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Loblaw Companies Limited (L)
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Metro Inc. (MRU)
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Alimentation Couche-Tard Inc. (ATD)
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iShares S&P/TSX Capped Consumer Staples Index ETF (XST)
I see its 5yr & 10yr returns are 10% & 12%, its 3 largest holdings (ATD, Loblaws, MRU) total about 60% of the fund, and it has 11 holdings.
I would basically purchase for diversification as opposed to buying the main holdings individually and paying commissions. Thank you.
It is true that XST could provide investors with decent exposure to the consumer sector which is stable and earns decent returns over time. XST is quite heavily concentrated on the top holdings, but investors can still get some benefit from diversification from other small holdings. XST has a management expense ratio (MER) of 0.61%, which is OK. That being said, we think the majority of the returns came largely from the top three holdings ATD, L, and MRU. Investors can actually do quite well just owning these three instead. At the end of the day, it depends on investors' preferences whether they prefer diversification and passive holdings or individual stock picking, but we think both of them could work. In addition to no fees, the stock approach also allows flexibility in tax planning (i.e. selling losers for tax losses) which is not available via the ETF route.