ZCN VS HXT: A Comprehensive Comparison of ETFs
Exchange-Traded Funds (ETFs) have become a cornerstone of modern investment portfolios, offering diversified exposure to a wide range of sectors and asset classes. In this article, we will conduct a thorough comparison between two prominent ETFs: ZCN (BMO S&P/TSX Capped Composite Index ETF) and HXT (Horizons S&P/TSX 60 Index ETF). We will explore key aspects including ETF tickers, full names, issuers, sectors, top holdings, capitalization, investment strategy, tracking methodology, and exposure.
ZCN VS HXT: Overview
ZCN and HXT are both ETFs that provide exposure to the Canadian equity market. ZCN aims to replicate the performance of the S&P/TSX Capped Composite Index, representing a broad spectrum of Canadian companies. In contrast, HXT seeks to track the S&P/TSX 60 Index, which includes 60 of the largest and most liquid stocks on the Toronto Stock Exchange. This distinction in underlying indices results in differing sector allocations and market exposure.
ZCN VS HXT: Sectors and Top Holdings
ZCN encompasses a comprehensive selection of sectors, including financials, energy, materials, and more, reflecting the diversity of the Canadian economy. Its top holdings include well-established Canadian companies such as Shopify, Royal Bank of Canada, and Enbridge. On the other hand, HXT's portfolio is concentrated on the largest and most influential stocks on the TSX, featuring companies like Shopify, Royal Bank of Canada, and TD Bank. Analyzing these sectors and top holdings can aid investors in identifying the ETF that aligns with their investment goals and risk preferences.
ZCN overlap ZCN VS HXT: A Comprehensive Comparison of ETFs
ZCN VS HXT: Capitalization and Investment Strategy
ZCN boasts a substantial Asset Under Management (AUM), indicating its popularity among investors seeking broad exposure to the Canadian market. Its investment strategy revolves around replicating the performance of the S&P/TSX Capped Composite Index through a diversified approach. HXT, on the other hand, employs a unique structure known as a total return swap to track the S&P/TSX 60 Index. This difference in capitalization and strategy introduces varying levels of risk and return potential, which investors must evaluate in light of their investment objectives.
ZCN VS HXT: Tracking Methodology and Exposure
ZCN utilizes a direct investment approach, aiming to hold a portfolio that mirrors the composition and weightings of the S&P/TSX Capped Composite Index. In contrast, HXT employs a total return swap arrangement, which involves an agreement with a counterparty to exchange the total return of the index for a fixed payment. This method allows HXT to provide returns closely tied to the performance of the S&P/TSX 60 Index without holding all the underlying securities. Understanding these tracking methodologies is essential for investors to make informed decisions about their desired level of market exposure.
Conclusion
ZCN and HXT serve as distinctive avenues for investors seeking exposure to the Canadian equity market. The choice between the two depends on individual preferences and risk appetites. For those interested in delving deeper into the holdings, correlations, and overlaps of these ETFs, ETF Insider offers a user-friendly app that provides valuable insights into various financial instruments.
Disclaimer: This article does not provide any investment advisory services.
Sources:
BMO Global Asset Management. (2023). BMO S&P/TSX Capped Composite Index ETF (ZCN). Link
Horizons ETFs. (2023). Horizons S&P/TSX 60 Index ETF (HXT). Link
ZCN ETF issuer
ZCN ETF official page