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You're right, they are similar. I think this is because both exclude commodities and resources so both are essentially holding the TSX, underweight commodity stocks. In other words, they have similar sector exposures. Both are very light on tech.

I have considered buying ZLB instead of my individual 5 stocks and I think one could make that substitution. ZLB is better diversified, which is a plus.

In my non registered account, I prefer to hold these individual stocks. I prefer the tax accounting with the individual stocks, since I don't have to deal with the ETF distribution mess. I really prefer keeping Canadian ETFs inside registered accounts only.

But there's also a hefty 0.39% fee on ZLB. For my 100K invested, assuming I make just 5 rebalancing trades a year @ $10 each, my "MER" works out to just 0.05% which is a fraction of the cost of ZLB.
That's true, good point!

Anyone knows how that MER truely affects the returns? Say I buy an 100$ of an ETF with 1% MER and 10% CAGR. Let's say everything is applied only once per year. At the end of the year, will I get +10$ from CAGR and -1$ from MER or will I get +10$ from CAGR and -1.1$ from MER (because my investment now worth 110$). In the first case, it means MER can be substracted from CAGR. In the second case, it means MER must be compounded over the CAGR. I've read places saying your total return is CAGR - MER, but I'm wondering if it's just simplifying the truth...
 

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So, use ZLB in RRSP/LIRA/TFSA/ect and in the MARGIN/CASH acct use the 5-Pack ? Seems to make sense to me... simplicity has to be worth something...
Maybe. I'm using the 5-pack in the non-reg margin account, and XIU in registered.

J4B have you done a backtest on your 5-Pack vs ZLB ?
I haven't, but I think my 5-pack performance is closer to XIU than ZLB is. And I think ZLB has outperformed my pack.
 

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I have been using HXS & HXT for simplicity in my non-reg accounts for the tax simplicity/efficiency. I can see the advantage of 5-pack in a cash account if your not interested in a swap based structure.
 

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An update on my 5 pack (RY, ENB, CNR, BCE, FTS)

Year to date performance is -1.3% versus XIU -1.4% so they are exactly the same. Which is good, actually, because remember that XIU is getting a performance boost from SHOP.

I would consider matching XIU performance long term to be a success. I think I mentioned before that my trading costs on the 5 pack make it cheaper than holding XIU. So if I can hold essentially the same TSX 60 exposure, with lower costs, and with direct equity holdings, that would be pretty good. This also eliminates the securities lending of the ETF, which some people (including me) worry a bit about.

I also looked at stats on how badly the 5 pack fell during the crash, and this was interesting.

From January 1 to March 23 (the stock market low), the 5 pack was down -24% which was actually better than XIU -32% in the same period. And I measured the maximum drawdown of the 5 pack at -29% versus -36% for XIU.

That suggests that the 5 pack has roughly 80% of the volatility of XIU

So it appears that the 5 pack fell less severely than XIU in the recent crash. I would guess this is thanks to the weight in utilities, but also because these giant large caps tend to be a bit more stable than other TSX stocks. I would welcome other thoughts, because I don't have a great explanation of that but I like these results :)
 
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