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iShares Core S&P/TSX Capped Composite Index ETF (XIC)
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Vanguard FTSE Developed All Cap Ex U.S. Index ETF (VDU)
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Vanguard S&P 500 Index ETF (VFV)
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BMO Nasdaq 100 Equity Index ETF (ZNQ)
Q: For ETF’s there are a number of variations of a given index such as market capitalization weighting vs equal weight capitalization vs capped weighting and for Canadian versions of US ETF’s hedged vs unhedged. I’m sure I’m probably missing other differentiating options. For someone who wants to invest in Canadian (rather US) dollars, and given all these different options, I’m wondering what your preferred funds would be for S&P500, NASDAQ100, and an international ex-US ETF and a brief comment for each as to the rationale why? For coverage of the TSX do you prefer a fund that tracks the TSX60 or the entire index and which one would that be? Would these suggestions differ depending upon whether the funds are held in a non-registered account vs an RRSP vs other registered accounts (TFSA, FHSA and RESP)? Thanks.
5i Research Answer:
VFV would be our preferred ETF for the S&P 500: it is liquid, unhedged with low fees (0.09%) and will represent the index well. ZNQ for Nasdaq, for similar reasons though fees are higher at 0.39%. VDU for international ex-US. It has $400M+ in assets and fees are OK at 0.22%. It is also an 'all cap' ETF so a broad range of companies are represented. We like XIC which is a capped TSX Composite ETF. Generally, we would prefer any US exposure to be in an RRSP instead of a TFSA.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.