Investing, Stock Market

XUU ETF Review 2023: iShares Core S&P U.S. Total Market Index ETF

One of the ETF portfolios you can trade on the Toronto Stock Exchange is the iShares Core S&P U.S. Total Market Index ETF (XUU).

XUU is one of the Canadian-listed ETFs that track the returns of the U.S. Total Market Index. 

Unlike the S&P 500 Index which tracks only large-cap US stocks, the U.S. Total Market Index tracks all US stocks ranging from small, mid and large-cap.

This provides you with greater exposure to the overall US stock market through a single ETF portfolio.

If you are looking to invest in XUU, this XUU ETF review covers everything you need to know to make an informed decision. 

XUU ETF Review

What is XUU?

XUU is the ticker symbol of iShares Core S&P U.S. Total Market Index ETF that’s traded on the Toronto Stock Exchange.

The ETF tracks the returns of the entire US stock market that are listed on the U.S. Total Market Index.

What this means is that the XUU ETF does not only focus on the S&P 500 or the NASDAQ Index alone, it represents the entire U.S. market. 

As a Canadian investor, the XUU ETF is one of the easiest ways you can gain diversified exposure to the entire U.S. stock market. 

Because the XUU ETF is traded on the Toronto Stock Exchange, Canadian investors have access to owning the fund without being charged foreign exchange fees. 

Key Facts of XUU

Before going deep into this XUU ETF review, let’s take a quick look at some of the key facts about the ETF.

  • Launch date: February 10, 2015
  • Asset Class: Equity
  • Benchmark Index: S&P Total Market Index
  • Price: $39.45 (as of December 21, 2022)
  • Management Fee: 0.07%
  • Management Expense Ratio (MER): 0.08%
  • Net Assets: CAD 2,194,133,093 (as of December 21, 2022)
  • Number of Holdings: 115 (as of December 21, 2022)
  • Number of underlying Holdings: 3409 (as of December 16, 2022)
  • Avg. Returns since inception: 11.44% (as of November 30, 2022)
  • Eligible accounts: TFSA, DPSP, RRIF, RDSP, RRSP
  • Traded with: CAD on Toronto Stock Exchange
  • 12-month trailing yield: 1.28% (as of December 21, 2022)
  • Distribution frequency: Quarterly
  • Distribution yield: 1.06% (as of December 20, 2022)

Now that you have gotten a quick overview of the XUU ETF, let’s dive deeper into the important details.

XUU Investment Objective

The XUU ETF seeks long-term capital growth by replicating the S&P Total Market Index’s performance (net of expenses). 

By tracking the whole U.S. Stock market, the XUU ETF exposes your portfolio to all the top large-cap U.S. companies across various sectors. 

Since the S&P Total Market Index has different underlying stocks with varying performance, the XUU ETF also gives different fund allocations to the stocks. 

It’s worth noting that XUU’s allocation is rebalanced quarterly to stay on track with its main investment objective. 

XUU Allocations

Though 100% of XUU’s funds are invested in the underlying stocks of the S&P Total Market Index, the allocations vary per asset. 

At the moment, XUU ETF has up to 115 holdings that consist of other iShares ETFs covering the whole U.S. Stock market. Similarly, hundreds of other stocks of U.S. companies are listed as holdings under the XUU ETF.

In the subsequent heading below, you will get a clearer picture of how XUU allocates its funds to the underlying holdings. 

XUU Top 10 Holdings

According to current data on the BlackRock website, the XUU ETF has 115 holdings and a total of 3409 underlying holdings as of December 16, 2022. 

The following table presents the top 10 XUU holdings and their respective fund allocation

Holding (Name)Holding (Ticker)AllocationMarket Value
iSHARES CORE S&P 500 ETFIVV48.98%CAD 1,101,417,899.97
iSHARES CORE S&P TOTAL U.S. STOCKITOT43.99%CAD 989,232,200.55
iSHARES CORE S&P MID-CAP ETFIJH3.16%CAD 71,117,083.09
iSHARES CORE S&P SMALL-CAP ETFIJR1.33%CAD 30,011,347.78
USD CASHUSD0.16%CAD 3,639,067.06
BLACKSTONE INCBX0.07%CAD 1,651,710.05
UBER TECHNOLOGIES INCUBER0.07%CAD 1,579,569.07
FERGUSON PLCFERG0.07%CAD 1,537,320.88
PALO ALTO NETWORKS INCPANW0.06%CAD 1,349,240.33
SNOWFLAKE CLASS ASNOW0.06%CAD 1,306,948.41

From the above table, you can see that XUU ETF allocates more than 92% of its funds to iSHARES CORE S&P 500 ETF and the iSHARES CORE S&P TOTAL U.S. STOCK.

