Best Canadian ETFs

Best Canadian ETFs

Exchange-Traded Funds (ETFs) have been gaining popularity since their introduction to the Canadian landscape over 30 years ago. Offering a lower risk level compared to stocks and holding lists with hundreds to thousands of securities, it’s no wonder why Canadians are choosing ETFs to build their financial future. Currently, there are over 1,000 ETFs for Canadians to purchase with assets hovering around $200 billion. Since ETFs have multiple underlying assets (unlike stocks that only have one), they can be structured to track the price of an individual commodity, a large group of securities, or even specific investment strategies.

Table of Contents

There are many kinds of ETFs including:

Stock ETFs – access major market index stocks

Bond ETFs – track a bond index or product

International ETFs – invest in foreign-based securities

Industry ETFs – own stocks and securities in a specific industry or sector

Foreign Currency ETFs – trade foreign currencies without complex transactions

Equity EFTs – track an index of equities or shares

Dividend ETFs – own stocks in companies that pay dividends

All-in-One ETFs – bundle ETFs with automatic rebalancing

ETFs have simplified the investing process and made it easier than ever to DIY your dream portfolio without the panic of leaving significant returns on the table.

The Best ETFs in Canada

Whether you’re just kicking the tires on investing, or you drink stocks for breakfast, ETFs are a great way to harness the power of your hard-earned income. To help get your money growing in the right direction, we’ve compiled a list of the best Canadian ETFs.

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Best All-in-One ETFs

Vanguard ALL-Equity ETF Portfolio

Ticker: VEQT
Dividend Yield: 1.27%
MER:0.24%
Net Assets: $1.6 B
Composition:

  • Apple Inc.
  • Shopify Inc Class A
  • Royal Bank of Canada
  • Microsoft Corporation
  • Toronto Dominion Bank
  • Amazon.com
  • Canadian National Railway Co.
  • Bank of Nova Scotia
  • Enbridge
  • Brookfield Asset Management Class A
  • Vanguard Growth ETF Portfolio

    Ticker: VGRO
    Dividend Yield: 1.81%
    MER:0.24%
    Net Assets: $3.2 B
    Composition:

  • Apple Inc.
  • Shopify Inc Class A
  • Royal Bank of Canada
  • Microsoft Corporation
  • Toronto Dominion Bank
  • Amazon.com
  • Canadian National Railway Co.
  • Bank of Nova Scotia
  • Enbridge
  • Brookfield Asset Management Class A
  • iShares Core Equity ETF Portfolio

    Ticker: XEQT
    Dividend Yield: 1.64%
    MER:0.20%
    Net Assets: $813.62 B
    Composition:

  • Apple Inc.
  • Microsoft Corporation
  • Royal Bank of Canada
  • Amazon
  • Shopify
  • Toronto Dominion Bank
  • Bank of Nova Scotia
  • Facebook
  • Canadian National Railway
  • Enbridge
  • Best Canadian Dividend ETFs

    iShares S&P TSX Composite High Dividend Index ETF

    Ticker: XEI
    Dividend Yield: 3.60%
    MER:0.22%
    Net Assets: $1.4 B
    Composition:

  • TC Energy Corp
  • Royal Bank of Canada
  • Bank of Nova Scotia
  • Enbridge
  • Toronto-Dominion Bank
  • Suncor Energy
  • Canadian Natural Resources
  • BCE Inc.
  • Telus
  • Bank of Montreal
  • BMO Canadian Dividend ETF

    Ticker: ZDV
    Dividend Yield: 3.86%
    MER:0.39%
    Net Assets: $757.32 M
    Composition:

  • BCE Inc.
  • Toronto-Dominion Bank
  • Bank of Nova Scotia
  • Royal Bank of Canada
  • Enbridge
  • Telus
  • Canadian National Railway Co.
  • Canadian Imperial Bank of Commerce
  • Manulife Financial
  • Manulife Financial
  • S&P/TSX Canadian Dividend A

    Ticker: CDZ
    Dividend Yield: 3.13%
    MER:0.66%
    Net Assets: $969 M
    Composition:

  • SmartCentres Real Estate
  • Canadian Natural Resources
  • Keyera Corp
  • Enbridge
  • Pembina Pipeline
  • Power Corporation of Canada
  • Fiera Capital
  • BCE
  • Great-West Lifeco
  • Canadian Imperial Bank of Commerce
  • Best Canadian Equity ETFs

