Canadian Exchange Traded Funds (Canadian ETFs) Valuation

小股民

With this one article a diversified Canadian ETF Exchange Traded Fund portfolio could be selected and purchased within an hour or so.
We provide the P/E and dividend yields as ofJanuary 7, 2012. But we also provide links so that you can check the latest P/E, dividend yield and Canadian ETF prices. Therefore this Canadian ETF reference article can be used at any date, not just near the date it was last updated.
Keep in mind that P/E ratios and yields (and the resulting valuation comments) are based on the earnings and dividend information available at a point in time. For example the figures below updated January 6th would generally reflect2011 Q3 earnings. Ratios are always subject to change as financial results change and as the ETF prices change. You can click to see the updated P/E and yield as earnings get reported and as the ETF prices change. If the earnings are expected to rise or fall substantially compared to the earnings in the most recent four quarters reported, then the most recent P/E ratio would not be reliable as a valuation indicator. Nevertheless, the trailing P/E ratios are what they are, and investors should find value in being aware of them.
Keep in mind that stocks are volatile and a segment that looks attractive on trailing earnings may not be attractive if earnings fall sharply, but the opposite applies if earnings start to rise rapidly.
See also our article on selected global ETFs Exchange Traded Funds.
  

TSX Segment Index	Trailing P/E   (Click for update)	Dividend Yield % (Click for update)	ETF Stock Symbol, Price (Jan. 6,      '12 and MER)	CommentThe valuation     comments are based o n the trailing P/E ratios and the yields.  the P/E at times may not represent a good indication of value if the     earnings are expected to change readily compared to the trailing earnings.
HIGHER YIELDING      DIVIDEND CANADIAN EQUITY STOCK ETFs      - (updated January 7, 2012) Note      that ETF dividends can be volatile and therefore the indicated dividend yields      can      sometimes be misleading.
S&P/TSX Income Trust Index	7.6	5.2%	No ETF	The P/E is surprisingly low probably due to      IFRS mark to market valuations of properties that REITs use. The yield       is attractive. 16 Trusts 13 are REITs. No ETF to our knowledge
S&P/TSX Capped Financials Index      and TSX Financials ETF and TSX Financials and double bull ETF and TSX Financials      single and double bear     ETF	11.2	4.2%      (index)      3.4%      XFN       0%      HFU, HIE and HFD	XFN      $21.31 (0.55%      MER)        HFU     $10.34(1.15% MER) 2 times bull       HIF $8.94     Single Bear 1.15% MER       HFD      $7.85 (1.15% MER) 2 times bear	About 25 companies dominated by the big banks and life     insurance companies. Looks quite attractive Note     that leveraged ETFs (2 or three times bull or bear) are known to perform as     expected for short-term holding periods but may not perform as expected over     longer holding periods. Click on the ETF symbol to see a graph that     illustrates the problem.
S&P/TSX Capped Real Estate Index      TSX Real Estate ETF	6.4	4.3%      (index)4.8%      XRE	XRE $15.53 (0.55% MER)	17 entities. Most but not all are REITs. P/E is      ostensibly very attractive but this is due to mark to market valuation of      properties of REITS under IFRS accounting and will be highly volatile.  Attractive yield.
S&P/TSX Capped Telecommunications Index	31.5	5.1%	No ETF	Only 5 companies. The large telcos. Surprisingly      high and unattractive P/E. There is no ET to our      knowledge.
S&P/TSX Capped Utilities Index	17.1	4.6%	No ETF	10 companies. No ETF, to our knowledge
S&P/TSX Capped REIT Index	6.5	5.5%	No ETF	13 companies. P/E is ostensibly highly      attractive but this is due to mark to market valuation of properties under      IFRS and will be highly volatile. No ETF,      to our knowledge.
Dow Jones Canada Select Dividend Yield Index    TSX Dividend ETF	13.4P/B =1.8	4.9%      index3.8%      XDV	XDV $20.70 (0.50% MER)	Appears attractive.     About 30 companies in     the ETF. Their is a heavy exposure to the big bank stocks.
