Investing based on index has become very popular in the past few years. The main advantage that investors get from index based investing is the low fees, diversification and simplicity. Average market performance can be achieved for this low cost but it is also a very powerful approach. Even the novice investors can outperform investment professions if they acquire the index investment strategies. A very known index is the Canadian Stock Exchange (TSX) in this regard. TSX ETF options offer a variety of index funds that can add diversity to the portfolio at low costs.
TSX has a number of ETFs based on the type of investing approaches used by investors. These include ETFs based on index tracking, leveraged ETFs, inverse ETFs, commodity based ETFs, currency ETFs and actively managed ETFs. The advantage of listing in the TSX for investors is losing the risk of US dollar being depreciated and affecting the value of foreign listed ETFs.
Diversification can be achieved through the TSX ETF options as there are funds that track over 200 large Canadian companies. TD’s S&P/TSX Composite ETF (TSX:TTF) is one good option for investors looking for a diversified exposure. Another ETF that offers international exposure is the RRSP-eligible iUnites EAFE ETF (TSX:XIN). It tracks the MSCI Europe Australasia Far East Index. Both ETFs, TTF and XIN, charge less than 0.36% in management fee and expense ratio. This is considered enormous savings in a diversified ETF because and actively managed fund would charge much higher than these two funds combined.
One of the biggest global names in ETF market the Invesco PowerShares Company has also recently expanded into the TSX ETF list. The first two ETFs that opened in the TSX include the PowerShares 1-5 Year Laddered Investment Grade Corporate Bond Index (PSB) and PowerShare Ultra DLUX Long Term Government Bond Index (PGL). Investors in Canada will now be able to invest in Canadian domiciled as well as listed PowerShare ETFs in Canadian dollars.
Other popular names include iShares Funds having 46 ETFs, Claymore Investments with 31 ETFs, Horizons Exchange Traded Funds with 68 ETFs, BMO Exchange Traded Funds with 40 ETFs, Barclays Capital with 9 ETFs and Capital Exchange Traded Funds with 5 ETFs listed on the Canadian Stock Exchange (TSX).
TSX Venture Exchange is another of Canada’s public venture equity market exchange which is now in partnership with Standard & Poor’s. S&P/TSX Venture 30 Index is designed to measure the performance of 30 largest and most liquid securities in the relative index. An exposure to TSX can also be achieved through ETFs tracking this index. Currently there is one ETF that is venturing purely into the TSX Venture 30 index which is the Global X S&P/TSX Venture 30 Canada ETF (TSXV). This TSX ETF provides exposure to commodities in the junior mining companies on the TSX Venture Exchange. It has an expense ratio of 0.75% with an average volume of $4.8 million. TSX Venture 30 is predicted to be competitive for the larger cap weighted indexes.