9 Best ETFs in Canada

PiggyBank Staff | September 11, 2023
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Overloaded by the many ETF options in Canada? Seek growth and success in investments but don’t know where to start? Let us help you! Here are 9 of the best Canadian ETFs you should consider adding to your portfolio:

1. iShares S&P/TSX 60 Index ETF (XIU.TO)
2. BMO S&P 500 Index ETF (ZSP.TO)
3. Vanguard FTSE Canada All Cap Index ETF (VCN.TO)
4. iShares Core MSCI All Country World ex Canada Index ETF (XAW.TO)
5. BMO Aggregate Bond Index ETF (ZAG.TO)
6. iShares Canadian Select Dividend Index ETF (XDV.TO)
7. Horizons S&P/TSX 60 Index ETF (HXT.TO)
8. Vanguard FTSE Canadian Capped REIT Index ETF (VRE.TO)
9. BMO Equal Weight Utilities Index ETF (ZUT.TO)

1. iShares S&P/TSX 60 Index ETF (XIU.TO)

Investors in Canada love the iShares S&P/TSX 60 Index ETF (XIU.TO). It tracks the S&P/TSX 60 Index, a collection of Canada’s top stocks.

XIU.TO is cost-effective and liquid. Plus, it offers exposure to various sectors like financials, energy, and consumer discretionary.

Plus, investors can get dividend income from the underlying index. Over the last decade, XIU.TO has beaten many actively managed funds, giving strong returns.

The BMO S&P 500 Index ETF (ZSP.TO) is a top pick for those who wish to mirror the famous U.S. stock market index. This ETF follows the S&P 500, which includes 500 of the biggest companies in the United States from different industries.

Canadian investors can gain access to Apple, Microsoft, Amazon and Facebook by investing in the BMO S&P 500 Index ETF. It’s a great way to diversify portfolios and possibly profit from the growth of renowned American companies.

What’s more, this ETF stands out due to its low management fee compared to other funds. Low expenses mean more potential for long-term development while reducing the costs of managing investments.

Did you know this ETF was initially launched by BMO in October 2010? Since then, it has attracted lots of attention from investors keen on gaining access to the U.S. market without selecting individual stocks. With its impressive performance since then, it’s now one of Canada’s go-to options for investing in American equities.

3. Vanguard FTSE Canada All Cap Index ETF (VCN.TO)

Vanguard FTSE Canada All Cap Index ETF (VCN.TO) is a top ETF in Canada. It provides exposure to a diversified portfolio of Canadian stocks across various sectors. VCN.TO offers broad market coverage and low fees.

It tracks the FTSE Canada All Cap Index. This Index includes around 300 Canadian securities, offering investors well-rounded exposure to the Canadian equity market. With VCN.TO, investors can gain from the growth potential of Canadian businesses.

VCN.TO is committed to low-cost investing. Its expense ratio is only 0.06%, allowing investors to keep more of their returns. These low fees make it a great choice for long-term investment plans.

If you want a simple way to invest in a range of Canadian stocks, consider adding VCN.TO to your portfolio. Its user-friendly nature and low cost make it suitable for both novice and experienced investors. Don’t miss out on this top-rated Canadian ETF.

4. iShares Core MSCI All Country World ex Canada Index ETF (XAW.TO)

The iShares Core MSCI All Country World ex Canada Index ETF (XAW.TO) is a great investment in Canada. It gives access to stocks from different sectors and countries, apart from Canada. XAW.TO has a comprehensive portfolio.

Its key feature is its broad market coverage. XAW.TO tracks a carefully constructed index of stocks from developed and emerging markets. Investing in it gives diversification and growth potential.

Another great thing about it is the low expense ratio. XAW.TO’s management fee is lower compared to similar ETFs. Lower fees mean more returns for investors.

Let me tell you a story about XAW.TO. Emily was looking for ways to diversify her portfolio. She found XAW.TO. She liked its global scope and cost efficiency, so she invested her savings in it.