Dow Jones Canada Select Value Index    TSX Value ETF	11.7P/B =      1.5	3.7%      index      3.3%      XCV	XCV $19.48 (0.50% MER)	88 companies. Appears quite attractive
S&P/TSX Canadian Dividend Aristocrats Index	15.8     P/B =    2.4	4.0      index 3.0%      CDZ	CDZ$21.59 (0.65% MER)	About 58 companies. Appears      neutral in attractiveness.
S&P / TSX Preferred Share Index	not Applicable to     Preferred	5.0%      index 4.8%      CPD	CPD$17.32 (0.45% MER)	About 150 preferred share      issues. This     appears to be moderately attractive. But keep in mind there is little chance      of a price increase here, and if interest rates rise there could be a      price decline.
TSX Segment Index	Trailing P/E  (Click for update)	Dividend Yield % (Click for update)	ETF Stock Symbol, Price as at Jan 7, '12 and MER (Click for updated price)	Comment
CANADIAN EQUITY ETFs (update Jan.    7, 2012)
S&P/TSX Composite index     and TSX Composite ETF	14.5	2.8%      index      2.4%      XIC	XIC TSX    $19.21 (0.25% MER)	Appears reasonably valued. Has a     heavy weighting to volatile finance and energy sectors.
S&P/TSX 60 (Large Cap) Index     and TSX 60 ETF and TSX 60 bull ETF and TSX 60 bear ETF	14.1	2.8%      index      2.5%      XIU       No dividend on HXU, HIX or HXD	XIU    $17.41    (0.17% HXU    $17.67 (1.15% MER) 2 times bull       HIX      $11.160     Single Bear 1.15% MER     HXD    $9.64 (1.15% MER) 2 times bear	Note the very low management expense fee (ratio). This     allows broad exposure to the Canadian stock market at a low fee. Appears    reasonably valued. Has a     heavy weighting to volatile finance and energy sectors.     Note that leveraged ETFs (2 or three times bull or bear) are known to     perform as expected for short-term holding periods but may not perform as     expected over longer holding periods. Click on the symbol HXU to see a graph     that illustrates the problem.
S&P/TSX Mid     and Small Cap Index (Completion     Index) and TSX mid-cap ETF	16.0	2.7%      index      2.0%      XMD	XMD $21.32 (0.55% MER)	Seems neutral in attractiveness. About 193      companies.
S&P/TSX Small Cap Index     and TSX small cap ETF	19.9	2.5%      index      1.6%      XCS	XCS$15.99 (0.55% MER)	Seems unattractive. 268 companies.
S&P/TSX Capped Consumer Discretionary Index	14.3	3.0%	No ETF	There are only about 17 companies in the index, some     are poor fits. (Magna, Thompson Reuters??) Seems like a meaningless sector.
S&P/TSX Capped Consumer Staples Index	14.9	1.9%	No ETF	Neutral in attractiveness. Only about 12 companies mostly retail.
S&P/TSX Capped Metals & Mining Index	15.6	0.9%	No ETF	About 15 companies.
S&P/TSX Capped Energy Index     and TSX Energy ETF and TSX Energy double bull ETF and TSX Energy single and      double bear ETF	19.3	2.6%      index1.8%      XEG       No dividend on HEU, HIF or HED	XEG    $17.34 (0.55%      MER)    HEU    $6.20 (1.15% MER) 2 times bull       HIE      $10.66     Single Bear1.15% MER     HED     $4.27 (1.15% MER) 2 times bear	About 56 companies.     Looks unattractive but that depends on oil and gas prices.
S&P/TSX Capped Health Care Index	65.5.	2.9%	No ETF	With 4 companies, it is strange to call this a     segment.
S&P/TSX Capped Industrials Index	17.0	2.1%	No ETF	About 18 companies.
S&P/TSX Capped Information technology Index     and TSX Information Technology Tech ETF	8.5	0.3%      index      n.a.      XIT	XIT$6.04 (0.55% MER)	Appears quite attractive - only about 6  companies in     this so-called "index"
S&P/TSX Capped Materials Index     TSX Materials ETF	16.6	0.9%      index      n.a.      XMA	XMA     $19.96 (0.55% MER)	64 companies, looks neutral in attractiveness      but earnings here are particularly unpredictable
Dow Jones Canada Select Growth Index    TSX Growth ETF	19.4P/B =2.2	1.5%      index0.7%      XCG	XCG$22.99 (0.50% MER)	67 companies appears unattractive.
