There are many great ETFs on the TSX Index. In fact, there may be too many to choose from, with new flavours popping up left, right, and centre. Indeed, plain, vanilla ETFs used to be the dominant options. But now, there’s everything from covered-call ETFs (specialty income) to thematic ETFs and even ones reliant on smart beta characteristics.
It’s an exciting time for passive investors to get a bit more personal with their self-constructed portfolios. For beginners, though, the growing number of options may make things seem more complex than they ought to be. Just because there are more options does not mean you need to own a piece of them all.
In this piece, we’ll have a look at two great ETFs that I believe can give the TSX a good run for its money in 2022. While the year could prove a bumpy ride, I think that the shift to value and away from growth favours the following funds.
Without further ado, consider iShares S&P/TSX Global Gold Index ETF (TSX: XGD) and BMO MSCI China ESG Leaders Index ETF (TSX: ZCH).
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iShares S&P/TSX Global Gold Index ETF
Gold has been clobbered of late, with the precious metal now off around 12% from its high hit back in 2020. Undoubtedly, Bitcoin is the new gold, but if you’re like me and aren’t buying that crypto is the new gold standard, gold may prove the be an intriguing option here, with inflation kicking it into high gear this year.
The XGD is a levered way to play gold prices, with some of the best gold miner stocks within the ETF. While you could pick and choose your favourites within the space, I think the XGD does a fine job of representing the space. With a reasonable MER, smaller investors may stand to save money with the ETF over a basket of gold miners. In any case, XGD stands out to me as both a lowly correlated security as well as an intriguing value after a rough year and a half.
China ESG Leaders Index ETF
The ZCH is one of the best securities to buy for exposure to the rocky Chinese stock market. Yes, China isn’t growing at the same rate when its tech shares were blasting off. That said, I still think that long-term investors can generate some pretty solid results by picking up a name like the ZCH after getting cut in half.
Undoubtedly, investing in China will not be everybody’s cup of tea, given all the risks. Delistment, regulatory roadblocks by President Xi Jinping, geopolitical tensions, trade wars and accounting question marks are some of the reasons many are on the sidelines. With such incredible growth at such a reasonable multiple, though, I think the risks are worth the shot at greater reward. After a forgettable 2021, China looks poised to bounce back, and the ZCH could help fuel a portfolio to intriguing results in what’s shaping up to be a quiet year for the TSX and S&P 500.
