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Best Canadian ETFs

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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.

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.

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

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

  • Holdings: ETFs are a pre-selected basket of assets; therefore, investors can’t choose the individual holdings.
  • Fees: Trading ETFs on a regular basis comes with transaction fees and management fees (MERs).
  • 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.

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.

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

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