Welcome to another edition of the ETF Insights newsletter! Instead of discussing a specific topic today, I thought it would be beneficial to have this issue of the newsletter highlighting the performance and my sentiments regarding a few of the highlighted funds here at ETF Insights.
My ETF shortlists are specifically designed for those looking for some of the top funds to buy in the country. Although the reports are jam-packed with relevant information to help you make the best decisions for your portfolio, I know many people would also appreciate my commentary.
Let’s dive right into it. I probably won’t be able to cover all of the funds in this single newsletter, but I’ll do my best to cover the ones I feel are the most popular.
Fidelity All-in-One Equity ETF – FEQT.NO
FEQT is one of the more underrated funds in Canada. While many investors flock to popular all-in-one funds like XEQT, VEQT, and ZEQT, FEQT continues to put up the best performance out of all of them. If we look to the chart above, since it was highlighted here at ETF Insights, it has returned around 3%~ more than the standard all-in-one funds.
I believe a lot of investors avoid this fund due to the “factor-based” ETFs it holds. In addition to this, I believe that iShares, BMO, and Vanguard just do a better job at marketing their all-in-one funds overall, leading to more eyeballs on them and less on FEQT.
Also, there is the added element that FEQT does allocate a small portion of the portfolio to Bitcoin. If you don’t like that, the fund certainly isn’t for you. I view Bitcoin as a long-term buy-and-hold asset when you properly align allocation to risk tolerance. However, I also know plenty of people who won’t touch it, and I understand that, too.
When we span the performance out to when FEQT was created, the outperformance gets wider.
Many incorrectly attribute this outperformance solely to Bitcoin. This just isn’t the case. The fund only contains around 3% cryptocurrency. What is driving the results is the factor-based funds inside of the fund.
I still believe this is the best all-in-one solution for Canadians if they’re comfortable holding crypto. Although there is no guarantee it will outperform as significantly in the future, its concentrated approach in more high-quality equities is certainly something I would predict would outperform a broad-based fund with 10,000+ holdings.
BMO Low Volatility Canadian Equity ETF – ZLB.TO
ZLB continues to be one of my favorite funds in Canada. Instead of taking a broader approach to buying the entire TSX Index, it instead focuses on high-quality, low-volatility companies here in Canada. In a nutshell, this fund contains just about every blue-chip company in the country.
Over the last year, it has turned out around a 2%~ outperformance of the TSX Index. However, when we span this out since ZLB was created back in 2011, it has nearly doubled the returns of the TSX Index.
The fund is well-balanced and touches nearly every sector in the country outside of energy and technology. Remember, this is a low-volatility fund, and energy and tech stocks rarely exhibit characteristics of low volatility.
However, one could just as easily own ZLB, an energy fund, and a few Canadian technology stocks to grab complete diversity across the entire country.
This is no longer an “under-the-radar” fund. In fact, its assets under management have nearly doubled over the last 3 years. This makes complete sense, as it has arguably been the best way in the country to buy a high-quality basket of Canadian stocks in a single click.
I’m a big fan, and I don’t see my opinion changing on this one anytime soon.
BMO MSCI USA High Quality Index ETF (ZUQ.TO)
ZUQ is effectively a fund I had mentioned that could be a good alternative to owning the S&P 500. It uses a factor strategy that isolates “high-quality” companies in the United States that exhibit the qualities many want in strong businesses. Solid debt levels, high returns on equity, earnings growth, etc.
The fund has trailed the S&P 500 since I had added it to ETF Insights a year ago, but even if we span that performance out to a couple of years, it has beat the index and has been a consistent outperformer of the S&P 500 over the long-term as well.
The fund is a little more concentrated than the S&P 500, containing 125 companies versus 500, which is likely what contributed to its underperformance over the last year. Many of the best companies in the United States were trading at high valuations, and with ZUQ being more concentrated in those companies, it will likely see more volatility to the downside.
Case in point, the fund had been outperforming the S&P 500 right up until the tariff scares in March that sent the market crashing.
There is always added risk in more concentrated funds. For example, UnitedHealth’s large drawdown will have much more impact on a fund like ZUQ, in which UnitedHealth makes up 4%, versus the S&P 500, in which it makes up 0.55%.
However, the fund is still diversified enough that a single stock won’t ever have a gigantic impact on returns. I’m still pretty bullish that ZUQ can drive larger returns than the index in the future, just like it has in the past.
Hamilton Enhanced Canadian Bank ETF – HCAL.TO
Canadian banks are resilient businesses. Although their performances aren’t necessarily always market-beating, if I were to bet on a sector to continue to provide low volatility with reasonable returns, it would be the Canadian banking sector.
This is precisely why I added something like HCAL, which is a Hamilton fund that owns the Big 6 but utilizes leverage to amplify returns and was one I was completely comfortable with.
