S&P/TSX Composite Index

This Page's Content Was Last Updated: September 14, 2022
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What You Should Know

  • S&P/TSX Composite Index is the premier indicator of market activity for the Canadian stock market.
  • In terms of number, the S&P/TSX Composite Index includes 13% of TSX-listed companies.
  • In terms of market capitalization, S&P/TSX Composite includes 77% of the Toronto Stock Exchange (TSX) as of 1 August, 2022.
  • S&P/TSX is investable both through Canadian ETFs and Canadian mutual Funds.
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S&P/TSX Composite Index is the Canadian equivalent of the S&P 500 in the US. It acts as a barometer for the health and wellbeing of corporate Canada and, as such, is closely followed and reported in the Canadian financial news.

This index used to be called S&P 300, and resource extraction corporations dominated TSX. Currently, the financial sector dominates the index. S&P/TSX Composite can be followed using the ticker symbol ^GSPTSE or SPTSX. Its adjusted performance since inception is depicted in the graph above.

Long Term Return

Currently, the S&P/TSX index stands 11.4 times its adjusted value in 1979. This translates to an annualized return of 6% over the past 43 years. TSX has returned 2.1% annualized over the past 15 years.

TSX stands for the Toronto Stock Exchange, which is among the ten largest exchanges in the world. There are 1775 companies listed on the Toronto Stock Exchange with a total market capitalization of $4 trillion ($3,891,999,952,913 as of July 31, 2022). Individuals cannot independently buy stocks on a stock exchange; they need to use a trading platform to have their broker perform their trades.

Two hundred thirty-eight of the TSX listed companies are included in the S&P/TSX Composite Index, whose market capitalization is $3,247,129M as of 25 August, 2022. S&P used to stand for Standard & Poor’s, but now it is simply the first part of S&P Global’s name. S&P Global is an American corporation specializing in financial information and analytics.

S&P Global is the majority owner of the S&P Dow Jones Indices joint venture. This is the company which has created and maintained many indices, including the S&P/TSX Composite Index. This index is designed with two goals. The first is to represent the TSX and the second is to be investable.

Largest Sectors in TSX

The financial sector constitutes one-third (31.3%) of the S&P/TSX Composite Index. The Toronto Stock Exchange's financial sector includes Canadian bank stocks, Canadian insurance stocks and asset managers. Together, the financial and energy sectors constitute one-half (49.8%) of the S&P/TSX Composite Index. Sector Weights are as of July 31, 2022.

Vehicles for Gaining Exposure to S&P/TSX (Representing Canadian listed companies)
XIC - iShares Core S&P TSX Capped Comp ETF
ZCN - BMO S&P/TSX Capped Composite Index
CIBC Canadian Index Fund
XMD - iShares S&P/TSX Completion Index Fund + XIU - iShares S&P/TSX 60 Index Fund
XMD - iShares S&P/TSX Completion Index Fund + HXT - Horizons S&P TSX 60 Index ETF
Scotia Canadian Equity Index Fund

To satisfy these goals, the eligibility criteria for this index include:

  • Each security must represent a minimum of 0.05% of the index and have a stock price greater than C$1.
  • The trading volume of each security over any year should at least be 0.025% of the index-eligible securities.
Toronto Stock ExchangeTSX Venture Exchange
Listing Fees$10,000 - $200,000$7,500 - $40,000
Accounting and Auditing Fees$75,000 - $100,000$25,500 - $100,000
Legal Fees$400,000 - $750,000$75,000+
Underwriters' Commission4 - 6 %Up to 12 %

Index weighting is determined by float capitalization. Every March, June, September and December, weights for index constituents are readjusted. TSX is considered the primary exchange in Canada; companies that do not qualify for listing on TSX can list on TSX Venture (Canada’s junior exchange), which also is part of the TMX group.

One can get exposure to S&P/TSX Composite through Canadian ETFs or mutual funds. ETFs and mutual funds are both investment pools but have technical differences. A combination of the XMD - iShares S&P/TSX Completion Index Fund and XIU - the iShares S&P/TSX 60 Index Fund gives complete exposure to the S&P/TSX Composite Index.

