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Top 10 Best Growth ETFs in Canada April 2021

In this post, we will go over the best performing growth ETFs in the past 52 weeks. I extracted the data from Barchart, I selected only growth ETFs. Then, I focused on ETFs that had the highest returns in the past 52 weeks and asset under management above 100 Million dollars. ETFs that have low asset under management tend to be less liquid and cost more for investors when they want to trade them. This is why they were excluded from this analysis.

Obviously, historical performance is no indication of future returns!

Summary

Main takeaway from the list:

Cannabis/hemp sector (HMMJ-U, HMMJ)

The democratic sweep in the US election was the most important factor in the phenomenal growth in Marijuana companies’. Recently, the house passed the marijuana Opportunity, Reinvestment and Expungement (MORE) act. This would remove marijuana from the controlled substances act of 1970. The future of the industry would be now more related to the branding being used for their products. It’s important to favor actively managed funds as this industry is quite volatile;

Small caps (XCS, XSU)

Smaller stocks have historically led after recessions, which could augur well for small-caps if the economy continues to strengthen this year, and the new stimulus bill in the US is expected to boost spending. However, investors should keep in mind small caps are inherently risky and more volatile.

Best Canadian Dividend ETFs 2021, full analysis and comparison!

Banking and Financials (FSF, ZUB)

News of faster economic growth than anticipated seem to favor the banking sector.

Agriculture (COW)

One Agriculture ETF found its way in the top 10 performers! This sector has suffered last year with trade barriers and unprecedented measures taken by governments to contain the the pandemic. Restaurants closures for instance had a huge impact on the sectors’ profitability overall. Now, with an economy on its way to recovery, the sector is back to positive territory.

Energy 

Energy has strongly rebounded this year. This is especially true, as oil price has been benefiting the most from the expectation of swift global economic recovery buoyed by rapid vaccination rollout.

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Risk

Most of the ETFs below share the risk factors below:

  • Sector risk: they all have 100% exposure to a specific sector. To reduce this risk, investors should hold investments in various sectors;
  • Index risk: most of the ETFs below seek to replicate an index. This makes them a passive investment. Even if within the index the manager identifies underperforming companies, he will still have to acquire them. It’s important to keep in mind that when investing in an index fund, the manager has the obligation to replicate the index in its entirety;
  • All ETFs below are in a very rewarding but are in risky or cyclical industries;

Table 1: Asset under management and Volatility

Name AUM*MER*
HMMJ-U – Horizons Marijuana Life Sciences Idx USD              4280.85%
HMMJ – Horizons Marijuana Life Sciences              5390.85%
XSU – Ishares US Small Cap Index              5220.36%
XCS – Ishares S&P TSX Smallcap Index              1690.60%
XIT – Ishares S&P TSX Capped Info Tech              4970.61%
XEG – Ishares S&P TSX Capped Energy Index          1,0710.61%
COW – Ishares Global Agri Index              2590.72%
ZUB – BMO Eql Wgt US Bank Hdgd To CAD              5920.37%
HXQ-U – Horizons Nasdaq 100 Index  USD              2660.28%
FSF – CI First Asset Global Financial Sector              6711.02%

Full comparison of the Best Canadian Index ETFs 2021

Note:

The AUM means Asset under management. MER is the management expense ratio which is the total fees the fund charges to its unit holders.

Table 2: Historical performance

NameYTD %Chg1M %Chg3M %Chg52W %Chg
HMMJ-U42.60%-17.26%13.90%100.69%
HMMJ39.09%-17.28%6.51%82.36%
XSU12.41%-5.46%5.20%80.63%
XCS11.42%-3.53%7.54%77.31%
XIT10.28%6.37%7.64%77.23%
XEG27.09%-8.80%15.48%76.78%
COW21.98%0.95%12.39%75.57%
ZUB26.19%-1.18%12.40%72.82%
HXQ-U7.69%7.53%7.93%70.26%
FSF15.73%3.20%17.26%69.62%

1 and 2- Horizons Marijuana Life Sciences Idx

(Both HMMJ-U and HMMJ) dominates the list. They invest mainly in a basket of North American publicly listed life sciences companies with significant business activities in the marijuana industry. Their largest holdings are Aphria Inc (18%) and Canopy Growth Corp (14.69%). This  is rebalanced on a quarterly basis to adapt to the ever changing nature of this industry.

 U.S. dollar-denominated units of HMMJ will trade under the ticker symbol “HMMJ.U”. Both the HMMJ and HMMJ.U tickers refer to the same exchange traded fund. The only difference between the two listings is the currency in which they trade.

