If you’re looking for an easy way to invest in the Canadian stock market, a good exchange-traded fund to consider is the iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC). It offers instant diversification across the entire Canadian equity market, features an ultra-low management expense ratio that preserves capital, and provides reliable exposure to the nation's banking and energy leaders.
Unlike funds that focus exclusively on the largest 60 blue-chip companies, this ETF tracks the S&P/TSX Capped Composite Index, providing access to approximately 95% of the Canadian equity market by capitalization. This comprehensive approach means the fund holds over 200 stocks, capturing the performance of mid-cap and small-cap companies alongside established giants like Toronto-Dominion Bank. The capped nature of the index is a critical risk management tool, ensuring that no single company exceeds a 10% weight, which helps shield investors from volatility if a sector darling falters.
Cost efficiency remains the primary driver for choosing this fund over active management. With a management expense ratio of just 0.06%, the cost to own the market is negligible, allowing compounding to work effectively over time. The fund also offers a distribution yield of more than 2%. While the Canadian market is structurally weighted toward financial services and natural resources, this ETF provides the most complete picture of the domestic economy available in a single ticker.
This ETF is an ideal core holding for passive investors and retirement savers who want a low-maintenance, cost-effective way to participate in the long-term growth of the Canadian economy.
