Index Funds

I have room for $15,000 of tax free investments in my Tax Free Savings Account (TFSA). I've been looking at delving into iShares index funds / ETFs - exchange traded funds. Most of their ETFs seem to be doing well.

The iShares DEX Universe Bond Index Fund (XBB) has increased by about 40% in the past six years. It wasnt' even dented by the recession because it's founded on stable, guaranteed bonds. At around 6.5% returns per year, I believe that's a very good investment. I was planning on filling up 50% of my TFSA with guaranteed income funds such as this.

There are a number of other notable iShares funds that caught my eye. The S&P/TSX SmallCap (XCS) index returned 28% last year. In fact, the top 4 iShares funds in the last year were all based on the S&P and TSX. Rounding out the top 5 was the Canadian Dollar fund (XSU). However, I doubt that the CDN dollar is going to rise much higher than parity, which is where it's at now.

I'm more interested in some of the iShares emerging markets funds. Places like Brazil and the CIVET nations - Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa) are all set to expand in the next decade. I would be interested in investing in some of these markets.

This post has been pretty biased towards iShares, as that has been the focus of my research into investing. However, the five worst iShares funds averaged around 5% returns last year - not bad at all.

I don't have much experience investing, however, so I'd love to hear my readers' opinions on where to invest in 2011.