These Canadian ETFs could make you a smart investor

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 These Canadian ETFs could make you a smart investor
Image source: © 2022 Kalkine Media®   

Highlights

  • Some people see exchange-traded funds (ETFs) as a healthy and viable investment option as these provide exposure to a broader section of any industry than any single stock can.
  • ETF investments can also minimize the risk associated with a particular company by diversifying the invested funds in different stocks.
  • Some market experts believe that retail and institutional investors can benefit from strategically investing their lockdown-induced improved purchasing power in different ETFs along with other options.

Some people see exchange-traded funds (ETFs) as a healthy and viable investment option as these provide exposure to a broader section of any industry than any single stock can.

ETF investments can also minimize the risk associated with a particular company by diversifying the invested funds in different stocks.

Some market experts believe that retail and institutional investors can benefit from strategically investing their lockdown-induced improved purchasing power in different ETFs along with other options.

Let us discuss two TSX-listed ETFs that could help you invest smartly.

1.    iShares S&P/TSX Capped Energy Index ETF (TSX: XEG)

The iShares S&P/TSX Capped Energy Index ETF, which tracks the S&P/TSX Capped Energy Index, is known to invest in Canadian energy companies and provide exposure to likely capital growth in the long run.

Units of XEG galloped by almost 115 per cent in the past one year. The energy index-focused ETF closed at a value of C$ 13.01 apiece on Wednesday, February 2.

iShares S&P/TSX Capped Energy Index ETF’s performance on the TSX

 Image source: © 2022 Kalkine Media®    

Also read: CGI (GIB.A) & Open Text (OTEX): 2 TSX tech stocks with rising profits 

2.    BMO Equal Weight Banks Index ETF (TSX: ZEB)

The BMO Equal Weight Banks Index ETF, which is known to invest in Canadian banks, is an equal-weighted index fund that aims to replicate the performance of a diversified bank index.

The bank index-focused ETF pays a monthly dividend of C$ 0.12 apiece to its unitholders, with a dividend yield of 2.725 per cent, and presently holds a return on equity (ROE) of 16.4 per cent.

Having closed at a price of C$ 42.11 apiece on Wednesday, units of this bank ETF increased by over 43 per cent year-over-year (YoY).

Bottomline

Exchange-traded funds, in some cases, can be an ideal option for low-risk investors as they can go on to reel in long-term capital growth while also providing a steady dividend cycle.

However, one should note that factors such as management expenses attached with such investments can dig into the profits they create.

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