Claymore Oil Sands     Sector ETF(note, fundamentals only updated      quarterly, last are from December 31)	9.1P/B =      2.1	1.5%      index0.4%      CLO	CLO     $16.12(0.60% MER)	14 companies. Looks highly attractive but valuation will change with oil prices.

小股民

FIXED INCOME BOND ETFs (last updated    Jan 7, 2012)
Bond Type (Click for updated yield to     maturity and to see the individual bonds in the index)	Average Term of Bonds in Years	Average  Yield to Maturity before     MER on index and cash yield on ETF	ETF Stock Symbol, Price as at Jan 16,     '10 and MER (Click for updated price)	Comment (Bonds and Bond      ETFs are more     suitable to tax-sheltered accounts than taxable) ETF      yield may be higher than the true return you will get because these bonds      trade at a premium
ishares     Canadian Bond ETF (Mix of Government and Corporate)	9.5	2.3%      YTM index3.6%      XBB	XBB$31.49 (0.30% MER)	Appears highly unattractive and it will fall in price if interest rates rise.Expect a      capital loss      even if interest rates are stable, best indication of true expected return is index      yield minus MER! Actual return is unpredictable.
ishares Canadian Corporate Bond ETF	9.0	3.1% YTM      index      4.3%      XCB	XCB $21.10      (0.42% MER)	Not attractive       It will fall in price if the probability of corporate bankruptcies rises, and/or if interest      rates rise.      Expect a capital loss      even if interest rates are stable, best indication of true expected return is index      yield minus MER !Actual return is unpredictable.
ishares Canadian Government Bond ETF	9.9	2.0%      YTM index      3.1%      XBG	XGB $21.10 (0.35% MER)	Not     attractive.      Expect a capital loss      even if interest rates are stable, best indication of true expected return is index      yield minus MER! Actual return is unpredictable.
ishares Canadian Long Bond ETF      (mix of government and corporate)	22.9	3.4%      YTM index3.9%      XLB	XLB $23.28      (0.37% MER)	Not an attractive yield      and  with its long maturity it will fall heavily if long-term interest rates rise.       The best indication of true expected return is index      yield minus MER! Actual return is unpredictable.
ishares Canadian Real Return Bond ETF	20.8	0.3%      YTM plus inflation index1.8%      XRB	XRB $25.76      (0.37% MER)	Possibly worth considering for     inflation protection, but you can buy a real return bond directly and avoid     the MER, although you will pay a bid/ask spread. Real return bonds do not at      all protect against a rise in the real (before inflation) interest rates.      Real interest rates are at historic lows so that represents a danger with this      ETF fund.
ishares Canadian Short Bond ETF	2.8	1.4%      YTM index      3.2%      XSB	XSB $29.25       (0.26% MER)	1.4% minus the MER is unattractive.       Expect a capital loss      even if interest rates are stable, best indication of true expected return is index      yield minus MER!, not the cash yield on the ETF
General     comments on Bonds: Bond interest is taxed more heavily than share dividends     or capital gains. Therefore they are more suitable for tax-sheltered savings     accounts. (RRSP, RESP, Tax Free Savings Account). Longer term bonds will     fall in value if interest rates rise. Bonds, and especially longer term bonds     fall in price when interest rates rise. Interest rates are currently at     record lows and therefore there is a high risk that interest rates will rise     and that bond prices will fall. The real return bond partly protects against     that risk. Corporate Bonds fall in price when corporate profits fall and or     whenever corporations are viewed as more risky. Bond and Bond ETF cash      yields can be higher than the underlying yield to maturity - don't be      misled - the offset would be an expected capital loss as the bonds are      trading at a premium to their maturity price.
GOLD AND COMMODITY ETFs (last updated    Jan 7, 2012)
Commodity Type	P/E Ratio	Yield	ETF Stock Symbol, Price as at Jan 16,     '10 and MER (Click for updated price)	Comment
S&P/TSX Global Gold Index    TSX Global Gold ETF	Note: P/E ratio not available	0.9%      index      0.2%      XGD       No dividends on the bear/bull ETFs	XGD    $23.41 (0.55% MER)HGU    $12.63(1.15% MER) 2 times bull           HIG     $11.22     Single Bear 1.15% MER     HGD    $8.70(1.15% MER) 2 times bear	67 Global gold companies. My experience has     been that gold companies tend to be often over-priced due to a "lottery ticket"     mentality.The symbols starting with H here trade on Toronto in Canadian     dollars - but not hedged.     Note that leveraged ETFs (2 or three times bull or bear) are     known to perform as expected for short-term holding periods but may not     perform as expected over longer holding periods. Click on the ETF symbol to     see a graph that illustrates the problem.