This simply means that the overall performance of the XUU ETF will be largely dependent on both the S&P 500 Index and the total U.S. Stock market altogether. 

XUU Sector Allocations

The XUU ETF invests across different sectors of the U.S. Stock market. Below are the current sector allocations of the ETF. 

SectorAllocation (% of Market value)
Information Technology24.98
Health Care15.18
Financials12.03
Consumer Discretionary10.09
Industrials9.61
Communication6.68
Consumer Staples6.63
Energy5.03
Real Estate3.28
Utilities3.08
Materials2.95
Cash and/or Derivatives0.43
Other0.02

Don’t be surprised that the Information technology sector gets the largest allocation of XUU funds. This is because the S&P 500 Index and U.S. stock market is currently dominated by the tech sector. 

XUU Returns

Over the years, the XUU ETF has yielded varying returns as it attempts to replicate the S&P Total Market Index’s performance.

Here is a highlight of the average returns that XUU ETF has provided since its inception up till December 22, 2022.

  • 1-year return — -5.33%
  • 3-year return — 10.73%
  • 5-year return — 11.03%
  • Return since inception — 11.44%

Though XUU ETF has been providing impressive returns since its inception, it is still important to remind you that past performance is not a direct indication of the future. This is a general rule of thumb in the investing world.

XUU ETF Yields

XUU ETF distributes yields quarterly.  The most recent distribution yield of XUU ETF was on December 20, 2022, and it is recorded at 1.06%.

Similarly, the 12-month trailing yield of the XUU ETF was recorded at 1.28% as of December 21, 2022.

These yields might not be the best in the market but they compete significantly with the yields of other ETFs out there 

XUU Fees

Fees are crucial factors that must be considered before investing in any securities out there.

Like all other ETFs out there, a management fee and a management expense ratio (MER) also apply to the XUU ETF. 

The management fee for XUU ETF is currently 0.07% while the MER is 0.08%. These are relatively low fees when compared to that of some other popular ETFs in Canada right now. 

Bear in mind that the fees charged on XUU goes to the portfolio manager and ETF provider as payment for the management and operation of the XUU ETF. 

Pros and Cons of XUU 

As with all ETFs, there are benefits and downsides to investing in the XUU ETF. The major pros and cons are highlighted below.

Pros

  • Low fees: By charging a management fee of 0.07% and an MER of 0.08%, the XUU ETF is considered a low-cost ETF.
  • Competitive returns: The past returns of XUU ETF are competitive compared to the returns of similar portfolios and the allocations of the ETF.
  • No foreign exchange fee: Unlike the US-listed ETFs, you get to save on FX fees when investing in XUU ETF because it’s listed on the Toronto Stock Exchange, allowing you to invest in Canadian dollars.
  • Supports registered accounts: XUU ETF can help you invest in a tax-efficient manner because it supports registered accounts like RRSP and TFSA. 

Cons

  • Full exposure to the U.S. market: Investing all your funds in one market could be risky should the country’s economy go into turmoil.  
  • Low yield: The most recent dividend yield of the XUU ETF is just 1.06% and that is very low compared to other ETFs.

How XUU ETF Compares

This is the section where we compare XUU to other popular ETFs offered by BlackRock and Vanguard. 

XUU vs XUS

The XUS ETF is a different iShares ETF offered by BlackRock Capital Investment Corporation.

The major difference between these two ETFs is that XUU tries to replicate the performance of the entire U.S. Stock market while the XUS only tracks the U.S. S&P 500 Index.

While XUS focuses on large-cap US companies, XUU invests in the entire US market. As such, XUS is less risky than XUU and it has a higher return potential.

