Stockchase Opinions

Peter Brieger iShares S&P/TSX Capped Financials Index ETF XFN-T BUY Jan 27, 2014

If you want one stop shopping for financials, this ETF is okay. You will do as well as the banks and other financial institutions in the index.

$28.130

Stock price when the opinion was issued

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COMMENT

Canadian financials have actually underperformed year to date. It depends on what energy is going to do. This won’t be a wildly underperformer or outperformer. If the market were to pull way, way back, he thinks the banks will outperform by going down less. He prefers cherry picking insurers and banks and hopefully outperform the ETF by a couple of percents if you get them right.

COMMENT

An ETF for a TFSA for a long-term hold? If you were going to do financials, he would probably look at this one. You have all the banks and insurance companies in this one.

COMMENT

This has done very well, and he would have no problem with holding this. He doesn’t buy this because he already has exposure to banks through covered calls, which he prefers.

DON'T BUY

His concern is with the sector. Financial services make up a ridiculous amount of the TSX. The product is excellent and does what it is supposed to do, but he would not buy it because financials make up so much of the index.

COMMENT

This has the banks, insurance companies and mutual funds. He would be more inclined to go with BMO Covered Call Canadian Banks (ZWB-T), but if you want to be a little more diversified, there is certainly nothing wrong with this one.

WATCH
If it falls below $4.25 then something's going on. This sell-off is overreacting. Watch this one for sure.
DON'T BUY

Don’t use it. It is broad financials. Insurance companies will be impaired for a number of years. If you want banks go with ZEB-T, but don’t buy it here.

BUY
Gotta likes the financials. Not expensive relative to the market right now. As interest rates rise, and the steeper yield curve would be a plus for them. Banks and value outperforms large cap tech in a rising rate environment. It looks like this is coming. Some of the good news is probably priced in.
BUY
Allan Tong’s Discover Picks In 2021, XFN climbed 31%, which actually outperformed Royal by 3%, but lagged TD by 3%. BAM.A, though, soared 45%. That said, XFN's performance gets a passing grade. Meanwhile, average daily volumes run at 227,000, which is enough to avoid volatility. XFN is currenly trading near its $51.26 52-week high. As rates rise, so will XFN. Read Best Financial Stocks in 2022 for our full analysis.
COMMENT
Exposure to major banks and insurance companies. Canadian banks more stable. Comment - governments are concerned about income and asset inequality so expect large, very profitable companies to get approached to pay their fair share.