HXT - Horizons S&P TSX 60 Index ETF is another ETF following the TSX 60 Subindex. Also, XIC - iShares Core S&P TSX Capped Comp ETF and ZCN - BMO S&P/TSX Capped Composite Index ETF own the same securities represented in the S&P/TSX.

S&P/TSX Capped Composite is composed of the same stocks as S&P/TSX Composite, the only difference being that the first would cap the share of any single constituent at 10%. Royal Bank of Canada, with ticker RY, is the largest component of TSX and has a weight of 5.4% in S&P/TSX. Therefore, S&P/TSX Capped Composite and S&P/TSX Composite are currently identical.

S&P/TSX 60 Index

60 large TSX listed companies from ten sectors constitute the S&P/TSX 60 index. The S&P/TSX 60 index and the S&P Completion index comprise the S&P/TSX Composite index.

Monthly Return for the S&P/TSX Composite Index

It is also instructive to note the monthly return of this index over the past 37 years. The average monthly return of the index over the past 37 years has been 0.56%. Returns are seen all over the place. Even though the average monthly return of 0.56% annualizes to 6.9%, there are seven months with returns worth less than -10%. These significant negative returns suggest that the S&P TSX is quite a risky investment.

The Canadian S&P Index Committee, in addition to the S&P/TSX Composite Index, maintains the S&P/TSX 60 Index. The S&P/TSX 60 Index is designed to represent leading companies in the leading industries. It is the Canadian component of the S&P Global 1200 index.

The Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montreal Exchange, and Canadian Derivatives Clearing Corporation are parts of the TMX group.

Largest Constituents of the S&P/TSX Composite and the S&P/TSX 60 Indices
Rank ConstituentSymbolWeight in S&P/TSX Comp
as of August 25, 2022
1Royal Bank of Canada RYFinancials5.4%
2Toronto-Dominion Bank TDFinancials4.8%
3Enbridge Inc. ENBEnergy3.6%
4Canadian National Railways CNRIndustrials3.4%
5Brookfield Asset Management BAM.AFinancials3.4%
6Canadian Pacific Railway CPIndustrials3%
7Bank of Nova Scotia BNSFinancials2.8%
8Bank of Montreal BMOFinancials2.7%
9Canadian Natural Resources CNQEnergy2.6%
10Thomson Reuters Corporation TRIIndustrials2.2%
11Nutrien Ltd. NTRBasic Material2.2%
12TC Energy Corporation TRPEnergy2.1%
13Suncor Energy Inc. SUEnergy1.9%
14Alimentation Couche-Tard ATDConsumer Cyclical1.8%
15BCE Inc. BCECommunication1.8%
16Canadian Imperial Bank of Commerce CMFinancials1.8%

Relative success of Canadian companies change the list of most expensive TSX companies, for example, at the beginning of 2022 Shopify was at the top of the list of most expensive Canadian public companies.

Companies listed on the TSX are grouped into the energy sector companies, the mining sector, the technology sector, the life sciences sector, the clean technology sector, and diversified industries. The diversified industries sector is divided into five subsectors: communications and media, consumer products and services, financial services, industrial products and services, and real estate.

Distribution of Market Capitalization Among Sectors Comprising the S&P/TSX Composite
SectorIndex Weight
Information Technology5.6%
Communication Services5%
Consumer Staples4.2%
Consumer Discretionary3.4%
Real Estate2.8%
Health Care0.3%
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Based on MSCI standards, member companies of the index do not provide exposure to controversial weapons, nuclear weapons, civilian firearms and tobacco. Yet it exposes you to oil sand producers.

Index Rebalancing Frequency

Every March, June, September and December, weights for the S&P/TSX composite index constituents are readjusted based on float capitalization. Float capitalization neglects the shares which are held by company insiders. In other words, company weights in the index are determined based on each company’s floating shares multiplied by its share price.

S&P/TSX Composite Sector Weightings
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