Investing in exchange-traded funds (ETFs) normally doesn't yield a strong returns for investors, especially over a short time frame. But for investors of iShares S&P/TSX Capped Information Technology Index ETF (TSX:XIT), that hasn't been the case, as the fund is up over 50% in just the past 12 months while the TSX has risen by just 3%.
With many stocks performing well even amid the pandemic, especially those in the tech sector, it's no surprise the ETF has done generated such strong returns.
The ETF is made up entirely of tech stocks and it contains some of the biggest names on the TSX, including Shopify, which is the fund's largest holding at more than 25%. Constellation Software is not far behind, at 24%.
The downside is that the fund isn't very big as the top 10 holdings make up more than 97% of its total assets. But the strength of the companies within the fund still make this a fairly safe ETF to hold over the long term. And if Shopify (TSX:SHOP) continues with its impressive its growth amid the pandemic, 2021 could be another great year for the fund.
With a modest expense ratio of 0.55%, the ETF appears to be fairly priced.
Rather than investing into each one of these stocks individually, investors can simply hold the ETF in their portfolio and take advantage of Canada's top tech stocks. Over the past five years, the fund has risen 300% in value and still looks like a great buy today.
