It’s no secret that the U.S. stock market has historically performed better than its Canadian counterpart over the years. If you want to invest in the U.S. market, S&P 500 funds like XUS ETF are a low-risk way to invest in the U.S. market with minimal funds.
Canadian investors looking for exposure and desire to add balance and stability to their portfolio will find iShares Core S&P 500 Index ETF (XUS) a suitable option.
Exchange-traded Funds (ETFs) offer instance diversification, allowing you to own a basket of over 500 US companies with one asset.
This XUS ETF review discusses Blackrock’s iShares Core S&P 500 Index ETF (XUS), its fees, performance, pros and cons, and how it compares to other ETFs in the market.
Without skipping a bit, let’s get right into it.
What is iShares Core S&P 500 Index ETF (XUS)?
iShares Core S&P 500 Index ETF (XUS) is one of the exchange-traded funds offered by Blackrock. XUS ETF tracks the S&P 500 index and trades on the Toronto Stock Exchange under the “XUS.TO” ticker symbol.
Incepted on April 10, 2013, XUS was designed to allow Canadian investors to gain exposure to U.S. stocks and companies without paying equities in U.S. dollars.
If you want to add exposure to the U.S. stock market without buying individual stocks, XUS ETF is a suitable option for your needs. It is eligible for both registered and non-registered accounts in Canada.
Key Facts About XUS ETF (As of November 1, 2022)
- Inception date: April 10, 2013
- Stock price: $63.60
- Assets under management: $4.3 billion
- Number of underlying holdings: 504
- Management fee: 0.09%
- MER: 0.10%
- Distribution yield: 1.08%
- 12-month trailing yield: 1.21%
- Distribution frequency: Semi-annually
- Price/Earnings Ratio: 22.13x
- Price/Book Ratio: 4.25x
- Currency: CAD
- Eligible accounts: RRSP, TFSA, RRIF, TFSA, DPSP, RDSP
Benefits and Drawbacks of XUS ETF
There are several benefits and drawbacks to buying XUS ETFs and getting exposure to the largest U.S. companies without paying foreign exchange fees.
You should consider a few pros and cons of XUS ETF before buying.
Pros
- Highly liquid
- Diversified exposure
- Low cost
- Holds its U.S.-listed counterpart, IVV, to reduce transaction costs
Cons
- Tech Heavy
- Only pays distribution semi-annually
- High MER compared to other ETFs
XUS ETF Returns/Performance
XUS ETF was designed to replicate the performance of the S&P 500, and it does that effortlessly, which is why XUS is an ETF to invest in.
XUS ETF has been a steady performer, but this does not guarantee that the historical returns don’t indicate future performance. Below is the breakdown of the cumulative returns of XUS ETF since its inception.
Source: www.blackrock.com
XUS ETF Holdings
XUS ETF is different from other index funds ETFs. It is not an all-stock fund; it includes another ETF (IVV) as the main holding.
XUS also has names of the highest weighted stock in the U.S. market under its holdings.
While a majority of XUS holdings are made up of iShares Core S&P 500 ETF (IVV), it also has weightings from other large companies like Apple, Amazon, Tesla, etc.
Source: www.blackrock.com
XUS ETF Sector Allocation
XUS not only offers exposure to over 500 companies in the U.S. market but also provides you with little extra growth opportunity and adds a little weight to the biggest companies in the S&P 500 index.
Below is the sector breakdown for XUS as of November 1, 2022.
Source: www.blackrock.com
XUS ETF Underlying Holdings
As of November 1, 2022, Apple Inc. has the largest holdings in XUS at a 6.91% weighting, followed closely by Microsoft Corp at a 5.18% weighting. NVDA is at the bottom of the list at a 1.41% weighting.
Ticker | Name | Weight (%) |
AAPL | APPLE INC | 6.91 |
MSFT | MICROSOFT CORP | 5.18 |
AMZN | AMAZON COM INC | 2.58 |
TSLA | TESLA INC | 1.81 |
BRKB | BERKSHIRE HATHAWAY INC CLASS B | 1.65 |
GOOGL | ALPHABET INC CLASS A | 1.65 |
UNH | UNITEDHEALTH GROUP INC | 1.60 |
GOOG | ALPHABET INC CLASS C | 1.47 |
XOM | EXXON MOBIL CORP | 1.44 |
JNJ | JOHNSON & JOHNSON | 1.41 |
Source: www.blackrock.com
XUS ETF Fees
- Management fee: 0.09%
- Management Expense Ratio: 0.10%
Source: www.blackrock.com
XUS ETF charges reasonable amounts for its management fees and MER. Though it’s not the cheapest in the market, it is considerably lower than investing in an average mutual fund through Canadian financial institutions. An average mutual fund in Canada charges about 1.98%.
