Canadian energy-focused ETF XDIV outperforms S&P 500 in 2026 amid oil price gains

The iShares Core MSCI Canadian Quality Div Index ETF (XDIV:CA) has outperformed the S&P 500 in 2026, mainly due to its heavy exposure to the energy sector benefiting from volatile oil prices. Although oil prices are expected to moderate next year, the ETF's low valuation offers a margin of safety even if earnings growth slows. Canadian GDP growth is projected to pick up from 2027, contrasting with a slowdown expected in the U.S. However, XDIV's high concentration in cyclical sectors means it may face losses during recessions, making it suitable only for dividend investors who can tolerate short-term volatility. Diversifying XDIV within a broader portfolio can mitigate its concentration risk.