Investing, Stock Market

XUS ETF Review For 2022: iShares Core S&P 500 Index ETF

XUS is one of the best BlackRock S&P 500 ETFs that’s traded with CAD on the Toronto Stock Exchange.

The ETF competes significantly with other Canadian-listed S&P 500 Index ETFs in terms of fees, yields and returns. But these don’t make the ETF suitable for every investor. 

If you’re looking to invest in XUS, it’s essential to understand what it entails and how it compares with other S&P 500 Index ETFs out there.

This XUS review covers everything you need to know about the ETF ranging from its returns, yields, fees and more. 

Let’s go there!

XUS ETF Review

What is XUS?

XUS is the ticker symbol of the iShares Core S&P 500 Index ETF that’s traded on the Toronto Stock Exchange (TSX). 

The ETF was launched by BlackRock in 2013 to provide long-term capital growth by tracking the returns of the S&P 500 Index.

By using an index approach, XUS lowers your investment costs and reduces your risk compared to holding actively managed ETFs.

With this ETF, you will gain low-cost exposure to the top companies in the US without breaking your bank account. 

But is this the perfect option for you? I can’t tell for now. As you continue reading, you will learn more about what XUS entails to understand whether it’s the perfect option for you.

Key Facts of XUS

  • Benchmark index: S&P 500 Index
  • Asset Class: Equity
  • Net assets:  4,506,679,442 CAD (as of Nov 10, 2022)
  • Price: $65.60 (as of November 10, 2022)
  • Number of holdings: 504
  • Number of underlying holdings: 503
  • Management fee: 0.09%
  • MER: 0.10%
  • Average return since inception: 14.98%
  • 12-month trailing yield: 1.23%
  • Distribution yield: 1.09%
  • Distribution frequency: Semi-annual

XUS Investment Objective

The investment objective of XUS is to provide investors with long-term capital growth by tracking the performance of the US S&P 500 Index.

By using the S&P 500 Index as a benchmark, XUS exposes you to the leading large-cap companies in the US across different sectors. 

The S&P 500 index constitutes over 70% of the US stock market. This automatically makes it the benchmark of the US stock market.

With high-standard inclusion criteria, the S&P 500 index has proven to be one of the world’s best index funds.

Since the underlying stocks in the S&P 500 Index perform differently, XUS also allocates funds in the stocks differently as we shall see shortly.

To keep up with its investment objective, XUS’ portfolio manager rebalances its allocation quarterly.  

XUS Allocations

XUS invests 100% of its funds in US equities that are traded under the S&P 500 index. If not for the index approach of the ETF, the 100% equity allocation could have translated to a high-risk rating against the existing medium rating.

As of the time of writing, XUS allocates funds to 504 US companies that are listed on the S&P 500 index. But since the companies perform differently, XUS also allocates funds differently. 

In what follows, we’re going to learn about the top ten holdings of XUS and the sectors the ETF invests in.

  • XUS Top Holdings

As of November 8, 2022, XUS has the following top 10 holdings:

HoldingAllocation 
ISHARES CORE S&P 500 ETF96.41%
APPLE INC0.23%
MICROSOFT CORP0.19%
USD CASH0.10%
AMAZON COM INC0.08%
ALPHABET INC CLASS A0.06%
BERKSHIRE HATHAWAY INC CLASS B0.06%
UNITEDHEALTH GROUP INC0.06%
TESLA INC0.05%
EXXON MOBIL CORP0.05%

One thing to note from the above holdings is that XUS invests more than 96% of its funds in the iShares Core S&P 500 ETF (IVV).

With this, you will not get direct broader exposure to the S&P 500 Index when you invest in IVV.

That being said, XUS holdings are similar to the holdings of other BlackRock S&P 500 ETFs as we shall see shortly.

  • Sector Allocations

The companies XUS invests in are categorized under different sectors. The following are the sector allocations of the ETF as of November 9, 2022:

SectorAllocation
Information Technology25.5%
Health Care15.62%
Financials11.75%
Consumer Discretionary10.19%
Industrials8.61%
Communication7.15%
Consumer Staples7.06%
Energy5.44%
Utilities3%
Materials2.68%
Real Estate2.67%
Cash and/or Derivatives0.33%
Other0.01%

There’s no surprise about XUS’s high allocation to the information technology sector. This is because the S&P 500 index is dominated by companies across the information technology sector.

