We asked each of our judges to name a “desert island” exchange-traded fund (ETF) that wouldn’t otherwise fit into one of our categories but that they think could add extra performance or diversification benefits to a portfolio. Here’s what they suggested.
The best ETFs in Canada
The panellists favourite picks.
Tony Dong: iShares U.S. Aerospace & Defense Index ETF (XAD)
“I am personally long defense, albeit not via this ETF. XAD is currently the only Canadian-dollar-denominated defense industry ETF available right now,” Dong says. XAD tracks the Dow Jones U.S. Select Aerospace & Defense Index and has a 0.44% expense ratio. “It captures the biggest U.S. defense contractors poised to benefit from possible increased government spending and speculation from those looking to hedge increasing geopolitical risks.”
Alain Guillot: iShares Semiconductor ETF (SOXX)
“SOXX is a benchmark of companies that produce semiconductors, a crucial part of modern computing. Semiconductor chips act as the brains to numerous devices that we rely on today, including smartphones, calculators, computers and much more,” Guillot says. “The Chips Act in the U.S. will give it a boost that should last at least five more years.”
Travis Koivula: SPDR S&P 500 Fossil Fuel Reserves Free ETF (SPYX)
“I use SPYX for clients that don’t want fossil fuels in their portfolio,” Koivula says. This U.S.-listed fund trading in U.S. dollars has an acceptable MER of 0.2%.
Mark McGrath: iShares Core Equity ETF Portfolio (XEQT)
“My favourite ETF in the market—0.20% for nearly 10,000 global stocks,” McGrath says. He likes XEQT’s higher weighting to the U.S. and less Canadian home bias than Vanguard’s version. “Really the definition of a set-and-forget, total global stock market ETF.”
Aman Raina: iShares S&P/TSX Capped REIT Index ETF (XRE)
“This is a contrarian and long-term pick,” Raina says. “The space is down as a result of the high-interest-rate environment and change in the business environment (work from home). My take is, at some point in the next two years, we’ll be returning back to five days in an office as the fog of COVID lifts and new management with no ties to the pandemic come aboard and just say it doesn’t work anymore and call everyone back in (a recession will further accelerate this narrative). In the meantime, you get 5% a year to wait while it likely treads water, which will look good as interest rates eventually come back down a bit (no idea when).”
Yves Rebetez: iShares S&P/TSX Global Gold Index ETF (XGD)
“Gold continues to represent one of the meaningful diversifiers out there,” Rebetez says. He suggests the commodity may be destined for higher prices if and when the U.S. dollar retreats from “fundamentally elevated” levels. “The fund holds stocks of gold producers. Gold equities have underperformed for quite some time and could be poised for some decent catching up if the gold price strengthens further.”
Michelle Robertson: Purpose Bitcoin ETF (BTCC)
“Bitcoin has historically offered high returns (and high risk) but also has no correlation to the equities market, therefore offering diversification,” Robertson says. “Crypto is a very volatile asset, so only a small percentage is recommended (1% to 3%). Holding it in an ETF allows investors exposure using their registered accounts to shield taxes.”
Sam Rook: Vanguard All-Equity ETF Portfolio (VEQT)
Rook is another fan of global equity funds, but in addition to VEQT, he says, “As a humorous selection, I’d pick XCD, iShares’ Global Consumer Discretionary Index ETF, because it holds Amazon (they could deliver stuff to anywhere it seems), Tesla (Starlink), Home Depot and Lowe’s (need to order some wood to build a shelter), and Booking Holdings (so I can find the right deserted island for cheap) in the top 10 holdings.”
Mark Seed: Global X All-Equity Asset Allocation ETF (HEQT)
“For investors with a long investing timeline measured in decades, I’m a fan of 100% equity ETFs, and HEQT is one excellent candidate for that,” Seed says. With just a 0.13% MER (management expense ratio), this fund-of-funds has less than 20% exposure to Canada and more than 10% to the Nasdaq 100. “So while you can retain some Canadian exposure with this all-in-one fund, you can also take advantage of U.S. tech stocks and their growth in this all-in-one product.”
Ioulia Tretiakova: Global X NASDAQ-100 Corporate Class ETF (HXQ.U)
After settling on a low-volatility pick the past two years, Tretiakova is ready to switch to Nasdaq exposure, “now that AI is here.”
Mark Yamada: Global X NASDAQ-100 Corporate Class ETF (HXQ.U)
“If one is stuck on an island for years or decades, technology will always play a central role in advancing economic growth,” Yamada says. “HXQ.U offers exposure to this growth in a tax-efficient way. While others may question valuations or volatility in the short run, I think this pick has done pretty well in the past and will continue, as long as you are on that island.”
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