Over time, Emily saw her portfolio growing. XAW.TO’s broad exposure let her share in the success of many international companies. Now, she still uses XAW.TO as her go-to option. It lets her take advantage of global trends while reducing reliance on any single country’s economy.

Investors in Canada seeking a profitable option should consider the BMO Aggregate Bond Index ETF (ZAG.TO). It provides a stable income stream with low management fees.

The ETF has broad exposure to various bond sectors. It tracks the performance of the Bloomberg Barclays Global Aggregate Canadian Float Adjusted Bond Index. This includes gov’t, corporate, and other investment-grade bonds.

ZAG.TO has a balanced portfolio that captures the overall bond market. It offers federal gov’t, provincial gov’t, corporate, and municipal bonds. Low management fees mean investors get to keep more returns. Reinvesting interest income boosts long-term growth potential.

According to Wealth Professional Canada, ZAG.TO has outperformed its benchmark index over the past five years. This makes it a dependable source of income.

6. iShares Canadian Select Dividend Index ETF (XDV.TO)

The iShares Canadian Select Dividend Index ETF (XDV.TO) is a great choice for investors after high-quality dividend stocks. It focuses on Canadian companies with a history of consistent dividend payments. This ETF tracks the Dow Jones Canada Select Dividend Index. It includes 30 of Canada’s largest dividend payers. These stocks are selected based on their dividend yield and growth rate.

This ETF stands out for its focus on quality. It seeks to invest in companies with strong balance sheets and sustainable cash flows. This offers stability and protection in tough times. So, it’s attractive to investors after income and long-term growth.

The 2008 financial crisis is a good example. Many companies had to cut or suspend dividends. Yet, XDV.TO did remarkably well. That’s thanks to its focus on high-quality companies that pay stable dividends.

7. Horizons S&P/TSX 60 Index ETF (HXT.TO)

HXT.TO, the Horizons S&P/TSX 60 Index ETF, is a great choice for those tracking the performance of the S&P/TSX 60 Index. It offers low risk exposure to Canada’s largest companies, across multiple sectors, with diversification.

It’s also tax-efficient. Income is reinvested back into shares, via a total return swap structure, so taxes can be deferred until sale. This could save investors a lot over time.

The MER of just 0.03% makes HXT.TO one of the most cost-effective ETFs in Canada. This means more of your investment returns stay with you.

So, if you’re looking for a low-cost, tax-efficient way to get exposure to top Canadian companies, consider HXT.TO. Its diversified approach and minimal fees make it an ideal option for long-term investors.

VRE.TO, the Vanguard FTSE Canadian Capped REIT Index ETF, is an investment worth considering. It focuses on Canadian Real Estate Investment Trusts (REITs), giving investors exposure to the Canadian real estate market.

REITs are a great way to diversify a portfolio. These public companies make money by owning, running, and leasing out properties such as apartments, offices, and malls. Investing in a REIT ETF like VRE.TO makes it easier to get a range of real estate assets without needing to buy each one.

VRE.TO has a unique focus on the Canadian real estate market. This lets investors benefit from Canada’s growing sector. With this ETF, investors can take part in the success of top Canadian REITs.

Do research and talk to a financial advisor before investing. Consider historical performance, management fees, and underlying holdings.

Don’t miss out on VRE.TO. Add this ETF to your portfolio to get access to the Canadian real estate market. Start exploring now and gain wealth through this promising investment.

9. BMO Equal Weight Utilities Index ETF (ZUT.TO)

BMO Equal Weight Utilities Index ETF (ZUT.TO) is a top choice among Canadian investors. This ETF focuses on utility companies, using an equal-weighted strategy. This means no single stock dominates the portfolio, providing diversification and reducing risk.

Investing in ZUT.TO gives you stability and consistent returns. It includes electric and gas utilities, giving comprehensive exposure. These companies often have steady cash flows and dividends.