XUS Returns

XUS has provided varying returns in its attempt to track the performance of the S&P 500 Index. The following are the returns of the ETF as of October 31, 2022: 

  • -6.31% as a 1-year return
  • 11.20% as a 3-year return
  • 11.28% as a 5-year return
  • 14.98% return since inception

Compared to the returns of the S&P 500 Index, we can see that XUS is lagging. However, XUS has impressive returns compared to the returns of other S&P 500 Index ETFs.

As always, you shouldn’t finalize your decision on XUS past returns alone as that can’t guarantee future returns.

XUS ETF Yields

XUS distributes yields to investors semi-annually. The last distribution yield was 1.09% as of November 9, 2022.

Within the same timeframe, XUS also distributed a 12-month trailing yield of 1.23%.

While these yields compete with other BlackRock S&P 500 Index ETFs, they are not the best out there. 

XUS Fees

XUS comes with a management fee and management expense ratio like other ETFs out there. 

These fees are charged by the ETF provider and portfolio manager to cover the operation and management of the ETF.

That being said, XUS has a 0.09% management fee and 0.10% MER. Compared to the fees of other ETFs, we can see that XUS has a low fee schedule. However, US-listed S&P 500 ETFs like IVV have lower fees.

XUS Pros and Cons

We can identify the following pros and cons of XUS from the foregoing review:

Pros

  • Competitive returns: XUS’s past returns compete significantly with other S&P 500 Index ETFs even though the returns didn’t match the returns of the benchmark index.
  • Low fees: XUS’ management fee and MER compete with the fees of other  Canadian-listed S&P 500 Index ETFs.
  • No FX fee: By trading with CAD, XUS helps you save on FX fees, unlike US-listed S&P 500 Index ETFs.
  • Eligible for registered accounts: You can invest in XUS using registered accounts like TFSA and RRSP. This helps you invest tax-efficiently.

Cons

  • Limited exposure: XUS invests a large part of its funds in IVV. This limits its exposure to the underlying holdings of the S&P 500 Index.
  • Semi-annual distribution: If you’re looking for monthly or quarterly distributions, XUS may not be an option for you because it distributes yield semi-annually.

How XUS Compares

In this section, we’re going to look at how XUS compares with other BlackRock S&P 500 ETFs.

XUS vs XUS.U

Key FactsXUSXUS.U
Inception dateApril 10, 2013Apr 10, 2013
ExchangeToronto Stock ExchangeToronto Stock Exchange
Trading currencyCADCAD
Price$65.60 (as of November 10, 2022)$49.90 (as of November q0, 2022)
Management fee0.09%0.09%
MER0.10%0.10%
1-year return-6.31%-14.86%
Return since inception 14.98%11.08%
12-month trailing yield1.23%1.15%
Distribution yield1.09%1.12%
Distribution frequencySemi-annualSemi-annual

XUS.U is the ticker of the iShares Core S&P 500 Index ETF – USD Units. This ETF and XUS were launched on the same day in 2013. 

Like XUS, XUS.U also seeks to provide long-term capital growth by replicating the performance of the S&P 500 Index.

In addition, XUS and XUS.U have the same fee and distribution schedules as highlighted in the above table. 

As of November 9, 2022, the two ETFs have the same top 10 holdings as shown below: 

HoldingAllocation 
ISHARES CORE S&P 500 ETF96.41%
APPLE INC0.23%
MICROSOFT CORP0.19%
USD CASH0.10%
AMAZON COM INC0.08%
ALPHABET INC CLASS A0.06%
BERKSHIRE HATHAWAY INC CLASS B0.06%
UNITEDHEALTH GROUP INC0.06%
TESLA INC0.05%
EXXON MOBIL CORP0.05%

From the above table, we can see that XUS.US also offers limited exposure to the underlying holdings of the S&P 500 index as it invests more in the BlackRock ETF (IVV).

Even though both ETFs are traded with CAD on TSX, USD is the XUS.U’s base currency of class. 

While XUS.U outshines XUS in terms of distribution yield, XUS has competitive returns as shown below: 

PeriodXUSXUS.U
1-year-6.31%-14.86%
3-year 11.20%9.83%
Since inception14.98%11.08%

Note: The above data is valid as of October 31, 2022

XUS vs IVV

Key FactXUSIVV
Inception dateApril 10, 2013May 15, 2000
ExchangeToronto Stock ExchangeNYSE Arca
Trading currencyCADUSD
Price$65.60 (as of November 10, 2022)$396.35 (as of November 10, 2022)
Management fee0.09%0.03%
MER0.10%0.03%
1-year return-6.31%-14.63%
Return since inception 14.98%6.42%
12-month trailing yield1.23%1.59%
Distribution yield1.09%
Distribution frequencySemi-annualQuarterly

Recall that XUS invests more funds in IVV than the underlying holdings of the S&P 500 Index. 