TOP HOLDINGS

AS AT APRIL 9, 2021

Security NameWeight
APHRIA INC .15.35%
CANOPY GROWTH CORP .12.65%
CRONOS GROUP INC .9.89%
INNOVATIVE INDUSTRIAL PROPERTI .9.52%
SCOTTS MIRACLE-GRO CO/THE .8.7%
TILRAY INC .7.54%
GW PHARMACEUTICALS PLC .7.08%
GROWGENERATION CORP .3.82%
VILLAGE FARMS INTL INC .3.27%
CHARLOTTES WEB HOLDINGS INC .3.04%

3- XSU – Ishares US Small Cap Index

Seeks to provide long-term capital growth by replicating the performance of the Russell 2000® Index – Canadian Dollar Hedged, net of expenses.

Why XSU?

  1. Exposure to 2000 small-cap U.S. issuers in a single fund

    2. Can be used to diversify a U.S. equity allocation and gain exposure to the long-term growth potential of smaller companies

Holdings as of Apr 12, 2021

TickerNameWeight (%)
IWMISHARES RUSSELL 2000 ETF99.83

Breakdown for IVM (US ETF)

NameWeight (%)
CAESARS ENTERTAINMENT INC0.60
PENN NATIONAL GAMING INC0.56
PLUG POWER INC0.43
DARLING INGREDIENTS INC0.39
NOVAVAX INC0.38
LITHIA MOTORS INC CLASS A0.37
BUILDERS FIRSTSOURCE INC0.35
DECKERS OUTDOOR CORP0.34
RH0.33
CHURCHILL DOWNS INC0.29

Sector breakdown

TypeFund
Health Care18.45
Industrials16.12
Financials16.05
Consumer Discretionary14.82
Information Technology12.93
Real Estate6.02
Materials4.40
Consumer Staples3.28
Utilities2.76
Energy2.45
Communication2.42
Cash and/or Derivatives0.2

4- Ishares S&P TSX Smallcap Index

Seeks long-term capital growth by replicating the performance of the S&P/TSX SmallCap Index, net of expenses. The index includes Canadian small caps.

Holdings as of Apr 12, 2021

NameWeight (%)
NORTH WEST COMPANY INC1.38
LAURENTIAN BANK OF CANADA1.35
ENERPLUS CORP1.34
WPT INDUSTRIAL REAL ESTATE INVESTM1.31
RUSSEL METALS INC1.31
INTERTAPE POLYMER GROUP INC1.29
HOME CAPITAL INC1.24
COMINAR REAL ESTATE INVESTMENT TRU1.22
NEW GOLD INC1.20
JAMIESON WELLNESS INC1.18

Sector breakdown

TypeFund
Materials25.65
Energy13.84
Industrials12.73
Real Estate10.40
Health Care8.99
Financials8.88
Consumer Discretionary6.80
Consumer Staples4.80
Information Technology3.72
Communication3.61

5- iShares S&P TSX Capped Info Tech  (XIT.TO)

This  seeks exposure to the Canadian information technology companies. The index used is the S&P/TSX Capped Information Technology Index.

see below their top holdings

Holdings as of Apr 12, 2021

NameWeight (%)
CONSTELLATION SOFTWARE INC25.20
SHOPIFY SUBORDINATE VOTING INC CLA25.10
CGI INC15.76
OPEN TEXT CORP11.23
LIGHTSPEED POS SUBORDINATE VOTING5.30
DESCARTES SYSTEMS GROUP INC4.56
BLACKBERRY LTD3.89
KINAXIS INC2.80
ENGHOUSE SYSTEMS LTD1.61
DYE AND DURHAM LTD1.33

Sub-Sector breakdown

TypeFund
Application Software52.40
Cash and/or Derivatives0.04
Communications Equip.0.87
Electronic Equipment & Instruments0.19
Electronic Manufacturing Services0.79
Internet Services & Infrastructure25.10
IT Consulting & Other Services15.83
Systems Software4.78

6- XEG – Ishares S&P TSX Capped Energy Index

XEG comes in the sixth position in our ranking of the Best Growth ETFs in Canada. Funds objective: Seeks long-term capital growth by replicating the performance of the S&P/TSX Capped Energy Index, net of expenses.

In terms of holdings, Canadian Natural Resources and Suncor Energy make up almost 50% of the holdings. This high exposure reduces the benefit of diversification that’s usually desired by investors when buying an ETF.

