The panel retained six of the eight international or global ETF All-stars from 2020: two from iShares (XAW and XEF), three from Vanguard (VXC, VEE and VIU) and BMO’s low-volatility pick ZLI. Two other new picks introduced in the 2020 edition didn’t make the cut this time: iShares Edge MSCI Min Vol Global Index ETF (XMW, 0.48%), and CI First Asset MSCI World Low Risk Weighted ETF (ticker: RWW/B; unhedged). Read more about low-volatility ETFs in our All-Star package overview.
If he could own just one international equity ETF, panelist Mark Seed would choose XAW. “I personally own this fund since I like the ex-Canada exposure; …Canadians are too heavy historically in energy and financials. Even with foreign withholding taxes, you’re looking at total costs of around 0.50% for global growth from 8,000 stocks. XAW is very tax-efficient in a non-registered account and I anticipate I might buy some there over time since my TFSA and RRSP are maxed out of investing contribution room.” Partner Yves Rebetez agrees that “all world-ex Canada = ultimate diversification indeed.” While not an All-Star, those who like international small caps selected with a value screen may be interested in Ben Felix’s new Desert Island pick this year: Avantis International Small Cap Value ETF, which trades on the NYSE Arca exchange under the ticker symbol AVDV.
Canada is well-positioned for the post-COVID reopening given its strong cyclical players and banks; but with respect to emerging markets, investors should remember the Canadian market and emerging markets are highly correlated. Both can be highly volatile, and Rebetez says there are two ways to deal with that: low-volatility Emerging Markets ETFs like XMM or ZLE, and emerging markets dividend ETFs like FDE or RXD.
|ETF Name||Ticker||Management Fee||MER||# of Holdings||Description||iShares Core MSCI All Country World ex Canada Index ETF||XAW||0.20||0.22||8,887||Global all-cap fund that’s lower-cost and tax-efficient; holds 6 iShares funds representing everywhere but Canada|
|Vanguard FTSE Global All Cap ex Canada Index ETF||VXC||0.20||0.26||10,720||Prefer one-stop international funds to picking stand-alone emerging and international ETFs|
|iShares Core MSCI EAFE IMI Index ETF||XEF||0.2||0.22||2,651||Broad coverage of Europe, Japan and Australia|
|Vanguard FTSE Emerging Markets All Cap Index ETF||VEE||0.23||0.24||5,048||Emerging markets index that includes China A shares but excludes South Korea|
|Vanguard FTSE Developed All Cap ex North America Index ETF||VIU||0.20||0.22||3,739||More diversified than XEF, similarly tax-efficient (includes South Korea)|
|BMO Low Volatility International Equity ETF||ZLI||0.40||0.44||100||Invests in international large-caps with lower volatility than the market|