Best Canadian ETFs for 2022

Presented By
Questrade
Our panel picks the best exchange-traded funds focused on Canadian stocks.
Presented By
Questrade
Our panel picks the best exchange-traded funds focused on Canadian stocks.
Those looking for a feisty debate among our panellists will not find it in the Canadian equity category. As has been the case for a while, all the Canadian funds on last year’s list have returned in the 2022 edition. There wasn’t much discussion about adding new funds to the list, but it’s worth pointing out that panellists Ben Felix, Cameron Passmore and Robb Engen voted not to include HXT and ZLB (full ETF names can be found in the chart below) because, as Engen says, “It’s a preference for broader diversification. HXT tracks the TSX 60 rather than an all-cap index, while ZLB has only 40-ish holdings.” VCN, XIC and ZCN were Felix’s preferred picks, all of which, he says, “are effectively interchangeable for exposure to the Canadian market. They are all low-cost, low-turnover and tax-efficient.”
While Canadian ETF investors will likely own at least one of these funds, if there’s any year for owning Canadian equities, it’s 2022, says panellist Yves Rebetez. “All of these funds are great considerations for long-term buy-and-hold investors; however, in a world of rising oil prices and a disquieting inflation backdrop, this could actually turn out to be the year when a bias toward energy, financials and low-vol funds could serve investors well,” he says. “Most broadly diversified funds and ETFs are great for longer term, yes. There are many which are interchangeable, if you will.”
If investors want to think outside of this list, so to speak, they could consider the iShares Canadian Value Index ETF (XCV), which, as its name suggests, is focused on domestic value stocks. While value and growth funds are not included in this ETF roundup, Felix points out that, at least anecdotally, value stocks tend to do better than growth stocks in times of high inflation and rising uncertainty. Indeed, XCV has outperformed the iShares Canadian Growth Index ETF (XCG) significantly this year, with the former up by 6.3% year-to-date and the latter down by about 12.2% at the time of writing. While these are the key Canadian equity ETFs, domestic stocks are also represented in the all-in-one asset allocation ETFs section, so make sure you’re aware of any duplication of securities.
To view all the data in this chart, use your mouse or two fingers to slide the columns right or left. To download the list to your device, tap or click your preferred format (Excel, CSV or PDF) below.
Watch: What are ETFs
This article was originally published in 2012 and is updated annually (most recently on May 25, 2022).
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Why buy XEI instead of XDIV when the MER is double with essentially the same portfolio/performance?
From Jonathan Chevreau:
It’s not just about the MER. Some panelists (Dale in particular) believe Canadian energy was oversold and due for a bounce and XEI has a healthy exposure to that sector. Those who prefer less volatility from energy may indeed prefer the lower-MER fund.
The top 4 mentioned ETFs did very well since the C-19 Crash and subsequent recovery (Apr-Apr) with HXT at 48.7%, VCN at 47.6%, XIC at 47.4%, ZCN at 47.3%, and ZLB’s lower-betas at 32.3%.
In contrast, there were 15 non-inverse, non-leveraged ETFs that had over 100% returns this past 12 months, including HBLK (355%), HBGD (315%), CARS (212%), XBM (140%), HURA (138%), ZMT (134%), NXTG (130%), HEE (116%), HMMJ (115%), EDGE (111%), XXM (110%), BASE (109%), ZUB (107%), XSU (105%, and XCS (103%). So picking the right sub-groups and/or themes would have been multiply beneficial!
I do not expect the coming year to offer similar multiples of return, but clearly allocating some monies towards ‘hot’ themes could provide enhanced portfolio returns.
From Jonathan Chevreau:
Sure, it’s a question of risk and return and prudent asset allocation. What soars quickly can just as quickly plunge, as we saw with the Work at Home theme and ARK ETFs early this year (and mentioned in the overview). As we also explain in the overview, we are looking for low-cost broadly diversified funds that stand the test of time, which means that for All-stars we seldom “vote” on sector funds, a point we make repeatedly. That’s why we do mention the more speculative funds in passing even when they’re not agreed All-Stars, and there is also room for such picks in the Desert Island picks: Last year Yves’s pick of the 5th gen ETF (NXTG) would have done very well, as would my mention in passing of ARKW.
Where can I buy EFTS? Does the banks sell them? I am a mutual funds person with high fees and I want a change in the system.
I have been trying to find an ETF focused on natural resources. Are there any that you are aware of? Thanks
Fairly new. Want to learn
I use these to look at the top holdings and purchase the stocks directly using my online brokerage.
PDF link only shows title page
Thanks for letting us know. We briefly experienced technical issues that prevented the tables from displaying properly. The issue has now been resolved.
Why did you choose not to include VDY in this list?