    Vanguard FTSE All Cap Index ETF

    Ticker: VCN
    Dividend Yield: 2.51%
    MER:0.05%
    Net Assets: $4.5 B
    Composition:

  • Shopify Inc.
  • Toronto-Dominion Bank
  • Bank of Nova Scotia
  • Enbridge
  • Canadian National Railway
  • Brookfield Asset Management
  • Bank of Montreal
  • Canadian Imperial Bank of Commerce
  • Canadian Natural Resources
  • Royal Bank of Canada
  • BMO S&P/TSX Capped Composite Index ETF

    Ticker: ZCN
    Dividend Yield: 2.76%
    MER:0.06%
    Net Assets: $7.10 B
    Composition:

  • Shopify
  • Royal Bank of Canada
  • Toronto-Dominion Bank
  • Brookfield Asset Management
  • Canadian National Railway
  • Enbridge
  • Bank of Nova Scotia
  • Bank of Montreal
  • Canadian Imperial Bank of Commerce
  • Canadian Natural Resources
  • Best US Stocks ETFs

    Vanguard S&P 500 Index ETF

    Ticker: VFV
    Dividend Yield: 1.06%
    MER:0.08%
    Net Assets: $6.23 B
    Composition:

  • Apple Inc.
  • Microsoft Corp
  • Alphabet Inc.
  • Amazon
  • Tesla
  • NVIDIA
  • Meta Platforms
  • Berkshire Hathaway
  • JPMorgan Chase & Co.
  • Home Depot
  • BMO S&P 500 Index ETF

    Ticker: ZSP
    Dividend Yield: 1.22%
    MER:0.09%
    Net Assets: $10.6 B
    Composition:

  • Apple Inc.
  • Microsoft Corp
  • Alphabet Inc.
  • Amazon
  • Tesla
  • NVIDIA
  • Meta Platforms
  • Berkshire Hathaway
  • JPMorgan Chase & Co.
  • Best International ETFs

    Vanguard FTSE Global All Cap ex Canada Index ETF

    Ticker: VXC
    Dividend Yield: 1.49%
    MER:0.21%
    Net Assets: $1.3 B
    Composition:

  • Apple Inc.
  • Microsoft Corp
  • Alphabet Inc.
  • Amazon
  • Tesla
  • NVIDIA
  • Meta Platforms
  • Berkshire Hathaway
  • JPMorgan Chase & Co.
  • iShares Core MSCI All Country World ex Canada Index ETF

    Ticker: XAW
    Dividend Yield: 1.77%%
    MER:0.22%
    Net Assets: $1.9 B
    Composition:

  • Apple Inc.
  • Microsoft Corp
  • Alphabet Inc.
  • Amazon
  • Tesla
  • NVIDIA
  • Meta Platforms
  • Berkshire Hathaway
  • Taiwan Semiconductor Manufacturing
  • Home Depot
  • Vanguard FTSE Emerging Markets All Cap Index ETF

    Ticker: VEE
    Dividend Yield: 2.17%
    MER:0.22%
    Net Assets: $1.60 B
    Composition:

  • Taiwan Semiconductor Manufacturing Co.
  • Petroleo Brasileiro SA
  • China Mobile Ltd
  • China Construction Bank Corp
  • Industrial & Commercial Bank of China Ltd
  • Vale SA
  • Gazproom OAO
  • Banco Bradesco SA
  • Tencent Holdings
  • Itau Unibanco Holding SA
  • Best Bond ETFs

    iShares Core Canadian Short-Term Bond Index ETF

    Ticker: XSB
    Dividend Yield: 2.06%
    MER:0.10%
    Net Assets: $3.2 B
    Composition:

  • Canada 4Y
  • Canada(Government)
  • Canada Housing Trust No 1
  • Canada 5Y
  • Canada 3Y
  • Province of Ontario
  • iShares IBoxx $ High Yield Corporate Bond ETF

    Ticker: HYG
    Dividend Yield: 4.06%
    MER:0.48%
    Net Assets: $21.39 B
    Composition:

  • Blackrock Cash Funds
  • Sprint Corp
  • TransDigm Inc
  • Centene Corp
  • Colt Merger Sub
  • AAdvantage Loyalty IP Ltd
  • CCO Holdings
  • Mozart Debt Merger Sub
  • Teva Pharmaceutical Finance Netherlands
  • Home Depot
  • *All figures as of January 2022

    What is an ETF?

