Tag: XIU

News: Upcoming changes to S&P 500, S&P/TSX Composite

RobH1 Comment

As a dedicated low-fee ETF investor (new to ETFs? read more here), most of my holdings are actually tied up in various index funds; as of right now about 26% of my retirement savings are tied up in the S&P 5001 (largely by holding AOA and XGRO, two of my ETF all-stars), and another 11% are tied up in the S&P/TSX capped composite2 (a lot of which is due to holding XGRO)3.

Beyond making sure I keep my asset allocations in line (read more about that concept here), there’s not much to do. But this doesn’t mean that what I ultimately hold isn’t always changing!

I was reminded of that fact when I noted the latest announcements from S&P, who on a quarterly basis, rejig their indices to add new stocks and drop others. It’s not something I’ve typically paid any attention to, but I share it with you because I found it interesting.

S&P 500: AppLovin, Robinhood & Emcor added, MarketAxxess, Caesars and Enphase deleted

Effective, September 22, 2025 per the press release.

Newly added: AppLovin seems to deal in the world of online advertising, Robinhood is a notorious4 online broker, and Emcor looks to be a construction company.

Newly booted: Marketaxess sells a platform to financial services companies, Caesars operates casinos, and Enphase is a solar energy product company5.

S&P/TSX Composite6: 5 added, 2 deleted

Effective September 22, 2025 per the press release.

Newly added: Aris, Discovery, Perpetua and Skeena who are all involved with precious metals production7 and Curaleaf which is a weed dispenser.

Newly deleted: Enghouse (software and services, based in Markham) and Pason (products and services for oil and gas based in Calgary).

If ever you want to see what’s in either of these indicies, then check out this chart for the S&P 500 and this chart for the TSX composite.

  1. You can read about this index right from the source if you like. ↩︎
  2. There’s another 6% in the S&P/TSX60 index, which are the 60 largest Canadian firms. The 10 year return of these two indicies is nearly identical — 7.98% for the capped, 8.06% for the TSX 60. You can read about the capped composite here. ↩︎
  3. You may wonder where the rest of holdings are. There’s 15% in various bond indices, 5% in cash, and the rest are in an assortment of international indices (largest are MSCI World ex-US at 10% and MSCI EAFE IMI at around 5%) and lesser-known US/Canadian indicies (like FTSE all-cap Canada or S&P total market US). In the Canada/US case, I’m rather certain that an all-cap index has a very high correlation with the large-cap indices; I could have bundled it all together I suppose. ↩︎
  4. Notorious because they are associated with meme stocks. ↩︎
  5. It’s probably not a good time for any US company in the renewables business, sadly. ↩︎
  6. I wondered when the last change to the TSX 60 was. I couldn’t find one after September 2019! ↩︎
  7. Perhaps a “why I don’t need to buy gold bars from Costco” comment is apropos here ↩︎

How to read an ETF fact sheet: what’s in a name?

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Summary: The standard ETF fact sheet is 4 pages of information a Canadian ETF provider is required to provide. Here’s some tips about what to look for in a name.

Google AI, which is never wrong, tells me that there are more than 1500 ETFs available for purchase on the Canadian market. For those new-to-DIY-investing1, that can seem a little overwhelming. Most of my retirement holdings are tied up in just two asset-allocation ETFs, but prior to retirement, I enjoyed juggling a bunch of index ETFs to roll my own custom asset allocation that I rebalanced manually.

A good skill to have is to understand some of the basic language used in these fact sheets so you can decide if a given ETF is right for you and your investment objectives.

What’s the name of the ETF?

So much is captured in the full name of a given ETF. There’s key words I look for, and key words that I avoid.

Words I look for: “Index” or maybe “Idx”

An index is a list of assets that comply to a set of rules laid out by the index manager. You can think of an index as a detailed recipe for building a list of stocks or bonds. What’s important is that the index is not invented by the company selling you the ETF. The index is a third-party invention, and any ETF company can make use of the recipe in offering you, the investor, a product to buy. The index is the recipe, and the ETF company is the chef that prepares the dish that you buy. You could become a chef yourself, and buy the individual components of the index on your own. However, since some of the indices are comprised of hundreds or even thousands of assets, not every index is realistic for the home chef to create.