The following table summarizes the key differences between the two ETFs.

Key FactsXUUXUS
ExchangeToronto Stock ExchangeToronto Stock Exchange
Launch dateFebruary 10, 2015April 10, 2013
Management fee0.07%0.09%
Price (CAD)$39.45 (as of December 21, 2022)$65.00 (as of December 16, 2022)
Trading CurrencyCADCAD
MER0.08%0.10%
Number of Underlying Holdings3409503
Avg. Return since inception11.44% (as of November 30, 2022)15.41% (as of November 30, 2022)
1-year return-5.33% (as of November 30, 2022)-4.34% (as of November 30, 2022)
Distribution yield1.06% (as of December 20, 2022)1.04% (as of December 21, 2022)
Distribution frequencyQuarterlySemi-Annual
12-month trailing yield1.28% (as of December 21, 2022)1.18% (as of December 21, 2022)

Aside from having more underlying holdings, the XUU ETF has also recorded a slightly higher distribution yield and 12-month trailing yield. 

However, XUS outshines the XUU ETF by recording a 3.97% higher average return since inception.

Learn more: XUS ETF Review

XUU vs IVV

IVV stands for iShares Core S&P 500 ETF. It’s another BlackRock ETF that’s traded on the NYSE Arca Exchange.

Like UX, IVV also tracks the performance of the U.S. S&P 500 Index which consists of 500+ largest US stocks.

However, their difference lies in the fact that XUS is traded with CAD on the Toronto Stock Exchange while the IVV is traded with USD on the NYSE Arca exchange.

On the other hand, XUU replicates the performance of the total U.S. Stock Market and is traded with CAD on the Toronto Stock Exchange.

Below is a table showing a side-by-side comparison between the XUU and IVV ETFs.

Key FactsXUUIVV
ExchangeToronto Stock ExchangeNYSE Arca
Launch dateFebruary 10, 2015May 15, 2000
Management fee0.07%0.03%
PriceCAD$39.45 (as of December 21, 2022)US$382.60 (as of December 22, 2022)
Trading CurrencyCADUSD
MER0.08%0.03%
Avg. Return since inception11.44% (as of November 30, 2022)6.65% (as of November 30, 2022)
Distribution yield1.06% (as of December 20, 2022)
1-year return-5.33% (as of November 30, 2022)-9.24% (as of November 30, 2022)
Distribution frequencyQuarterlyQuarterly
12-month trailing yield1.28% (as of December 21, 2022)1.51% (as of November 30, 2022)

Since the IVV is traded on a U.S. online exchange in USD, you may incur foreign withholding taxes and FX fees when trading the ETF.  

Meanwhile, the management fee and MER for the IVV ETF are lesser than those of XUU even though they are traded in different currencies. 

When it comes to 12-month trailing yields, IVV outshines the XUU by a fair margin. However, the average return since inception for XUU is almost double that of the IVV ETF. 

XUU vs VUN

VUN is the ticker symbol of the Vanguard US Total Market Index ETF traded on the Toronto Stock Exchange.

Both XUU and VUN seek to track the performance of the entire U.S. Total Market performance and they are traded with CAD, saving you FX fees. 

Here is a table showing a side-by-side comparison between the XUU and VUN ETFs.

Key FactsXUUVUN
ExchangeToronto Stock ExchangeToronto Stock Exchange
Launch dateFebruary 10, 2015August 2, 2013
Management fee0.07%0.15%
Price (CAD)$39.45 (as of December 21, 2022)$70.80 (as of December 22, 2022)
Trading CurrencyCADCAD
MER0.08%0.16%
Avg. Return since inception11.44% (as of November 30, 2022)14.00% (as of November 30, 2022)
Distribution yield1.06% (as of December 20, 2022)1.17% (as of November 30, 2022)
1-year return-5.33% (as of November 30, 2022)-7.04% (as of November 30, 2022)
Distribution frequencyQuarterlyQuarterly
12-month trailing yield1.28% (as of December 21, 2022)1.10% (as of November 30, 2022)

From the above table, you can see that VUN  outshines XUU in terms of average return since inception. 

However, XUU takes the lead over VUN when it comes to the 12-month trailing yield, management fee and MER.

