The main difference between VFV and XIC is that VFV aims to replicate the performance of the S&P 500 while XIC aims to replicate the performance of the S&P/TSX Composite Index.
The Vanguard S&P 500 Index ETF (VFV) is managed by Vanguard while the iShares Core S&P/TSX Capped Composite Index ETF (XIC) is managed by BlackRock.
The S&P 500 is a market capitalization-weighted index that is designed to mirror the returns of the 500 largest companies traded on stock exchanges in the US.
In essence, that means that the higher the market capitalization of a company, the greater its influence on the total return of the index.
As one of the most cited and closely monitored indices in the world, the S&P 500 offers a good proxy for the performance of the overall US equity market.
For that reason, the index is also the most commonly-used benchmark for stocks, ETFs, and other assets.
The S&P/TSX Composite index tracks roughly 70% of the total market capitalization of the Toronto Stock Exchange.
Similar to the S&P 500, the S&P TSX Composite Index is also a market capitalization-weighted index.
However, unlike the S&P 500 which is weighted heavily towards technology firms, the S&P/TSX Composite Index has the largest weightage towards financial institutions in-line with the broader TSX.
Both ETFs are denominated in CAD and are suitable for long-term investors who hold a bullish view on North American equity markets.
VFV
Launched in 2012, the Vanguard S&P 500 Index ETF (VFV) tracks the performance of the broad US S&P 500 equity index.
Through the ETF, investors get indirect exposure to the growth and returns of the 500 most valuable companies in America.
As a long-term core holding, VFV allows investors to capture the US economy’s natural tendency to move upwards over time without the need for active participation, i.e., buying and selling at frequent intervals.
The VFV ETF is rated as medium risk given that it is entirely comprised of 100% equities, which are classified as ‘risk assets’.
However, the underlying equities in the S&P 500 are diversified by sector, region and customer base, thereby reducing the overall risk of any one company or sector on total returns.
For investors seeking an investment that leverages the potential of the American economy, VFV offers a solid option that has historically delivered strong capital gains with modest dividends (paid on a quarterly basis).
Since inception, VFV has delivered 17.16% annualized growth with a 5-year annual performance of 15.69% (as of June 30, 2024).
As at the same date, VFV had total assets of $14.21 billion.
XIC
The iShares Core S&P/TSX Capped Composite Index ETF (XIC) was launched in February 2001 and replicates the performance of the largest Canadian stock index, i.e., the Toronto Stock Exchange (TSX).
Advertised as a long-term core holding, XIC offers exposure to a significant portion of Canadian equity markets within a single security.
XIC is ideal for young and middle-aged investors with a longer time horizon for goals such as retirement and a bullish view of the Canadian economy.
With financial institutions comprising of nearly 30% of the overall exposure, XIC is also beneficial for investors seeking a balance of capital gains growth with strong, reliable dividend yields.
As of June 30, 2024, the ETF had $12.13 billion in assets under management.
Since its inception, the XIC ETF has delivered 7% annualized returns with a 3-year return of 5.92%.
Performance: VFV vs. XIC
VFV Annualized Performance (as of June 30, 2024):
- 3-Year: 13.34%
- 5-Year: 15.69%
- 10-Year: 15.29%
- Since Inception: 17.16%
XIC Annualized Performance (as of June 30, 2024):
- 3-Year: 5.92%
- 5-Year: 9.26 %
- 10-Year: 6.93%
- Since inception: 7%
Fees
VFV offers a Management Expense Ratio (MER) of 0.09% which is largely comprised of its 0.08% management fee.
XIC offers a Management Expense Ratio (MER) of 0.06% which is largely comprised of its 0.05% management fee.
Holdings
Below are the recent top security holdings within VFV (top 10 holdings as a % of asset value)
- Microsoft Corp. (7.22%)
- NVIDIA Corp. (6.61%)
- Apple Inc. (6.60%)
- Amazon.com Inc. (3.85%)
- Meta Platforms Inc. (2.40%)
- Alphabet Inc. (2.33%)
- Alphabet Inc. (1.95%)
- Berkshire Hathaway Inc. (1.60%)
- Eli Lilly & Co. (1.57%)
- Broadcom Inc. (1.52%)
As of June 30, 2024
Within VFV, sector and industry concentration recently is as follows:
- Information Technology (32.47%)
- Financial Services (12.83%)
- Health Care (11.73%)
- Consumer Discretionary (9.96%)
- Communication Services (9.34%)
- Industrials (8.14%)
- Consumer Staples (5.77%)
- Energy (3.65%)
- Utilities (2.26%)
- Materials (2.16%)
- Real Estate (2.15%)
As of June 30, 2024
The top security holdings within XIC (top 10 holdings as a % of asset value) recently are as follows:
- Royal Bank of Canada (6.47%)
- Toronto Dominion (4.28%)
- Shopify (3.49%)
- Canadian Pacific (3.25%)
- Canadian Natural Resources Ltd. (3.19%)
- Enbridge Inc. (3.17%)
- Canadian National Railway (2.93%)
- Brookfield (2.80%)
- Bank of Montreal (2.63%)
- Constellation Software Inc. (2.58%)
As of July 16, 2024
Within XIC, sector and industry concentration recently is as follows:
- Financial Services (30.51%)
- Energy (17.20%)
- Industrials (13.88%)
- Materials (12.70%)
- Information Technology (8.26%)
- Consumer Staples (4.23%)
- Utilities (3.71%)
- Consumer Discretionary (3.54%)
- Communications (2.96%)
- Real Estate (2.08%)
As of July 16, 2024
