On the surface, the TSX today looks like it’s been doing quite well. The index continues to rise nearer to all-time highs, with shares up 13% since bottoming out this year at the time of writing. It, therefore, tells us that there is growth to be had. The question is, where?
And that can be quite tricky. Investing in random stocks that you hope to earn growth on can be risky, to say the least — especially in this still-volatile market. This is why today we’re going to look at another option: exchange-traded funds (ETFs).
Why ETFs?
ETFs are like creating a perfect portfolio for you but managed by professionals. Since the introduction of ETFs on the market, their use has surged in popularity. Moreover, this isn’t necessarily a safer way to invest or even a way to invest for lower results.
Instead, you can make all the incredible gains that you would have hoped for from investing in a bunch of stocks. Yet, if you’re a more passive investor, it means just doing your research on the type of investment you want to get into, rather than just the one stock.
For instance, in this article, we want ETFs that are going to beat the market. That means ETFs that have seen growth of over 13% in the last year alone. And what’s more, I’m not talking about from peak to trough. Instead, these are ETFs that have done well and are continuing to do well. So, let’s look at two to consider on the TSX today.
XEQT
First up, there’s iShares Core Equity ETF Portfolio (TSX:XEQT). This ETF just sounds safe, doesn’t it? But you might be surprised to learn that shares of XEQT ETF are up 16% since reaching 52-week lows. Furthermore, shares are up 12% in the last year alone as of writing. This is definitely beating out the TSX today.
This ETF offers a dividend yield of 2.07%, allowing for cash along the way. It holds a gold rating by Morning Star as well, thanks to its diverse range of 500 large-cap companies in the United States.
Furthermore, the ETF provides you with all this exposure yet still offers a low cost with minimal turnover. This allows you to hold the ETF long term, knowing there aren’t going to be any significant risky changes. The ETF has outperformed not just the TSX today but also its average category peers by about 2% over the last decade. So, if you want to continue seeing outperformance, this is one ETF I would strongly consider.
XQLT
Then there is iShares MSCI USA Quality Factor Index ETF (TSX:XQLT), another market beater to consider. And again, there’s that safe word, quality, that should make you feel right at home. Shares of XQLT ETF are up an incredible 30% in the last year, meaning it’s done almost three times as well as the TSX today.
The ETF, given a silver rating by Morning Star, offers rock-solid performance by investing in rock-solid companies. Investors gain access to large- and mid-cap stocks in the United States, all with positive fundamentals. It seeks to track the Morgan Stanley Capital International (MSCI) USA sector neutral quality index, and find companies that fit the bar. This includes high profitability, low leverage, and stable recent earnings growth.
Because of this, there can be more turnover to keep up with the essentials. However, the stock is linked to historical market-beating returns. So, you won’t just see an increase in the next year but for years to come. In fact, it’s achieved an annual return of 13% between 2015 and 2023 alone! Therefore, it’s another ETF I’d pick up on the market today and hold for life.
