Best ETFs for 2023: Best Canadian equity ETFs

By Michael McCullough on May 2, 2023
Estimated reading time: 2 minutes

The MoneySense panel’s picks for the best exchange-traded funds focused on Canadian stocks.

A couple looking at the Best Canadian ETFs list

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Best Canadian ETFs for 2023

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wdt_ID	CANADIAN EQUITIES	Ticker	Management Fee	MER (%)	Holdings	Description
1	Vanguard FTSE Canada All Cap Index ETF	VCN	0.05	0.05	182	Exposure to Canadian small, medium and large caps, ultra low fee
2	iShares Core S&P/TSX Capped Composite Index ETF	XIC	0.05	0.06	232	Tracks S&P/TSX Capped Composite Index with a very low fee
3	BMO S&P TSX Capped Composite Index ETF	ZCN	0.05	0.06	233	Fee as low as VCN and XIC; more assets than VCN

Table of Contents: Best ETFs for Canadian Investors

Canada’s stock market fared relatively well through the downturn of 2022. And the MoneySense panel expects it to continue to outperform this year.

Vanguard FTSE Canada All Cap Index ETF (VCN), iShares Core S&P/TSX Capped Composite Index ETF (XIC) and BMO S&P/TSX Capped Composite Index ETF (ZCN) all received a unanimous nod from our panel. While the latter two track the country’s best-known index, the S&P/TSX Composite, VCN also includes some small-cap representation for the same rock-bottom fee.

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The perennial caveat to these index funds is the Canadian market’s heavy weighting to financials, energy and materials, all cyclical sectors that could become a millstone should a recession set in. There are particular concerns in 2023 around the banks, with their heavy reliance on the residential real estate market. If you agree that now might be a time to seek greater safety than you normally would look for, you could eschew the cap-weighted indexes for something like the BMO Low Volatility Canadian Equity ETF (ZLB), which also scored well with our panel.

“With ZLB, you have designed-in better sector allocation than just Canadian banks and financials like some market-weighted funds offer” says panellist and financial journalist Mark Seed. “BMO Low Volatility Canadian Equity ETF has been designed to provide exposure to a low beta weighted portfolio of Canadian stocks. This ETF utilizes a rules based methodology to build a portfolio of less market sensitive stocks from a universe of Canadian large cap stocks.”

Watch: What are ETFs

About Michael McCullough

Michael is a financial writer and editor in Duncan, B.C. He’s a former managing editor of Canadian Business and editorial director of Canada Wide Media. He also writes for The Globe and Mail and BCBusiness.