue-chip stocks.
VFV’s global diversification and XIU’s sectoral focus on the Canadian market complement each other, contributing to a well-rounded and diversified investment strategy.
Diversified Portfolio:
Combining VFV and XIU leverages the strengths of both economies and markets, providing investors with a diversified portfolio that spans North America.
Investors can benefit from VFV’s low-cost structure and global exposure, along with XIU’s historical significance, liquidity, and focused exposure to the Canadian market.
Portfolio holdings
VFV
| Holding Name | % of Market Value | Sector |
| Apple Inc. | 6.94% | Computer Hardware |
| Microsoft Corp. | 6.47% | Software |
| Amazon.com Inc. | 3.19% | Diversified Retailers |
| NVIDIA Corp. | 2.97% | Semiconductors |
| Alphabet Inc. | 2.14% | Consumer Digital Services |
| Tesla Inc. | 1.91% | Automobiles |
| Meta Platforms Inc. | 1.84% | Consumer Digital Services |
| Alphabet Inc. | 1.84% | Consumer Digital Services |
| Berkshire Hathaway Inc. | 1.76% | Diversified Financial Services |
| Exxon Mobil Corp. | 1.3% | Integrated Oil and Gas |
XIU
| Symbol | Name | Weight |
|---|---|---|
| RY | ROYAL BANK OF CANADA | 6,90 |
| TD | TORONTO DOMINION | 6,40 |
| CNQ | CANADIAN NATURAL RESOURCES LTD | 4,39 |
| ENB | ENBRIDGE INC | 4,26 |
| CP | CANADIAN PACIFIC KANSAS CITY LTD | 4,06 |
| CNR | CANADIAN NATIONAL RAILWAY | 3,92 |
| SHOP | SHOPIFY SUBORDINATE VOTING INC CLA | 3,63 |
| BMO | BANK OF MONTREAL | 3,39 |
| BNS | BANK OF NOVA SCOTIA | 3,04 |
| SU | SUNCOR ENERGY INC | 2,72 |