What is IVV? IVV is the ticker symbol of the iShares Core S&P 500 ETF that’s traded with USD on NYSE Arca. This ETF provides a wider exposure to the top companies under the S&P 500 Index. 

Unlike XUS, IVV is traded in USD. This means that you may incur FX fees and foreign withholding taxes when trading with the ETF.

However, IVV provides you with a wider exposure to the S&P 500 Index than XUS. This is obvious from the IVV top 10 holdings as shown below: 

HoldingAllocation
APPLE INC6.45%
MICROSOFT CORP5.30%
AMAZON COM INC2.42%
ALPHABET INC CLASS A1.66%
BERKSHIRE HATHAWAY INC CLASS B1.65%
UNITEDHEALTH GROUP INC1.60%
TESLA INC1.50%
ALPHABET INC CLASS C1.48%
EXXON MOBIL CORP1.44%
JOHNSON & JOHNSON1.44%

Note: The above data is valid as of November 9, 2022

Like other US-listed S&P 500 ETFs, IVV has a lower management fee and MER as shown in the above comparison table.  

And if you’re looking for an ETF with a quarterly distribution schedule, IVV got you covered. In terms of 12-month trailing yield, IVV also outshines XUS. 

But in terms of performance, XUS outshines IVV based on their returns as of October 31, 2022: 

PeriodXUSIVV
1-year-6.31%-14.63%
3-year 11.20%10.18%
5-year11.28%10.41%
Since inception14.98%6.42%

Is XUS a Good Buy?

XUS will be a good buy if you’re looking for a Canadian-listed S&P 500 Index ETF. The previous returns of the ETF have underscored its potential for providing long-term capital growth.

However, you should not buy XUS without first understanding how its drawbacks impact your investment objective.

The major drawback of XUS is that it doesn’t provide direct exposure to the S&P 500 Index. Instead, it provides exposure to the top US companies indirectly through IVV.

While XUS has outperformed IVV several times, its limited exposure to the S&P 500 Index could undermine your investment objective. 

Notwithstanding, you can’t go wrong with XUS so long it suits your investment objective.

How to Buy XUS

Buying XUS is the easiest of the whole process. Of course, the experience will depend on your investment skills.

If you’re confident about handling the investment yourself, you should sign-up with an online discount brokerage like Wealthsimple Trade.

Upon opening a brokerage account, you can fund the account to start trading XUS. In the case of Wealthsimple Trade, there’s no minimum investment, monthly fees, or commissions required when trading stocks and ETFs on the brokerage. The reverse is the case with other brokerages.

But if do-it-yourself investing is not your thing, you should consider investing in XUS through your financial advisor. While this option is expensive, it will help reduce the costs and risks of making wrong investment decisions.

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Verdict on XUS ETF Review

XUS remains one of the best S&P 500 Index ETFs in Canada. The past returns of the ETF make it an alternative ETF to its peers.

The major drawbacks of XUS are common to those of other S&P 500 Index ETFs in Canada. Notwithstanding, XUS doesn’t make it to our compilation of the best S&P 500 ETFs in Canada for obvious reasons.

The option before you now is to either go with XUS or other S&P 500 ETFs that provide more exposure to the S&P 500 Index with lower fees.

What’s your favourite S&P 500 ETF? Kindly let me know in the comment. If you also have a worthy alternative to XUS, please let me know as well.

I hope you’re impacted by this XUS review in one way or the other. If so, kindly visit our Investing Archive to learn more about other best investment deals out there.

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About John Adebisi

John Adebisi is a CPA, FCCA and MBA holder with a Bachelor's degree in Accounting & Finance. He has over a decade of experience in writing personal and business finance content for audiences across North America, Europe, the UK and Africa. In addition to his writing experience, he also has a strong background in financial research and analysis, giving him a unique perspective of the financial markets. John derives pleasure in helping people make smart financial decisions, and he believes that knowledge and experience can be valuable resources for anyone who wants to learn how to manage their money.

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