TSX60 ETF - kicking out Bombardier & Blackberry a bad idea?The issue arises from the fact the REIT sector in Canada has yet to be included in the TSX60. REITs now make up an important portion (albeit still small at about 5%) of the Canadian market. Only 60 companies can be included in the ETF TSX60 and so the smaller caps at the bottom have to make way for larger caps now represented by REITs.
As everyone knows the Canadian market is already very poorly diversified. While financials, energy, mining and materials make up 70% + of the TSX60 (same for the 300), other sectors such as industrials, consumer staples and discretionary, health, telecommunication and utililies group make up less than 30% of the TSX60.
If rules can be modified to now include REITs in the TSX60, something needs to give for indutrials and others. In my opinion it really doesn't make any sense to accomodate the REIT sector at the price of having to further increase the concentration of companies and sectors which are already over represented.
Taking out companies like Bombardier and Blackberry out of the TSX60 will only serve to furtther concentrate an index which is already too concentrated in other sectors and which already offers relatively poor diversification.
While it does make sense in my opinion to include REITs in the TSX, it will benefit no one by taking out what little industrial representation is there now.