4 Conservative ETFs for Your RRSP in 2014

The March 3 deadline to contribute to your RRSP is approaching.

| More on:
The Motley Fool


The March 3 deadline to contribute to your RRSP is approaching. And this month millions of Canadians are taking the opportunity to revisit their retirement plans and retune their investment strategies. Now many are wondering where is the best place to stash their RRSP contributions.

My favourite idea is exchange traded funds, or ETFs. Because these investments represent a basket of assorted securities, investors can quickly diversify their portfolios and reduce risk all within a single transaction and usually for a lower price than comparable mutual funds. So in preparation for this year’s RRSP deadline, here are four conservative ETFs to consider adding to your portfolio.

iShares S&P/TSX Canadian Dividend Aristocrats Index Fund (TSX:CDZ)

This ETF is a single-ticket solution for investors who want exposure to dividend-paying stocks. To be added in this index every company must have increased ordinary cash dividend for at least five consecutive years. This is a very high standard that ensures only the highest quality companies are included. As a result the ETF owns many Canadian stalwarts including Enbridge, Tim Horton’s and Imperial Oil.

iShares DEX All Corporate Bond Index Fund (TSX:XCB)

Fixed-income investments deserve a place in every investor’s portfolio. However, interest payments are taxed significantly higher than dividends or capital gains. That’s why it makes so much sense to hold fixed-income investments inside a tax-sheltered account like an RRSP or TFSA.

The DEX All Corporate Bond Index Fund gives exposure to nearly 300 Canadian corporate bonds across different sectors, maturities and credit quality. By buying high-quality corporate debt from companies like Royal Bank, Telus, and Shaw Communications, investors have an opportunity to boost yield in the current low interest rate environment.

BMO S&P 500 Hedged to CAD Index ETF (TSX:ZUE)

The weak Canadian dollar has put an end to the cross-border shopping tradition of many Canadians. But that doesn’t necessarily have to apply to investors. As the largest financial market in the world, the United States provides a wide variety of investment opportunities that are too good to pass up.

There’s nothing fancy here. The BMO S&P 500 Hedged to CAD Index ETF has been designed to replicate, to the extent possible, the performance of the S&P 500 for the low price of 0.15% annually. As you might expect the fund invests in great American companies such as Coca Cola, Microsoft, and McDonald’s all while hedged to volatile currency exchange rate fluctuations.

iShares MSCI EAFE Index Fund (CAD-Hedged) (TSX:XIN)

The biggest problem lurking in many Canadian portfolios? They’re over invested in Canada and the United States. That’s no surprise. These are the markets we all know best. But as a result of this investing xenophobia, many Canadians are missing great opportunities internationally.

The iShares MSCI EAFE Index Fund offers a quick shot of diversification outside of North America. The fund is focused on developed markets in Europe, Australasia and the Far East while completely hedged to fluctuations in the Canadian Dollars. Through this ETF, investors get to own a piece of many world-class businesses including Nestle, Toyota Motors, and Vodafone.

Foolish bottom line

As a final note, it’s important to remember that there is no reason to make any rushed investment decisions when it comes to your RRSP. Yes, there is a deadline to make your annual contribution. But if you’re unsure where to stash your RRSP cash, simply consult your investment policy and wait to decide the right investments for your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

A solar cell panel generates power in a country mountain landscape.
Energy Stocks

Clean Energy Play: Is Brookfield Renewable a Good Stock for a TFSA?

Add this top renewable energy stock to your self-directed TFSA portfolio for significant long-term and tax-free wealth growth.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

financial freedom sign

2 Stocks With Millionaire-Maker Potential

These two top Canadian stocks are among the best on the TSX, and each has the potential to be millionaire-maker…

Read more »

Piggy bank next to a financial report
Stocks for Beginners

Is It Finally the Right Time to Buy Bank Stocks?

Canadian bank stocks are some of the most secure investments out there, but of them all, this bank stock is…

Read more »

clock time

3 Blue-Chip Stocks Every Canadian Should Own

Want some reliable blue-chip Canadian stocks to buy and hold for the next 10 years? These three stocks are worth…

Read more »