Investing in exchange-traded funds (ETFs) is a popular option for investors for the diversification they can offer. Holding an ETF can be particularly useful inside of a tax-free savings account (TFSA) where you can just buy and hold forever.
One ETF that is particularly attractive for Canadian investors is the iShares Core Equity ETF Portfolio (TSX:XEQT). There's an entire Reddit community devoted to this fund as many investors see it as the ultimate way to invest for the long haul. But what makes it so appealing?
The fund aims to give investors broad diversification, and it has a relatively low fees with an expense ratio of just 0.20%. It holds five ETFs in its portfolio which are designed at long-term investing, with its largest being the iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC), which focuses on the entire Canadian stock market.
XEQT's focus is largely North American, with Canada and the U.S. accounting for 68% of its overall holdings. Through this ETF, you'll also have exposure to other countries, including Japan, Australia, China, France, and other European nations.
The fund also yields 1.6%, which is a decent payout that can provide you with some excellent recurring dividend income.
While I'm not sure if it is the best fund, it's definitely a great investment to hold for the long term, and it would be a suitable option for TFSA investors. In the past 12 months, this fund has risen by around 18%, and over the past five years it has gained roughly 70% -- slightly below the S&P 500's gains of 80% during that stretch. But in return for the lower returns, you get much more diversification and long-term safety and stability.