Plus, ZUT.TO has a low management expense ratio (MER), so more of your returns stay with you. It’s easy to buy and sell, just like any other stock on the Toronto Stock Exchange.

Interestingly, this ETF has historically performed well during market downturns. Utility stocks are often used as defensive investments, due to lower correlation with broader market trends.

In conclusion, BMO Equal Weight Utilities Index ETF (ZUT.TO) provides access to a range of utility companies. Its equal-weighted approach and low MER make it an appealing investment option in the utilities space.

What is a Canadian ETF?

An ETF, or Exchange-Traded Fund, is a popular investment choice in Canada. It bundles together stocks, bonds and commodities into a single fund, which offers investors an easy way to diversify their portfolios. The Canadian ETF market has been growing steadily over the years – giving people more options and opportunities.

ETFs have a few key advantages. They’re liquid and easy to buy and sell on stock exchanges, and tend to have lower fees than mutual funds. Plus, their passive management and low turnover means less capital gains distributions – so investors can save on taxes.

When investing in Canadian ETFs, it’s important to do research and choose funds that match your goals and risk tolerance. Consider broad-based equity ETFs that track major indexes like the S&P/TSX Composite Index, or sector-specific ETFs for industries like technology or healthcare. Also, include fixed-income ETFs investing in government or corporate bonds for stability and income potential.

Overall, Canadian ETFs provide a convenient way to build diverse portfolios and gain exposure to various asset classes. They offer flexibility, cost-effectiveness and tax advantages – so they’re becoming increasingly popular with individual and institutional investors. With the right combination of ETFs, you can set yourself up for long-term success.

Key Considerations When Investing in Canadian ETFs

If you’re investing in Canadian ETFs, there’s plenty to keep in mind! Here are some important factors to consider:

  1. Look at the expense ratio – this affects returns.
  2. Check liquidity & trading volume – ease of buying & selling.
  3. Understand the index/asset class – gives insight into performance & risk.
  4. Analyze the management team – track record & expertise.
  5. Think about tax implications – distributions & tax-efficient options.
  6. Diversify your investments – spread across sectors/classes.
  7. Evaluate historical performance – not a guarantee for the future.

By considering all factors & researching ETFs, you’ll be ready to make informed decisions that match your financial goals.

Frequently Asked Questions

1. What are ETFs in Canada?

Exchange-Traded Funds (ETFs) in Canada are investment funds that trade on stock exchanges, similar to stocks. They provide investors with exposure to a diversified portfolio of assets, such as stocks, bonds, or commodities.

2. How do ETFs work in Canada?

ETFs in Canada work by tracking an underlying index or asset. They aim to replicate the performance of the index or asset, allowing investors to gain exposure to a specific sector, industry, or market without directly owning individual stocks or assets.

3. What are the advantages of investing in ETFs in Canada?

Investing in ETFs in Canada offers several advantages. They provide diversification, as they typically hold a basket of different assets. ETFs are also easily tradable on stock exchanges throughout the day, providing liquidity. Additionally, they often have lower management fees compared to mutual funds.

4. Are ETFs in Canada suitable for beginners?

Yes, ETFs in Canada can be suitable for beginners. They offer an easy way to gain exposure to a diversified portfolio without needing extensive knowledge or research on individual stocks. Many ETFs also have low investment minimums, making them accessible to a wide range of investors.

5. How do I choose the best ETFs in Canada?

When choosing the best ETFs in Canada, consider factors such as your investment goals, risk tolerance, and the specific sectors or markets you want to invest in. It is important to research and compare different ETFs based on their performance, fees, and the underlying index or asset they track.

6. What are some of the best ETFs in Canada available?

Some of the best ETFs in Canada include the iShares Core S&P/TSX Capped Composite Index ETF, BMO Equal Weight Banks Index ETF, Vanguard FTSE Canada All Cap Index ETF, and Horizons S&P/TSX 60 Index ETF. It is always recommended to do thorough research and consult with a financial advisor before making investment decisions.