    An exchange-traded fund, ETF for short, is an investment fund that lets you buy a basket of securities for one price. ETFs can hold assets like stocks, futures contracts, and bonds, without having to select them individually. Think of ETFs like a burrito. The beans, rice, lettuce, and cheese are the securities, and the tortilla is the ETF holding everything together.

    ETF Pros & Cons

    Like everything else in life, there are pros and cons to ETFs. It's essential to do your due diligence before deciding if ETFs are the right choice to add to your investment portfolio.

    Pros: The Good Stuff

    Logo Diversification: ETFs give you access to thousands of assets, making it easy to diversify your portfolio with one or a few ETFs than if you were buying stock individually.

    LogoLower Fees: Because ETFs are passively managed, their fees are lower than mutual funds, which are actively managed.

    Logo Transparency: Unlike mutual funds, which only need to report their holdings a few times a year, ETFs allow investors to see their holdings at any time.

    Cons: The Not So Good Stuff

    Logo Holdings: ETFs are a pre-selected basket of assets; therefore, investors can’t choose the individual holdings.

    Logo Fees: Trading ETFs on a regular basis comes with transaction fees and management fees (MERs).

    Logo Liquidity: When buying and selling ETFs, there may be limited liquidity as you can only sell if someone wants to purchase that ETF.

    How To Buy ETFs in Canada

    Purchasing ETFs in Canada can be done through any major bank or Canadian brokerage. We recommend using a discounted broker, like Questrade and Wealthsimple, because their apps are user-friendly and they tend to have lower fees which puts more money in your pocket to invest. If you decide to use one of these apps, purchasing the ETFs is as simple as creating your account, funding your account, and buying the ETF.

    Questrade

    Questrade is a fan favorite among Canadians just breaking into the investment market. With key features like Market Data and Watchlists, users can easily track ETFs with real-time market data and quotes to get a feel for patterns and volatility. Questrade is also one of the most competitive brokers for pricing, offering free ETF purchases. You only pay a commission when selling, which fall around $9.95 for each trade and $1 per contract.

    QuestradeLogo
    Start investing today with a complimentary $50 in free trades for any account activation of $1,000 or more.

    Wealthsimple

    Another popular financial service making ETFs more approachable is Wealthsimple. Users can leave the heavy lifting to the online brokerage that will assess your risk tolerance preference to build a portfolio of ETFs, or investors that want to get in on the action can make self-directed ETF trades on major exchange markets in the US and Canada. Users won’t be charged trade commissions and ETFs can be purchased and sold at no cost.

    WealthsimpleLogo
    • User friendly platform for Canadians
    • $50 sign up bonus when you fund your invest account with $500

    The Bottom Line

    With the growing number of ETF options in Canada, it won’t be hard to find one to fulfill your financial goals. And now that you have the best Canadian ETFs at your fingertips, there’s nothing holding you back from making some serious money moves.

    Frequently Asked Questions

    ETFs and mutual funds are similar as they both offer pooled fund investing. However, there are a few key differences. Fees are the most significant difference between the two. ETFs have lower management expense ratios (MER) because they are passively managed. Whereas mutual funds are actively managed, which comes with a price tag for the time and expertise of a fund manager. ETFs also actively trade throughout the day. Mutual funds are priced only once and close at the end of the trading day.

    In a rare but not impossible situation, the broker you trusted with your trades could go belly-up. Typically, brokers provide protection for this type of situation. Securities Investor Protection Corporation or SIPC ensures that customers are not out of luck if a brokerage goes bust and assets are owed to customers. The broker will notify investors so they can either sell their shares or wait until they’re liquidated. This is a much better outcome than the traditional stock market, where investors own equity in a company—if the company goes bust, the investor can lose the value of their entire investment.

    MER stands for management expense ratio, which is an annual fee that covers the fund's operating expenses. The MER is comprised of several expenses like legal fees, taxes, management fees, and administrative costs. The cost of the MER does not have any impact on how the fund will perform, meaning a low MER doesn't guarantee great returns, whereas a high MER doesn't mean worse performance. MER fees matter more over the long term and should only be one thing that is analyzed when you are deciding which ETFs the best addition to your portfolio.

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