It’s been a mixed bag for stocks so far this year. Some sectors continue to struggle, especially those that are interest-rate-sensitive like telecoms and utilities. But other sectors have picked up the slack, including energy. And some overseas markets are also doing well.
Many investors prefer using ETFs instead of selecting individual stocks. This allows for the creation of a diversified portfolio at minimal cost. Here are four ETFs that I’ve selected for readers of my Internet Wealth Builder newsletter. All have turned in good results so far in 2024. Prices are as of the close on April 19.
iShares India Index ETF
Closed Friday at $52.19.
Ticker: XID-T
Background: This fund invests in a portfolio of the top 50 Indian stocks by market cap – the “Nifty Fifty” index, as it’s commonly known.
Performance: India is benefitting from an influx of foreign capital as more investors and companies move to profit from its burgeoning economy and growing population. The price has been volatile over the past year, but the overall trend is up. We’ve seen a gain of 10.2 per cent since the units were recommended last October. The three-year average annual compound rate of return is 10.1 per cent.
Key metrics: The fund was launched in January, 2010, and has $107-million in assets under management. The management expense ratio (MER) is high for an ETF, at 1.03 per cent.
Portfolio: The fund invests in units of the U.S.-based iShares India 50 ETF (INDY-Q). It’s heavily weighted to financials, which make up one-third of the assets. Other large sectors include information technology (12.85 per cent), energy (12.69 per cent) and consumer discretionary (9.23 per cent).
Distributions: The fund usually makes semi-annual distributions, although they are normally very small and sometimes even zero. The December, 2023, payment was 16.4 cents per unit.
Risk: BlackRock, which distributes the iShares funds, gives it a medium-high risk rating.
Outlook: The U.S. banking firm Jefferies recently published a report saying that India will become the world’s third largest economy by 2027, surpassing those of Germany and Japan. It currently sits at No. 5 with a GDP of US$3.4-trillion. Jefferies predicts the Indian GDP will reach US$10-trillion by 2030.
CI First Asset Morningstar Canada Value Index ETF
Closed Friday at $21.23.
Ticker: FXM-T
Background: This fund invests in stocks of the largest and most liquid Canadian public issuers based upon proprietary research by Morningstar. It is designed to provide diversified exposure to stocks which are considered “good value,” based on characteristics such as low price-to-earnings and low price-to-cash flow ratios.
Performance: The fund bumped along at around $20 from October to early February. It has been gradually edging higher since. During the first quarter of this year, it gained 5.7 per cent. The three-year average annual compound rate of return to March 31 was 8.6 per cent.
Key metrics: The fund was launched in February, 2012, and has $310-million in assets under management. The MER is 0.65 per cent. The company rates the fund risk as medium to high.
Portfolio: The portfolio composition is quite balanced. Utilities are the No. 1 sector, at 19 per cent of assets. Financials account for 16 per cent, energy 14 per cent, consumer staples 13 per cent and basic materials 11 per cent.
The portfolio is equally weighted with no stock holding accounting for more that 3.71 per cent of total assets. Top holdings include Kinross Gold Corp., Teck Resources Ltd and Finning International Inc.
Distributions: Payments are made quarterly and can vary significantly. The trailing 12-month total payout was 60.6 cents for a yield of 2.85 per cent at the current price.
Outlook: This fund has performed well, and the portfolio composition is altered on a regular basis to reflect market conditions.
Harvest Tech Achievers Growth and Income ETF
Closed Friday at $16.79.
Ticker: HTA-T
Background: The fund invests in an equally weighted portfolio of 20 large-cap tech companies such as Micron Technology Inc., Applied Materials Inc., Meta Platforms Inc. and Oracle Corp. The ETF is designed to provide a consistent and competitive monthly income with an opportunity for growth. The managers write covered call options to generate income.
Performance: The fund has been on a steady upward trend for most of the past year. As of the end of March, it was ahead almost 13 per cent for 2024, with a three-year average annual compound rate of return of almost 16 per cent.
Key metrics: The fund was launched in April, 2015. The original units are Canadian dollar hedged but there are also unhedged units (HTA.B) and U.S. dollar units (HTA.U). The fund has $590-million in assets under management. The management fee is 0.85 per cent. That’s on the high side for ETFs, but this is an actively managed fund.
Portfolio: The fund is equally weighted with each holding representing about 5 per cent of total assets. All the positions are U.S. companies.
Distributions: Payments are made monthly and are currently running at 12 cents per unit. If that continues, investors will receive $1.44 in distributions this year for a yield of 8.6 per cent at the current price.
Risk: We rate it as high. Tech stocks have been doing well this year but many look pricey at current levels. The covered call strategy does mitigate the risk to some extent.
Outlook: There are concerns about a tech bubble, but the rapid emergence of AI is fuelling a new growth spurt.
iShares Core S&P U.S. Total Market ETF
Closed Friday at $50.49.
Ticker: XUU-T
Background: This ETF tracks the entire U.S. market, including small, medium and large cap stocks. It comes in both a hedged version (XUH) and an unhedged version (XUU). We have recommended XUU.
Performance: The fund has been on an uptrend for most of this year and was showing a year-to-date gain of 10.29 per cent as of April 15. We have a capital gain of 147 per cent since our original recommendation in March 2015.
Key metrics: The fund was launched in February, 2015, and has $2.7 billion in assets under management. The MER is a very low 0.07 per cent so almost all your money is working for you.
Portfolio: This is a fund of funds. It invests in four U.S. ETFs, the largest of which are the iShares Core S&P 500 (47.57 per cent of total assets) and the iShares Core S&P Total U.S. Stock (45.76 per cent). The rest of the portfolio consists of small positions in small- and mid- cap ETFs and a limited amount of cash.
In sector terms, the fund has a 28.2 per cent exposure to information technology. Other large positions are financials (13.42 per cent), health care (11.71 per cent) and consumer discretionary (10.46 per cent).
Distributions: Payments are made quarterly, and the amounts vary considerably. The latest was 13.1 cents per unit, which was paid in March. Over the past 12 months, distributions have totalled about 55 cents per unit, for a trailing yield of 1.1 per cent at the current price. This is not a fund to own if you need steady cash flow.
Outlook: This is an all-stock ETF so returns will reflect what is happening in the U.S. equity markets. They have trended higher for much of this year. Long-term, this is a core holding for anyone who wants exposure to the broad U.S. market.
We rate all these ETFs as buys at this time.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.
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Gordon Pape