With that background, I would invest $10,000 in a way that doesn’t require currency forecasting. I would put $7,000 into international stocks iShares Core MSCI EAFE IMI Index ETF (TSX:XEF). Then I would put €3,000 into it iShares Gold Bullion ETF (TSX:CGL.C). The mix gives you long-term growth potential plus an ‘insurance cover’ that can help when markets and currencies both get jittery. I would also commit to holding for years, not months, and adding new money on a schedule.
CHIEF
XEF is a way to own developed markets outside North America with a single ticket. Its purpose is to track the MSCI EAFE Investable Market Indexand according to its latest fact sheet, it owned approximately 2,474 shares. That spreads the risk across countries and thousands of companies, rather than leaning on a handful of Canadian names. The fund also reported net assets of approximately $17.9 billion, indicating it is of real size and closely monitored.
The past year for XEF was mainly about results and the currency layer. It currently shows a full-year return of 7.4%, with the ETF’s net asset value (NAV) at the time of writing at $49.59. Those are solid numbers, but the fool still gets a vote. If CAD strengthens, your Canadian dollar return may appear smaller than the return of the underlying market. If CAD weakens, it can feel like a bonus.
Your return with this ETF comes from dividends and earnings growth across thousands of companies, minus fees. In terms of costs, XEF’s fact sheet at the time of writing stated a management fee of 0.20% and an MER of 0.23%, plus a distribution yield of 2.3%. That combination is the appeal: constant exposure, little fuss, and a fee that doesn’t eat up the entire meal.
CGL
CGL.C does one job, and keeps it simple. It aims to mimic the price of physical gold bullion, minus fees and charges, and is not hedged to the Canadian dollar. That uncovered design matters when the madman is on the move. If the CAD weakens, the Canadian dollar gold price could rise even if the US dollar gold price remains flat. At the time of writing, the net asset value was $56.91, up 15.4% year to date.
The numbers also show why gold can earn a small seat at the table. CGL.C also boasts an incredible 65% increase in the past year. It also listed net assets of approximately $860 million, a management fee of 0.50% and an MER of 0.55%. Gold can cool quickly, but it can also shine when inflation fears, geopolitical tension or stock volatility flare.
In short
Could this be a purchase for others with $10,000 and the crazy involved? That is possible, but only if the role fits. XEF works best for investors who need more global diversification than the TSX can offer, and who can weather currency fluctuations without panic selling. CGL.C is suitable for investors who want a small hedge and can accept that it produces little income and may lag in quiet markets.
If you already own global stocks elsewhere, you may not need XEF. If you hate volatility, you may want a more balanced ETF. The key is to stay consistent when the fool tempts you to tinker.
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