HBP COMEX®     GOLD ETF (HUG)	not applicable	not applicable	HUG      $16.40MER 0.65%	Gold itself as a commodity in Canadian     dollars and hedged to remove currency riskEndeavors to correspond to the     performance of the COMEX® gold     futures contract for a subsequent delivery month i.e. It does not own physical     gold       In a stable market with an upward sloping futures price, it would by      nature     lose money as each futures bought each month tends to be more expensive than     the value of the expiring contract being sold.
Claymore     Gold Bullion Trust	not applicable	not applicable	CGL       $14.46       MER = 0.50%	This is gold itself as a commodity.      This Trust owns physical Gold
ISHARES COMEX Gold TrustTSX Gold     Commodity ETF	not applicable	not applicable	IGT      $16.20(0.40% MER)       This is the American MER,     possibly it is higher in Canada.	This is gold itself as a commodity. This is a     U.S. gold ETF that also happens to trade on the TSX in Canadian dollars.      This Trust owns physical     Gold
Claymore     Silver Bullion Trust	not applicable	not applicable	SVR.un       $16.86       MER = 0.60%	This is silver itself as a commodity.      This Trust owns physical Silver
HBP     COMEX® SILVER ETF (HUZ)	not applicable	not applicable	HUZ       $18.79       MER 0.65%	Silver as a commodity  in Canadian     dollars and hedged to remove currency riskEndeavours to correspond to the     performance of the COMEX® silver futures contract for a subsequent delivery     month - it does not own physical silver.       In a stable market with an upward sloping futures price, it would by      nature     lose money as each futures bought each month tends to be more expensive than     the value of the expiring contract being sold.
HBP     WINTER NYMEX® CRUDE OIL ETF (HUC)	not applicable	not applicable	HUC       $11.59       MER 0.75%	Emulates December contract for NYMEX light sweet     Crude. Priced in Canadian dollars and Hedged.This should go up if     December futures price for oil rises. And the reverse. This ETF may lose     money when it ultimately sells the December 2012 contract and presumably     buys the December 2013 contract
HBP NYMEX® Crude Oil Bull Plus ETF                      HBP NYMEX® Crude Oil Bear Plus ETF	not applicable	not applicable	HOU        $6.69     MER 1.15%                            HOD $5.11     MER 1.15%	2x Bull Attempts to emulate a 200% continuous     exposure to the next month's oil futures contract on the New York Mercantile     Exchange     2x Bear Attempts to emulate a 200% continuous exposure to selling the     next month oil futures contract on the New York Mercantile Exchange          In Hedged Canadian dollars     Note that leveraged ETFs (2 or three times bull or bear) are     known to perform as expected for short-term holding periods but may not     perform as expected over longer holding periods. Click on the links to     see a graph that illustrates the problem.
Claymore     Natural Gas Commodity ETF	not applicable	not applicable	GAS       $16.95	The ETF will provide non-leveraged     exposure to the Alberta natural gas market, by investing in physical natural     gas forward contracts. (Which means it does not hold physical natural      gas in storage)    The NGX Canadian Natural Gas Index replicates an exposure to the monthly     contract (1-month spot price) for physical natural gas for delivery on the     TransCanada Mainline (AECO/NIT) in Alberta, that is rolled to the next     contract prior to delivery.       In the situation of a stable price and an inclining forward price curve this index      would face     a natural loss as each monthly contract may tend to decline through the     month and the sold month may be cheaper than the next month it has to buy.     Buying this ETF is a bet that natural gas prices will rise.     Past prices of the Alberta Natural Gas    index are available     here.
HBP     WINTER NYMEX® NATURAL GAS ETF (HUN)	not applicable	not applicable	HUN       $3.11       MER 0.75%	Emulates January contract for NYMEX Natural Gas.     Priced in Canadian dollars and HedgedThis ETF should go up if the January natural gas price rises. And the     reverse. Also may lose money when it has to sell January 2013 to buy January      2014.
