Mackenzie QCN.TO: A Steady Beacon in the ETF Liquidation Storm

Amid the recent wave of ETF liquidations at Mackenzie Investments—including the high-profile closures of the Global Sustainable Dividend Index ETF (MDVD) and US Large Cap Equity Index ETF (QUU.U)—investors are scrambling to reallocate capital to safer, more sustainable income-generating assets. The Mackenzie Canadian Equity Index ETF (QCN.TO), with its consistent quarterly dividends and broad exposure to Canadian equities, emerges as a compelling alternative. This article explores why QCN.TO is positioned to capitalize on investor demand for stability and yield, particularly after the turbulence of 2024–2025.

The Liquidation Landscape: Why Investors Need a New Playbook

The termination of MDVD and QUU.U by mid-2025, along with earlier closures like the Portfolio Completion ETF (MPCF), has left investors grappling with tax liabilities, capital gains calculations, and the need to reinvest proceeds into viable alternatives. These funds, often burdened by higher management expense ratios (MERs)—such as MDVD's 0.40%—and niche exposures, failed to meet performance expectations. Their liquidation underscores the risks of over-concentration in specialized ETFs.

Investors now face two critical tasks:
1. Tax Optimization: Managing adjusted cost bases (ACBs) post-liquidation to avoid overpaying taxes.
2. Portfolio Rebalancing: Replacing closed ETFs with low-cost, broad-market options that provide steady income.

QCN.TO: The Case for Broad Exposure and Stability

The Mackenzie Canadian Equity Index ETF (QCN.TO) offers a pragmatic solution. Tracking the Solactive Canada Broad Market Index, QCN provides diversified exposure to over 200 Canadian companies across all sectors and market caps. Its low MER—implied to be around 0.15% based on peer comparisons with similar Canadian equity ETFs—positions it as a cost-efficient alternative to terminated funds like MDVD (0.40% MER) or QUU.U (0.25% MER).

Dividend Consistency: A Key Advantage

While liquidated ETFs like MDVD relied on reinvested distributions (e.g., CAD $0.56/unit in June 2025), QCN's quarterly cash distributions provide reliable income. For example, its December 2024 year-end distribution of CAD $0.15537 per unit (with a NAVPU of CAD $154.63) reflects its steady payout history. Over the past year, QCN delivered a total return of 24.40%, including dividends, outperforming its benchmark and offering a 10.16% annualized return since inception (January 2018).

Tax Efficiency: Managing ACB in a Post-Liquidation World

Investors reallocated from terminated ETFs must meticulously track their ACB to avoid tax pitfalls. QCN's cash distributions simplify this process compared to reinvested dividends, which increase ACB and complicate capital gains calculations. For instance:
- A $1,000 investment in QCN with a $0.15/unit distribution would generate $15 in cash income, taxed as dividends or capital gains depending on the fund's composition.
- In contrast, MDVD's final reinvested distribution of CAD $0.56264 per unit forced investors to adjust their ACB, with proceeds taxed as capital gains upon liquidation.

Strategic Reinvestment: Why QCN is a Safer Bet

1. Broad Market Resilience: QCN's diversified portfolio reduces sector-specific risks. Unlike MDVD's focus on sustainable dividends—a niche exposed to ESG policy shifts—QCN's broad exposure dampens volatility.
2. Lower Cost Structure: A 0.15% MER versus MDVD's 0.40% means investors retain 25 basis points annually in cost savings, compounding over time.
3. ESG Alignment Without Overreach: While QCN isn't an ESG-themed fund, its underlying index includes companies with MSCI ESG ratings and tracks metrics like carbon intensity. This avoids the “greenwashing” risks associated with some terminated niche ETFs.

The Bottom Line: QCN.TO as a Core Holding

For investors exiting liquidated ETFs, QCN offers a high-yield, low-risk alternative to volatile or overpriced strategies. Its consistent dividends, broad diversification, and tax-friendly structure make it ideal for income-focused portfolios.

Actionable Advice:
- Reallocate Proceeds: Use cash from MDVD/QUU.U liquidations to buy QCN, leveraging its lower MER and broader exposure.
- Optimize Tax Strategy: Hold QCN in tax-advantaged accounts (e.g., TFSA) to maximize after-tax returns.
- Monitor ACB: Track distributions to avoid overestimating gains when selling units.

Final Take

In a market littered with the debris of underperforming ETFs, QCN.TO stands out as a reliable income generator with the scale and diversification to weather volatility. As Mackenzie's liquidation saga underscores the perils of niche investing, QCN's steady-as-she-goes approach offers a clear path forward—one dividend at a time.

Data as of June 6, 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.