Many investors call themselves value investors, at least partially because many studies have indicated value stocks have performed better than other asset classes over the last century.
But some investors don’t have the time nor inclination to pick individual value stocks. Is the iShares Canadian Value Index ETF (TSX:XCV) a decent choice for them?
First, let’s look at historical performance. The ETF debuted on the TSX in November 2007. Just $10,000 invested in the fund would be worth $16,659 today, growth of more than 65%. A similar investment in the TSX Composite would be worth approximately $14,500.
The Value ETF has 55 different holdings, with Royal Bank of Canada as the top holding with a 9.9% weighting. The other top five holdings are Bank of Nova Scotia, Suncor Energy, Bank of Montreal, and BCE. Top 10 holdings make up approximately 57% of assets.
When looking at the top holdings, it’s hard to classify them as value stocks. Royal Bank is trading at close to a five-year high. So is BCE. Value stocks have traditionally had problems--that’s why they’re cheap, after all--but none of the major holdings of this fund exhibit those characteristics.
It’s more of a blue-chip fund, not so much a value fund.
The dividend yield of this ETF is 2.9%, which is a decent amount. The management expense ratio of 0.56% is a little high, but not excessively so.
Overall, the ETF does have some flaws, but you can’t argue with performance. It’s a decent choice for potential value investors.