An ETF that uses the word “index” in its name suggests it’s a passive ETF, meaning there’s a skeleton crew of managers making trades based solely on what’s in the index. I like index funds because they are generally cheap, and over time, they beat the active traders2 again and again.

Like the ETF market itself, there has been an explosion in the number of indices3 out there created by the likes of FTSE Russell or MSCI. Knowing the names of some of the most popular indices can help:

  • S&P/TSX 60: Canadian stock market’s largest 60 companies. Canadian ETFs that track this include XIU and ZIU.
  • S&P 500: US Stock market’s largest 500 companies. Canadian ETFs that track this include VFV, ZSP, and XUS.
  • Russell 2000: US Stock market’s next-largest 2000 companies after first dropping the top 10004. A Canadian ETF that uses this index is XSU.
  • MSCI EAFE: Developed country index, excluding USA and Canada. Canadian ETFs that use this index include ZEA and XEF5
  • FTSE Canada Universe Bond Index: A broad set of Canadian corporate and government bonds. Sold as ZAG by BMO and XBB by BlackRock/iShares.

A quick search reveals all kinds of very specific index funds: sector based (e.g. “AI” or “Healthcare”) and country/region based (e.g. “China”, “BRICSA”). I ignore these kinds of funds because betting a sector or a region feels like market timing to me, and market timing is a proven loser in terms of long-term returns.

Words I avoid: “Hedged”

“Hedged” means that the ETF uses some kind of strategy to smooth out the ups and downs in the Canadian dollar’s exchange rate. And on one level, it makes sense: if you buy the S&P500, you’re owning a bunch of US stocks priced in US dollars. If the Canadian dollar gets stronger, then your US holdings are worth less in CAD. If the Canadian dollar gets weaker, then your US holdings are worth more to you in CAD. So some funds try to make this variance go away.

I avoid hedged funds for a few reasons:

  • It adds cost and complexity to the fund, two things I dislike about where I choose to invest.
  • It’s imperfect; while it makes the bumps in the foreign exchange rate get smaller, it would be overly expensive to make them go away completely
  • If you hold an asset long enough and reinvest your dividends, it will be a wash in the end, and the extra cost just creates a drag on your returns. For example, let’s compare XUS versus XSP, which are identical, save for XSP’s use of hedging:
The long term cost of using hedging: XUS vs XSP (hedged)

Words I avoid: “Leveraged” / “Bull” / “Bear”

“Leveraged” means “we’re buying stocks using borrowed money”. And while buying stocks using borrowed money can significantly enhance your returns in an up market, the opposite is true in a down market. No free lunch.

Any ETF that has Bull or Bear in the name is making a bet based on short term returns. Buying scratch tickets at Christmastime is enough gambling for me, and gambling has no place in my retirement strategy.

Summing up

Looking at the name of an ETF is a good starting filter to decide if it’s for you. It’s just one piece of many included in an ETF’s fact sheet.

  1. Tips on how to execute on that decision were the topic of a previous post ↩︎
  2. For example: https://www.spglobal.com/spdji/en/research-insights/spiva/#canada ↩︎
  3. One tip I can offer: if more than one ETF exists offering the index, it’s probably a decent index to consider. Be a bit suspicious if only one company has an ETF that mirrors said index — I’d consider it a bit of a fringe offering, of no interest to me. ↩︎
  4. This is normally seen as a “mid cap” or “small cap” index, meaning “US stocks that aren’t in the S&P 500”. I looked at https://www.marketbeat.com/types-of-stock/russell-2000-stocks/ and the first company I recognized was Duolingo. ↩︎
  5. As an illustration of the insanity regarding the explosion of indices, XEF tracks not MSCI EAFE but MSCI EAFE IMI, which adds a few more smaller companies into the mix. But if you refer to https://www.msci.com/documents/10199/11a56df6-0f09-4477-a168-cce49e1719cd you will see that the long term performance differs by 0.01%. ↩︎