Join Fund Library now and get free access to personalized features to help you manage your investments.
It’s been a respectable year so far for the TSX. We touched a new all-time high in intra-day trading on May 21, and as of the close on May 31 the Capped Composite Index was ahead 7.5% year to date. That’s not as good as the S&P 500 but it’s a decent showing.
The two sub-indexes that are leading the way are resource-driven. The Capped Energy Index has gained 25.4% so far in 2024 while the Capped Materials Index is up 19.1%.
Another sub-index that is doing well is the S&P/TSX Completion Index, which is ahead 11% this year. Many people have never heard of it and, no, it does not consist of companies with a track record of finishing their projects on time. Rather, it’s comprised of the stocks in the Composite Index that are not included in the large-cap S&P/TSX 60 Index.
Previously, this sub-index was called the S&P/TSX MidCap Index. It was renamed in March 2007, but the new title never caught on. I’d venture to say that fewer than half the people reading this article know what it is and what’s in it. That’s too bad because investing in this index has been reasonably profitable, with less volatility than might be expected.
Some of the top companies in the index include familiar names like Fairfax Financial, Great-West Life, and Brookfield Renewable Partners. Others are ARC Resources, TFI International, Stantec, Descartes Systems, Ivanhoe Mines, Lundin Mining, and GFL Environmental.
The easiest way to invest directly in the Completion Index is through an ETF. The iShares S&P/TSX Completion Index ETF (TSX: XMD) has been around since 2001 and has $228 million in assets under management. As of May 31, it was showing a one-year gain of 18.3% and an average annual compound rate of return since inception of 6.6%. The year-to-date gain to May 31 was 10.7%.
What I found especially interesting was that in 2022, which was a terrible year for all stock markets, this ETF was down only 4.72%. By comparison, the iShares S&P/TSX 60 Index ETF, which you’d expect to be less volatile, lost 6.36% that year.
The portfolio holds 163 positions. The leading sectors are materials (21.9%), energy (18.12%), industrials (17.41%), and financials (16.23%).
Distributions are paid quarterly and average around 15-16 cents. The trailing 12-month payout was $0.62571, for a yield of 1.8%.
XMD has a management expense ratio of 0.6% and is rated as medium risk. It’s an ETF for those who want to increase their exposure to mid-cap Canadian stocks through a diversified portfolio. Check with your advisor before investing to ensure the ETF aligns with your financial objectives and risk tolerance.
Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.
Follow Gordon Pape on X at X.com/GPUpdates and on Facebook at www.facebook.com/GordonPapeMoney.
Notes and Disclaimer
Content © 2024 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.
Image: iStock.com/NickR
Join Fund Library now and get free access to personalized features to help you manage your investments.
Fund Library
