Exchange Traded Funds (ETFs) are one of the most popular ways to diversify your portfolio across different asset classes. Amid the ongoing macro uncertainty, investing in large-capitalization stocks could be an apt way to earn stable returns with minimal risk. iShares S&P/TSX 60 Index ETF (TSE:XIU) and Horizons S&P/TSX 60 Index ETF (TSE:HXT) are two such ETFs that invest in large-cap companies traded on the Toronto Stock Exchange (TSE). Let’s look at the two ETFs in detail.
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iShares S&P/TSX 60 Index ETF (TSE:XIU)
The iShares S&P/TSX 60 Index ETF seeks to replicate the performance of the S&P/TSX 60 Index to earn long-term capital growth. Founded in 1990, XIU is one of the largest and most liquid ETFs in Canada, according to iShares.
As of November 6, XIU’s assets under management (AUM) stood at C$14.79 billion. It has a reasonable expense ratio of 0.18%. Notably, XIU also pays a regular quarterly dividend of C$0.27 per share, carrying a current yield of 1.99%.
XIUs’ top ten holdings contribute 43.18% of the total portfolio. Its top three holdings are Royal Bank of Canada (TSE:RY), Toronto-Dominion Bank (TSE:TD), and Shopify (TSE:SHOP).
Overall, the XIU ETF has a Moderate Buy consensus rating. Of the 61 stocks currently held in the portfolio, 49 have Buys and 12 have Hold ratings. Also, the average XIU ETF price target of C$39.88 implies 6.6% upside potential from current levels. Year-to-date, XIU ETF has returned 18.2%.
Horizons S&P/TSX 60 Index ETF (TSE:HXT)
The Horizons S&P/TSX 60 Index ETF seeks to replicate the returns of the S&P/TSX 60 Index. The index invests in equity securities of 60 of the largest and most liquid companies listed on the S&P/TSX 60 and offers a wide range of sectoral exposure.
HXT was founded in September 2010 and has one of the lowest expense ratios of 0.08%. As of November 5, HXT had an AUM of $4.08 billion. Its top three holdings include Toronto-Dominion Bank, Enbridge (TSE:ENB), and Brookfield Corp. Class A (TSE:BN). Year-to-date, HXT ETF has returned 18.4%.
Ending Thoughts
Investing in large-cap companies comes with a host of benefits, especially when the macroeconomic background is tough. Large-cap companies offer stable growth and returns over the long term despite market fluctuation, thanks to their well-established businesses.
ETFs like XIU and HXT offer the benefits of large-cap stocks, allowing investors to gain exposure to large companies with ease. It’s wise to do some thorough research before investing in these ETFs.