HBP NYMEX® Natural Gas Bull Plus ETF                     HBP NYMEX® Natural Gas Bear Plus ETF	not applicable	not applicable	HNU       $7.37     MER 1.15%                        HND $18.35     MER 1.15%	2x Bull Attempts to emulate a 200% exposure to     the next month Natural gas future on New York Mercantile Exchange     2x Bear Attempts to emulate a 200% exposure to selling the next month     Natural gas future contract on the New York Mercantile Exchange       In Hedged Canadian dollars     Note that leveraged ETFs (2 or three times bull or bear) are     known to perform as expected for short-term holding periods but may not     perform as expected over longer holding periods. Click on the links to     see a graph that illustrates the problem.

小股民

For those interested in Canadian ETFs this is an excellent reference article. You can bookmark it and alsojoin our free newsletter listto be advised of periodic updates to this table.
For those segments that show an entry in the Canadian "ETF" column, this means that a Canadian Exchange Traded Fund is available. These Canadian ETFs trade just like stocks on the Toronto Stock Exchange and the trading symbol is provided. Buying the Exchange Traded Fund gives convenient exposure to the segment.
Where an ETF exists, you can buy it just like buying a stock.
With the information above investors can make a judgment as to the desirability of various segments of the Canadian market and  we provide the trading symbol under which each can be purchased. (Or sold short for that matter).
This can help you decide which sectors are most (or least) attractive. (Financial, Energy, Real Estate etc.). For those sectors with an ETF available, you can then easily buy that sector by buying the Exchange Traded Fund.
While it can be very difficult to interpret whether a particular P/E ratio is attractive or not, it is useful to be aware of these ratios. Note that most of the indexes are "capped" which means that the contribution of any one company to the index is capped or limited to a certain level. In theory the P/E ratio of an index should be more meaningful than the P/E for an individual stock since the group of companies that make up an index are less prone to unusual gains and losses since these tend to average out. But in some cases they do not average out and an index P/E could be affected by large unusual gains or losses at individual companies or something unusual that is affecting the entire sector.
Note that the sectors contain corporations as well as Income Trusts, the inclusion of Trusts has driven the dividend yields higher compared to the situation before Trusts were added to the indexes.
Also note that some of these sectors contain less than 10 companies which is really not enough to be representative of a sector.
Where there is no ETF, you cannot buy the index and would need to pick and choose individual stocks or find mutual funds that focus on the sector.
The ETF's that start with "X" are from from www.ishares.ca The Canadian ETF's that start with "H" are by Horizon beta pro and are either a two times bullish bet on the segment or a two times bear bet against the segment. Use caution and see http://www.hbpETFs.com/ for more information. The ETF's that start with a "C" are byClaymore Investments. We have not so far included theBank of Montreal ETFs partly because we could not find the P/E and yield data. Also we have not so far included the new Vanguard Canadian ETFs partly dueto time constraints. If there is a particular Canadian ETF that you would liketo see added and for which fundamental data like the P/E ratios is available,please let us know and we will consider adding it.
In buying or selling any of these Canadian ETFs be cautious about the trading volume and the bid/ask spread. Higher volume ETFs are preferred, all else being equal.
In buying any of these, be careful to double check the Canadian ETF trading symbol with other sources. I believe the symbols above are correct, but please double check. A wrong symbol could lead to to the wrong investment. Also check the latest P/E ratios and dividend yield by clicking the links above. When clicking links check that it goes to the Canadian ETF name that you expect.
Investors may wish to consider the expected growth or contraction of the earnings that are driving the P/E for a particular segment. High growth  can justify a high P/E and low or negative growth leads to lower P/E ratios. Also for some industries like mining and real estate, the GAAP earnings may arguably understate sustainable free cash flow therefore justifying a higher P/E. For more on this see our articles onunderstanding P/E ratios. Possibly, some segments, which may not have a lot of companies in the sector,  are affected by one or two companies within the sector having unusual losses or gains.
END
Shawn Allen, CFA, CMA, MBA, P.Eng.
President, InvestorsFriend Inc.
Last updated: January 7, 2012

http://www.investorsfriend.com/C ... 0Canadian%20ETF.htm