The Toronto Stock Exchange (TSX) recently celebrated a significant milestone this month - the 30th anniversary of the launch of the first exchange traded fund (ETF) on its index.
(Video via TMX on Yotube.)
In coincidently related news, with a seemingly never-ending wave of new product launches that cater to every theme imaginable, ETFs now outnumber individual operating company stocks on the TSX, making them a go-to choice for many investor’s portfolios thanks to their diversity of offerings.
Much like stocks, an ETF is an investment fund traded on stock exchanges. An ETF holds assets ranging from stocks, commodities, or bonds and generally operates with a so-called “arbitrage mechanism”, which is designed to keep share prices in line with the value of the underlying securities or assets.
For newer investors: To learn more about ETFs, click here to read a brief background, by Stockhouse. For more on how to perform deeper due diligence through tips, such as how to calculate their price-earnings ratio, click here. Stockhouse has also highlighted specific ETFs in renewable energy.
Top TSX ETFs:
BlackRock Asset Management Canada Limited, iShares Core S&P U.S. Total Market Index ETF (TSX: XUU) - An indirect, wholly-owned subsidiary of BlackRock, Inc. (NYSE: BLK), this ETF replicates the performance of the S&P Total Market Index, with $4.3 billion (CAD) in assets under management (AUM).
BMO S&P TSX Capped Composite IDX ETF (TSX: ZCN) – Under BMO Asset Management (an investment fund and portfolio manager, a separate legal entity from Bank of Montreal), this ETF replicates the performance of the S&P / TSX Capped Composite Index with $4.1 billion in AUM.
Horizons S&P / TSX Capped Composite Index ETF (TSX: HXCN) – Through Horizons Exchange Traded Funds, this ETF replicates the performance of the S&P / TSX 60 Index and has $1.7 billion in AUM.
Via the TMX news release, as of February 29th, 2020, there were 732 ETFs listed on TSX with 135 new products launched since January 2019. In 2019, 5.9 billion ETF shares were traded on TSX, representing almost 7% of all trading on the Exchange. TSX ETFs held over $201 billion in AUM at year-end 2019 and represent 44% of total TSX listings.
Do you have any success stories with solid ETF performance from your own portfolio? Let us know in the comments below.