For investors seeking to broaden their Canadian equity exposure, the iShares S&P/TSX Completion Index ETF (TSX:XMD) offers a compelling route. This fund has delivered impressive year-to-date returns of over 31%, provides targeted exposure to mid-cap and small-cap Canadian stocks, and is designed to provide long-term capital growth by tracking companies outside of the well-known large-cap index.

The ETF achieves this by replicating the S&P/TSX Completion Index, which holds all the stocks in the broad S&P/TSX Composite Index except for the 60 largest companies that make up the S&P/TSX 60. This strategy results in a diversified portfolio of 154 holdings, giving investors access to a different segment of the Canadian market.

The fund is heavily weighted toward materials (27%) and industrials (19%), followed by energy (14%) and financials (13%). Its top holdings are Celestica at 6% and Fairfax Financial Holdings at 5.2%, with RB Global rounding out the top three at 2.8%. This composition means the fund's performance is tied to sectors beyond the typical large-cap banks and energy giants.

While the fund's 0.60% management expense ratio isn't terribly low, its focus on capital growth is clear, and that could make it worth investing in anyway. Plus, it also offers a modest dividend yield of 1.2%, which more than offsets those fees. With an average price-to-earnings ratio of 21, the fund holds companies with significant growth potential, but which aren't overly priced.

This ETF can be a strong option for growth-oriented investors who already have large-cap exposure and are seeking to diversify their Canadian holdings with a single, convenient fund.

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