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The hottest ETFs on the Toronto exchange

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

Leaders among Canadian-listed equity exchange-traded funds (ETFS) this year.

Global stock markets have staged a sharp comeback after last year's market collapse, and ETFs are one way to play the rebound. ETFs are similar to mutual funds but trade like stocks. There are brokerage fees to pay when buying ETFs, but they can be low when dealing with a discount broker.

TODAY'S SEARCH

We screened the year-to-date returns to Thursday of all equity ETFs to rank the best performers. We excluded the Horizons BetaPro bull and bear leveraged ETFs, and ETFs that were launched this year.

WHAT DID WE FIND?

The top three performers were Claymore specialty ETFs.

Claymore BRIC ETF, which is invested in Brazil, Russia, India and China, rose to the top with a nearly 75-per-cent gain. Claymore S&P/TSX Global Mining ETF posted a 59-per-cent return.

And Claymore Oil Sands ETF, which is focused on oil sands plays, has risen 54 per cent. While this energy ETF has blasted ahead of the 36-per-cent return by the broader based iShares Energy ETF, the Claymore offering also took a bigger hit in last year's market downturn.

What is also interesting is the performance range among Canadian equity ETFs.

While the iShares CDN Large Cap 60 Index is the grand daddy of ETFs in Canada, and a big draw for many investors wanting exposure to the domestic market, its 31-per-cent return lags some of its peers.

The leader of this group is the Claymore Cdn Fundamental Index ETF, which has gained a more robust 41 per cent. Unlike the iShares Large Cap 60 - whose stocks are weighted by market capitalization - the 65 stocks in the Claymore ETF are chosen using metrics like cash dividends, free cash flow, sales and book value.

The top three stocks in the Claymore ETF are Teck Cominco Ltd., Royal Bank of Canada and Toronto-Dominion Bank. The top three in iShares Large Cap 60 are Royal Bank of Canada, Suncor Energy Inc. and Toronto-Dominion Bank.

"Over 80 per cent are the same firms, but just different weights," said Vlad Tasevski, analyst at Claymore Investments Inc. "By Oct. 31, the Claymore ETF was overweight financials by 15 per cent [compared with the iShares ETF], and underweight energy by 8.8 per cent and 5.6 per cent less in materials."

If the financials outperform, the Claymore ETF will do well, but if this sector does badly, it will underperform the iShares ETF, Mr. Tasevski said. "Also, our metrics would provide our portfolio with a lower price-to-earnings ratio and higher dividend yields versus the iShares ETF."

Top 30 Equity ETFs so far this year As of
Oct. 31/09 (Calendar year % returns)
Assets Latest (Nov. 19)
Name Symbol Equity Category ($millions) MER YTD % 2008 2007 2006 2005 2004
Claymore BRIC CBQ-TEmerging Markets 245.50.6674.5-57.670.9
Claymore S&P/TSX Gbl Mining CMW-TPrecious Metals 44.90.5959.0-38.8
Claymore Oil Sands SectorCLO-TNatural Resources 31.30.6354.4-54.222.7
iShares CDN SmallCap XCS-TCdn Small or Mid Cap 68.70.5551.9-45.4
Claymore Global Mos. Adv Div CYH-TCdn Small or Mid Cap 30.80.6442.5
iShares CDN Materials Sector XMA-TNatural Resources 257.80.5542.3-26.829.548.4
iShares CDN Financial Sector XFN-TFinancial Services 827.60.5542.1-35.8-1.321.223.219.1
iShares CDN REIT Sector XRE-TReal Estate 786.40.5542.0-38.3-6.026.824.313.1
Claymore Eq. Wt. Bank & Lifeco CEW-TFinancial Services 22.20.5941.7-36.8
Claymore Cdn FundamentalCRQ-TCanadian 72.40.6041.4-31.67.3
iShares CDN Value XCV-TCdn Div. & Income 38.30.5039.8-34.05.8
iShares CDN Completion XMD-TCanadian137.20.5539.3-38.85.317.821.321.6
iShares CDN Tech Sector XIT-TScience & Tech 58.50.5537.6-49.110.732.7-13.524.2
iShares CDN Jantzi SocialXEN-TCanadian20.40.5037.2-35.5
iShares CDN Energy Sector XEG-TNat. Resources 826.50.5536.0-35.910.64.060.629.5
iShares CDN Income Trust Sector XTR-TCdn Income Trust 205.80.5534.9-25.96.0-3.2
iShares CDN Composite XIC-TCanadian796.80.2532.3-33.09.518.927.013.6
iShares CDN Dividend XDV-TCdn Div. and Income 462.50.5031.4-30.9-0.815.5
Claymore Dividend & Income CDZ-TCdn Div. and Income 89.60.6430.7-30.46.3
iShares CDN LargeCap 60 XIU-TCanadian9805.50.1730.5-31.110.921.525.913.6
Claymore US Fundamental CLU-TU.S. 67.30.6228.6-42.6-2.9
Claymore S&P/TSX Pref Share CPD-TCdn Div. & Income 277.422.7-17.1
iShares CDN Growth XCG-TCanadian 36.60.5021.9-29.321.4
iShares CDN S&P 500 XSP-TU.S. 1150.90.1520.9-40.33.215.53.52.3
Claymore Global Agriculture COW-TGlobal 30.00.6120.7-27.3
iShares CDN Gold Sector XGD-TPrecious Metals 1087.90.5519.71.0-4.540.821.7-8.9
Claymore International CIE-TInternational 80.40.6218.9-30.8
iShares CDN Russell 2000 XSU-TU.S. Sm/Mid Cap 34.80.3516.9-38.8
iShares CDN MSCI EAFE XIN-TInternational 939.30.1514.6-40.61.916.712.29.8
Claymore Global Real Estate CGR-TReal Estate 29.80.7210.2
S&P/TSX Total Return32.8-33.09.817.324.114.5
MSCI World ($ Cdn)-26.1-7.120.66.67.3
S&P 500 Composite ($ Cdn)5.3-23.8-12.213.6-0.21.5
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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