XUU vs VFV

The VFV is also another popular Vanguard ETF that is traded on the Toronto Stock Exchange in Canadian dollars.

The official name is Vanguard S&P 500 Index ETF while the ticker symbol is “VFV”. 

Unlike XUU, VFV tracks the returns of the &.S. S&P 500 Index which consists of the top large-cap companies in the US.

Below is a table showing the comparison between XUU and the VFV ETF.

Key FactsXUUVFV
ExchangeToronto Stock ExchangeToronto Stock Exchange
Launch dateFebruary 10, 2015November 2, 2012
Management fee0.07%0.08%
Price (CAD)$39.45 (as of December 21, 2022)$92.79 (as of December 22, 2022)
Trading CurrencyCADCAD
MER0.08%0.09%
Avg. Return since inception11.44% (as of November 30, 2022)16.26% (as of November 30, 2022)
Distribution yield1.06% (as of December 20, 2022)1.31% (as of November 30, 2022)
1-year return-5.33% (as of November 30, 2022)-4.94% (as of November 30, 2022)
Distribution frequencyQuarterlyQuarterly
12-month trailing yield1.28% (as of December 21, 2022)1.21% (as of November 30, 2022)

VFV also outshines XUU in terms of average returns since inception and dividend yields.

However, XUU outshines VFV in terms of 12-month trailing yield, management fee and MER.

Is XUU a Good Buy?

If you are looking for exposure to the entire U.S. stock market without paying FX fees, the XUU ETF may be worthwhile for you. 

It’s also interesting to note that the ETF has a lower management fee and MER compared to some of the other popular ETFs in Canada right now. 

One major drawback of the XUU is that it has low returns compared to other ETFs out there. This could be the red line for you.

To decide whether XUU is worthwhile for you, it’s essential to consider its investment objective and entire returns before making a final decision.

How to Buy XUU

You might be confused about how to go about buying the ETF if you are new to trading.

Regardless of your experience, you can take a self-directed investing approach by signing up with online discount brokerages like Wealthsimple Trade or Questrade.

Once you have opened and funded an account with a broker, you can then go ahead to trade the XUU ETF on their platform. 

Brokerages like Wealthsimple Trade allow people to open an account without any minimum investment requirement.

Also, you don’t pay monthly fees or commissions when trading ETFs and stocks on Wealthsimple Trade. 

However, there is a way to escape all the “hassle” involved in trading the XUU ETF yourself. Yes, you can invest in the ETF through a robo-advisor. 

The only issue you might face with robo-advisors is that the services might be slightly more expensive than the Do-it-Yourself approach. 

If you look beyond the Robo-advisor fees, you might like the fact that they help to automate the entire investing process

A robo-advisor can also help you avoid wrong investment decisions in the long run. 

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Verdict on XUU ETF Review

The XUU ETF presents an opportunity of investing in the entire U.S Stock Market while you are here in Canada.

With low fees, competitive yield and eligibility for registered accounts, XUU could be a perfect addition to your portfolio.

However, you shouldn’t be in a rush to invest in the XUU without understanding its pros and cons and how it compares with similar ETFs out there. 

Is XUU for you? Kindly share your thoughts with me in the comment below.

FAQs on XUU ETF Review

Is XUU a good investment? 

You’re in the right position to decide. Although XUU has a lower management fee and MER than many ETFs out there. It also has competitive yields and above-average returns since inception.

Does XUU pay dividends?

Yes. The recent dividend yield of XUU is 1.06% as of December 20, 2022. This is lower when compared to dividends of some similar ETFs within the same timeframe.

What is the difference between XUU ETF and stocks?

XUU ETF is a basket of funds consisting of the entire US stocks. On the other hand, stocks are individual shares of companies.

So with the XUU ETF, you will get exposure to the entire stocks of the US market instead of investing in individual stocks. This is an easy and low-cost way to invest across different companies with a little amount.

Do I need to pay taxes on XUU ETF?

Sure! You will have to pay taxes on dividends and interest earned from XUU ETF to the Canada Revenue Agency (CRA).

However, XUU supports registered accounts like RRSP and TFSA. Using a registered account will help you invest tax-efficiently.

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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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