Another year is in the books; ETFs continued to gain their fair share of media coverage in the past year. Which of these five can repeat in 2015?
Another year is in the books; ETFs continued to gain their fair share of media coverage in the past year. Which of these five can repeat in 2015?
Before announcing who the best performers are in 2014, let’s get a few things straight about the results.
First, the data is from Morningstar’s Canadian website as of December 30. They’ve been tracking performance for as long as we can remember so there’s no reason to doubt the veracity of their numbers. Second, we’ve excluded any inverse or leveraged ETFs from the running. We’re looking for funds the average client might have in their portfolio, not those owned by speculators and gamblers. Lastly, if there’s a tie between any of the ETFs, we’ll break the tie by picking the fund with the lower MER.
Here we go.
The Top Performer – iShares S&P/TSX Capped Consumer Staples ETF (XST) – up 45.8%
This ETF has only 10 holdings but what names they are. With the exception of Cott and Northwest Company, they all had double-digit returns in 2014. Alimentation Couche-Tard, which has been on a tear for several years, delivered 2014 returns of more than 80%, buoyed by its acquisition of Pantry in the U.S. Is there anything that can stop this juggernaut?
Runner Up – BMO India Equity ETF (ZID) – up 39.2%
In a statistical dead heat with iShares’ India fund, ZID came out ahead of XID because its 0.75% MER is 24 basis points lower than its peer. India’s stocks had a bounce back year after doing very little in 2013. A little more diversified than the XST with 18 holdings, financials and information technology represent more than half of the funds $70 million in total net assets.
Third Place – iShares India Index ETF (XID) – up 39.8%
Losing out to the ZID because of its MER, shareholders no doubt are very happy with the fund’s return in 2014. For those concerned about diversification, this particular India ETF tracks the CNX Nifty Index, a collection of 53 stocks with banks and IT accounting for a much smaller weighting than BMO.
Fourth Place – BMO Low Volatility US Equity ETF (ZLU) – up 37.6%
Investing in 100 large-cap U.S. stocks with the lowest betas, the ZLU delivered a stellar performance in 2014, outdoing the S&P 500 by more than 11 percentage points. Who knows what will happen in 2015 but the relatively new ETF – March 2013 inception – stands a good chance of doing it again in the coming year. Designed to provide lower volatility than the broader U.S. markets, so far in its young career it’s done just that.
Fifth Place – iShares S&P/TSX Capped Information Technology Index ETF (XIT) – up 36.2%
Tracking the 19 technology stocks within the S&P/TSX Composite Index, it’s not surprising that the XIT did well in 2014. South of the border only utilities and healthcare stocks did better than IT this past year. Over the past five years the XIT’s beaten the S&P/TSX Composite Index on an annualized basis by almost three percentage points. In the past decade it’s beaten the big board in eight out of 10 years. If you’re going to buy anything other than a broad-market ETF, this would probably be it.
Before announcing who the best performers are in 2014, let’s get a few things straight about the results.
First, the data is from Morningstar’s Canadian website as of December 30. They’ve been tracking performance for as long as we can remember so there’s no reason to doubt the veracity of their numbers. Second, we’ve excluded any inverse or leveraged ETFs from the running. We’re looking for funds the average client might have in their portfolio, not those owned by speculators and gamblers. Lastly, if there’s a tie between any of the ETFs, we’ll break the tie by picking the fund with the lower MER.
Here we go.
The Top Performer – iShares S&P/TSX Capped Consumer Staples ETF (XST) – up 45.8%
This ETF has only 10 holdings but what names they are. With the exception of Cott and Northwest Company, they all had double-digit returns in 2014. Alimentation Couche-Tard, which has been on a tear for several years, delivered 2014 returns of more than 80%, buoyed by its acquisition of Pantry in the U.S. Is there anything that can stop this juggernaut?
Runner Up – BMO India Equity ETF (ZID) – up 39.2%
In a statistical dead heat with iShares’ India fund, ZID came out ahead of XID because its 0.75% MER is 24 basis points lower than its peer. India’s stocks had a bounce back year after doing very little in 2013. A little more diversified than the XST with 18 holdings, financials and information technology represent more than half of the funds $70 million in total net assets.
Third Place – iShares India Index ETF (XID) – up 39.8%
Losing out to the ZID because of its MER, shareholders no doubt are very happy with the fund’s return in 2014. For those concerned about diversification, this particular India ETF tracks the CNX Nifty Index, a collection of 53 stocks with banks and IT accounting for a much smaller weighting than BMO.
Fourth Place – BMO Low Volatility US Equity ETF (ZLU) – up 37.6%
Investing in 100 large-cap U.S. stocks with the lowest betas, the ZLU delivered a stellar performance in 2014, outdoing the S&P 500 by more than 11 percentage points. Who knows what will happen in 2015 but the relatively new ETF – March 2013 inception – stands a good chance of doing it again in the coming year. Designed to provide lower volatility than the broader U.S. markets, so far in its young career it’s done just that.
Fifth Place – iShares S&P/TSX Capped Information Technology Index ETF (XIT) – up 36.2%
Tracking the 19 technology stocks within the S&P/TSX Composite Index, it’s not surprising that the XIT did well in 2014. South of the border only utilities and healthcare stocks did better than IT this past year. Over the past five years the XIT’s beaten the S&P/TSX Composite Index on an annualized basis by almost three percentage points. In the past decade it’s beaten the big board in eight out of 10 years. If you’re going to buy anything other than a broad-market ETF, this would probably be it.