Is XUS ETF a Good Buy?
iShares S&P 500 ETF (XUS) is an affordable and diversified ETF that is highly regarded. Canadians who desire exposure to the U.S. stock market will find XUS ETF a good choice.
If you want to add balance to your portfolio and get exposure to the S&P 500 at a reasonable management fee, XUS ETF is the right ETF to add to your portfolio.
This Blackrock ETF provides diversification by investing in the S&P 500 index and investing in it with Canadian dollars.
How To Buy XUS ETF in Canada?
Buying XUS ETF is simple, especially when you use platforms like Wealthsimple Trade and Questrade.
- Wealthsimple Trade: Wealthsimple Trade is a newly launched but popular investment platform in Canada from Wealthsimple financial institutions. It allows you to buy and sell ETFs like XUS at a charge of $0. It is available on desktop and mobile apps and has a very user-friendly interface making it easy to start your XUS ETF investment. Click here to open a Wealthsimple Trade account and get a massive welcome bonus.
- Questrade: Questrade has been around for a long time and has gathered the trust of many Canadian investors. You can buy ETFs like XUS for free on Questrade, but you must pay at least $4.95 when you want to sell your ETF. Click here to open a Questrade account and start trading with a huge welcome bonus.
XUS Vs XSP
XUS and XSP are two similar ETFs from the iShares line of Blackrock. They track the performance of the S&P 500.
However, the difference between both is that XSP is the hedged version of XUS. XSP is hedged against the Canadian dollar to protect it from currency fluctuations.
XSP holds little portions of U.S. and Canadian dollars, so if anyone fluctuates, the hedged XSP stabilizes your portfolio and eliminates foreign exchange fees.
Also, XSP has management fees of 0.09% and MER of 0.10% to match XUS. It also pays out distributions on a semi-annual basis.
Learn more about XUS vs XSP
XUS Vs VFV
VFV is an all-stock ETF from Vanguard Canada that directly mirrors the S&P 500 index. It trades on the Toronto Stock Exchange in CAD dollars and eliminates the need for foreign exchange fees.
It offers lower management fees and MER than XUS ETF. VFV offers management fees and an MER of 0.08%.
Also, in contrast to XUS, VFV ETF pays out its distribution quarterly.
XUS Vs XUU
iShares S&P US Total Markets Index (XUU) tracks the entire U.S. market and offers four other iShares ETFs. XUU holds iShares Core S&P Total US Stock RTF (ITOT), the iShares Core S&P Small-Cap ETF (IJR), the iShares Core S&P Mid-Cap ETF IJH), and s 50.26% weighted holdings of IVV.
XUU is hedged to hold both Canadian and U.S. dollars as well. It has a management fee and MER of 0.07%, and its distribution is paid out quarterly.
Final Thoughts on XUS ETF Review
If you want to round out your investment portfolio and add balance and diversity by buying U.S. stocks, consider buying XUS ETF.
XUS is reasonably affordable and offers one of the best options for investing in ETFs. However, if you are looking for other ETFs or other S&P 500 ETFs, you can consider options like VFV or VSP.
FAQs on XUS ETF Review
Is XUS hedged?
XUS ETF is not hedged against the Canadian dollar. It doesn’t hold any currency and is subject to foreign exchange fluctuations. However, it has a closely similar ETF from Blackrock that is hedged called XSP.
Is XUS a good investment?
Protecting your investment portfolio with ETF funds is a move in the right direction. And with XUS ETF, you have a good investment. It offers you relief with an index that exhibits consistent gains and volatility.
Does XUS pay dividends?
XUS ETF pays dividends in the form of distributions semi-annually. The distribution yield is 1.08% as of November 1, 2022.
Hi, I'm Adeola Adegoke. I am a licensed Insurance Broker in Manitoba, and I hold a master’s degree in Mathematical Sciences (with a major in Financial Modeling) from the African Institute for Mathematical Sciences (AIMS), Tanzania.
Also, I have a second master's degree in Statistics from the University of Regina, and I am currently pursuing my Ph.D. in Statistics at the University of Manitoba.
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