John DeGoey iShares Russell 2000(CAD-Hedged) XSU-T COMMENT Apr 17, 2017

It's the US small caps index. They do better in times of declining yields and higher growth. This is good if you want to hunker down and hedge the US dollar. Small caps are beat up, but he predicts a rotation in the coming year to favour small caps. XSU is decent, but he prefers SCZ.

MER of XSU is 0.36%. Around for a dog's age. Replicates small-cap index well. Doesn't have the same valuation challenges as with the S&P 500 and concentration of the Magnificent 7.

Also consider XMC for more mid-cap exposure, MER of 0.16%, has done a bit better.

(Don't forget to incorporate foreign, developed areas from EMs ;)

Thesis is that small caps are going to play catch up. At top of its trading range, and he thinks it will break out as we see markets broadening. Great way to diversify. Upside probably $43 by end of year.

Exposure to the Russell index, hedged to CAD, listed on the TSX so you don't have to go into US dollars. Market breadth is improving, so more companies are participating in the rally. This will continue for the next year or more as the bull market marches on. 

Gives you exposure to names that you wouldn't want to own on their own because of the risk. Good way to get diversity without the correlation to the overall market that you get with the large-cap names.

Not too worried, given the short timeframe. In more volatile markets, small caps are going to move down more. Ideally, they play catchup later in the year. Prefers the mega-caps, but this is a way to not have all your eggs in one basket. Good place to be if there's another broad rally over the next 6 months or so.

(Note the short timeframe.) At some point the market has to broaden out, and names other than mega-caps have to participate. Hasn't worked yet. Not the best place for new capital. Late October to January/February should see more participation.

Excellent way to get exposure to Russell 2000. Will see gains in performance based on lowering of interest rates. Would recommend holding for long term. Lower interest rates will also benefit the small companies who rely on borrowing money. 

Nothing wrong with it as a way to diversify away from the S&P 500. Has more volatility. Hasn't done as well as the Mag 7, but small- and mid-caps have a place in every portfolio.