Holdings as of Apr 12, 2021

NameWeight (%)
CANADIAN NATURAL RESOURCES LTD25.93
SUNCOR ENERGY INC24.56
CENOVUS ENERGY INC12.75
IMPERIAL OIL LTD7.54
TOURMALINE OIL CORP6.94
ARC RESOURCES LTD5.24
PAREX RESOURCES INC3.09
PRAIRIESKY ROYALTY LTD2.95
WHITECAP RESOURCES INC2.90
CRESCENT POINT ENERGY CORP2.76

Sub-Sector allocation

TypeFund
Oil & Gas Exploration & Production55.08
Integrated Oil & Gas44.84
Cash and/or Derivatives0.08

7) Ishares Global Agri Index COW.TO  

The fund seeks exposure to companies involved in the production of agricultural products, fertilizers and agricultural chemicals, farm machinery, and packaged foods and meats.

Holdings as of Apr 12, 2021

NameWeight (%)
DEERE9.72
CNH INDUSTRIAL NV9.25
CORTEVA INC8.96
SCOTTS MIRACLE GRO8.45
AGCO CORP7.56
BUNGE LTD7.21
MOSAIC6.05
TRACTOR SUPPLY5.82
DARLING INGREDIENTS INC5.20
TYSON FOODS INC CLASS A4.98

Geographic allocation

TypeFund
United States83.20
Italy9.25
Canada3.28
Brazil1.72
Cash and/or Derivatives0.14
Other2.41

8) BMO Eql Wgt US Bank Hdgd To CAD ZUB 

The BMO Equal Weight US Banks Hedged to CAD Index ETF (ZUB) has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight US Bank Index Canadian Dollar Hedged, net of expenses. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index. The U.S. dollar exposure is hedged back to Canadian dollars.

Weight (%)NameBloomberg Ticker
99.86%BMO EQUAL WEIGHT US BANKS INDEX ETFZBK
0.14%CASH

Breakdown for ZBK

Weight (%)Name
5.48%AMERIPRISE FINANCIAL INC
5.32%BANK OF AMERICA CORP
5.31%US BANCORP
5.13%WELLS FARGO & CO
5.08%CITIZENS FINANCIAL GROUP INC
5.06%TRUIST FINANCIAL CORP
5.03%JPMORGAN CHASE & CO
5.02%PNC FINANCIAL SERVICES GROUP INC/THE
5.00%FIRST REPUBLIC BANK/CA
5.00%FIFTH THIRD BANCORP

9- HXQ-U – Horizons Nasdaq 100 Index  USD

The Horizons NASDAQ-100® Index ETF (“HXQ” ) seeks to replicate, to the extent possible, the performance of the NASDAQ 100® Index (Total Return) – “the Index” – net of expenses. The Index includes 100 of the largest U.S. and international non-financial companies listed on The NASDAQ Stock Market.

TOP 10 INDEX HOLDINGS

AS AT FEBRUARY 28, 2021

Security NameWeight
APPLE INC.12.16%
MICROSOFT CORP9.50%
AMAZON.COM INC8.72%
TESLA INC.5.04%
FACEBOOK INC3.37%
ALPHABET CL C CAP3.28%
ALPHABET CL A CMN2.98%
NVIDIA CORPORATION2.65%
PAYPAL HOLDINGS2.26%
NETFLIX INC.1.94%

Sector allocation

Information Technology (47.39%)

Communication (19.67%)

Consumer Discretionary (18.90%)

Health Care (6.21%)

Consumer Staples (4.40%)

Industrials (2.55%)

Utilities (0.87%)

10- FSF – CI First Asset Global Financial Sector

The Fund’s investment objectives are to seek long-term total returns consisting of long-term capital appreciation and regular dividend income from an actively managed portfolio composed primarily of securities of issuers in the global financial services sector across developed and emerging markets. 

Top Holdings

NameWeight %
SYNCHRONY FINANCIAL10.08
CITIGROUP INC9.83
ING GROEP NV7.77
BURFORD CAPITAL LTD4.85
CONDUIT HOLDINGS LTD4.67
EQUITABLE HOLDINGS INC4.36
MANULIFE FINANCIAL CORP4.19
ATHENE HOLDING LTD4.07
MONETA MONEY BANK AS3.99
SLM CORP3.85

Disclaimer

The data on this website is for your information only. It does not constitute investment advice, or advice on tax or legal matters. Any information provided on this website does not constitute investment advice or investment recommendation nor does it constitute an offer to buy or sell or a solicitation of an offer to buy or sell shares or units in any of the investment funds or other financial instruments described on this website. Should you have any doubts about the meaning of the information provided herein, please contact your financial advisor or any other independent professional advisor.