XAW - ETF Overview
A Comprehensive Guide to the iShares Core MSCI All Country World ex Canada Index ETF (XAW)
For individuals seeking to learn about analyzing Exchange-Traded Funds (ETFs), I suggest reviewing my earlier post that explains the fundamentals of ETFs and the analysis process.
iShares Core MSCI All Country World ex Canada Index ETF (XAW) - Snapshot
Overview
The iShares Core MSCI All Country World ex Canada Index ETF (XAW) is designed to provide investors with exposure to global equity markets outside of Canada.
Investment Strategy
XAW uses an indexing strategy to achieve its investment objective. It seeks to replicate the performance of the MSCI ACWI ex Canada IMI Index by investing in a broad range of stocks from developed and emerging markets outside Canada.
The MSCI ACWI ex Canada IMI Index (Investable Market Index) is a comprehensive global equity index that captures large, mid, and small-cap representation across developed and emerging markets, excluding Canada. The index encompasses roughly 99% of the global equity opportunity set beyond Canada, featuring about 8,509 constituents.
Top Holdings
XAW invests in a basket of underlying ETFs, which in turn invest in stocks. This provides exposure to over 9,000 individual stocks traded worldwide.
The portfolio's top underlying holdings comprise of:
Sector Allocation
XAW allocates its funds primarily to equity securities, with approximately:
62% in North American markets
27% in international developed markets
11% in international emerging markets
Risk Level
LOW to MEDIUM - due to its diversified nature of the index in helping to mitigate risk.
Performance
As of October 10, 2024, XAW has a year-to-date return of 22.30%.
It has an average annual return of 10.21%, including dividends, since its inception.
Expense Ratio
XAW has a management expense ratio (MER) of 0.22%, which is considered low cost and helps investors maximize their returns.
This means that for every $1,000 invested, the annual cost would be $2.20.
Dividend Yield
XAW has an average dividend yield of 1.41%.
This means that if you invest $1,000 in this ETF, you can expect to receive approximately $14 in dividends over a year, assuming the yield remains constant.
Similar Alternatives
Here are some similar alternatives to the iShares Core MSCI All Country World ex Canada Index ETF (XAW):
Vanguard All-Equity ETF Portfolio (VEQT): This ETF provides exposure to global equity markets (including Canada) and is designed to be a one-stop-shop for investors seeking broad diversification.
iShares Core Equity ETF Portfolio (XEQT): Similar to XAW, XEQT offers exposure to global equity markets, with a slightly different allocation that includes Canada.
BMO All-Equity ETF (ZEQT): This ETF also provides broad exposure to global equity markets (including Canada), aiming to replicate the performance of a global equity index.
iShares MSCI World ex Canada ETF (XWD): This ETF offers exposure to global equity markets outside Canada, without currency hedging.
Here's a comparison of the expense ratios, yield, and performance of the XAW ETF and its close alternatives:
Target Investors
The iShares Core MSCI All Country World ex Canada Index ETF (XAW) is designed for a wide range of investors, including:
Individual Investors: Those looking to diversify their portfolios with global equity exposure outside of Canada.
Retirement Accounts: Investors who want to include international stocks in their retirement portfolios, such as RRSPs (Registered Retirement Savings Plans) or TFSAs (Tax-Free Savings Accounts).
Long-Term Investors: Individuals seeking long-term capital growth through a diversified portfolio of global stocks.
Income Seekers: Investors looking for a steady income stream through dividends, as XAW offers a dividend yield of around 1.52%.
Passive Investors: Those who prefer a passive investment strategy, as XAW replicates the performance of the MSCI ACWI ex Canada IMI Index without active stock selection.
Reason to Invest…
Global Diversification: XAW provides exposure to a wide range of global markets, including the U.S., international developed markets, and emerging markets.
Low Cost: With an expense ratio of 0.22%, XAW is a cost-effective way to invest in global equities.
Simplicity: XAW offers a simple way to achieve global diversification without the need to research and select individual stocks.
Long-Term Growth: Designed as a long-term core holding, XAW aims to provide capital growth over time.
Rebalancing: The ETF automatically rebalances itself, ensuring that your portfolio remains aligned with the target index.
Dividend Income: XAW provides a dividend yield of 1.52%, offering a steady income stream.
Reason Not to Invest…
Market Volatility: Like all equity investments, XAW is subject to market volatility and the risks associated with investing in global markets.
Lack of Bond Exposure: XAW focuses solely on equities, so it does not provide exposure to bonds or other asset classes.
Currency Risk: Investing in international markets introduces currency risk, which can impact returns.
Management Fees: While low, the expense ratio still represents a cost that can impact overall returns.
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