The fund owns the Big 6 and then takes out a 25% leveraged position on the banks. This is precisely why you’ll see the fund outperforming HEB, which is Hamilton’s equal-weight banking ETF, by around 22%.
Why not 25% exactly? This is a good example of what leverage does to the downside. It has the potential to earn you more when things are good, but will lose you more when things are bad. The drawdown at the start of 2025 caused HCAL to lose more than HEB, and this is why we’re sitting at a 22%~ outperformance versus 25%.
As mentioned, I’m not a huge fan of utilizing leverage in highly volatile sectors. Take energy or technology, for instance. However, with the banks, it is a sector that I am personally comfortable with (but one that you need to decide if you’re comfortable with before considering it).
There is the potential for some hardships for Canadian banks in this current tariff environment due to higher provisions for credit losses. However, even when the environment gets rough, they tend to be pretty resilient pricing-wise, so I don’t mind the leverage.
In addition to this, Hamilton pays out most of those amplified returns in the form of income, which is a bonus for those seeking that.
VanEck Retail ETF – RTH
Out of all the ETFs I highlight here at ETF Insights, this would probably be the one I am most surprised with performance-wise.
I initially added this one to my shortlist for a rebound in retail activity in the United States on the back of falling interest rates. RTH is a fund that invests in a lot of “consumer discretionary” companies. Consumer discretionary companies are often thought of as companies that tend to have strong earnings during economic booms and weak earnings during economic drawdowns.
Nearly 60% of the portfolio is discretionary, while the other 40% is defensive (30%) and healthcare (10%).
So, to see this one outperforming the S&P 500 is quite impressive. One of the main reasons for this is the top end of the portfolio is primarily defensive in nature, with companies like Walmart, Costco, and TJX Companies (owns TJ Maxx, Marshalls, etc). These companies have done quite well in the current environment.
Ultimately, this could be bullish for the fund moving forward, as it is likely we get some sort of rate declines in the United States in 2025. Why? Because the consumer discretionary side of the ETF should see a boost in earnings on consumers opening up their wallets.
This is a fund that relies heavily on Amazon (20% of the portfolio). However, I’m fairly bullish on the company, so I don’t really mind that.
Global X Semiconductor ETF – CHPS.TO
I decided to do two funds at once in this overview, as I have both CHPS.TO and SOXX highlighted. The main idea behind both of these funds has been long-term exposure to the semiconductor industry on the back of rising AI demand. Although performance hasn’t necessarily been the best, the thesis is well-intact.
What we are seeing here is likely some cyclicality in the semiconductor industry. When AI first started rolling out, demand was high. However, there is likely a slowdown in spending in terms of demand for semiconductors. But, it is highly unlikely this will be permanent, as rapidly developing technology will ultimately put more demand on semiconductor companies in the future.
If we acknowledge the fact that these companies are exposed to the infrastructure buildout demand from many major companies, we can accept the fact there will be ebbs and flows, and people can accumulate shares during the downturns.
I’m still bullish on this industry overall, and I do feel CHPS is an excellent way to get exposure in CAD, while SOXX is a little more concentrated US play.
iShares Core MSCI EAFE IMI ETF – XEF.TO
International equities have been ignored for quite some time. From a psychological standpoint, this makes sense. US equities have provided outstanding returns over the last 10-15 years, and many people tend to gravitate towards where the money has been made.
However, when we look to international equities over the last year here and since XEF has been on my shortlist at ETF Insights, they have outperformed US equities over the last year.
As you’ll notice in the chart above, the outperformance is primarily related to the drawdown we witnessed in March of 2025 due to the tariffs. This also makes sense, as US equities trade at large premiums relative to international equities. When things get harsh on the US markets, the drawdowns are likely going to be more amplified.
For many, international exposure is not going to be something they’re interested in, which I can completely understand. The North American markets are relatively predictable, and investors are more comfortable investing in North America.
However, if you’re willing to allocate a smaller portion of your portfolio to international equities without the hassle of doing the research on individual holdings, I do believe that XEF is the best way in the country to get exposure.
Overall, it’s been a great year for the funds highlighted at ETF Insights
The majority of funds I’ve highlighted this year have outperformed my expectations. There are a few laggards in terms of overall returns, but when we compare them to a relevant benchmark, which is how we should be analyzing returns, they’ve been outstanding.
I hope you’ve been able to utilize the research available on the platform over the last year to squeeze out an extra percent or two in terms of total returns. It can make all the difference over the long term. And most of all, I hope it has saved you some time – time you can spend doing things you enjoy instead of trying to sift through all the noise in the ETF space right now in terms of funds to buy.
I plan to add more funds to the list this year. With the sheer amount of funds coming out these days, there are a lot of high-quality ones, but unfortunately, the vast majority of them are fee traps.
