Best ETFs in Canada for 2023
Back for the 11th edition, the top 22 exchange-traded funds among Canadian, U.S., international, fixed income and all-in-one ETFs, and—fan favourite—desert-island picks.
Back for the 11th edition, the top 22 exchange-traded funds among Canadian, U.S., international, fixed income and all-in-one ETFs, and—fan favourite—desert-island picks.
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.
wdt_ID | Best ETFs | Ticker | ETF Category | Management Fee | MER (%) | # of Underlying Holdings | ETF Description |
---|---|---|---|---|---|---|---|
1 | Vanguard FTSE Canada All Cap Index ETF | VCN | Canadian Equities | 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 | Canadian Equities | 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 | Canadian Equities | 0.05 | 0.06 | 233 | Fee as low as VCN and XIC; more assets than VCN |
4 | iShares Core S&P US Total Market Index ETF | XUU | U.S. Equities | 0.07 | 0.08 | 3,336 | Holds total U.S. stock market (including small-cap and mid-caps) primarily via 2 iShares core ETFs |
5 | Vanguard S&P 500 Index ETF | VFV | U.S. Equities | 0.08 | 0.09 | 514 | Provides unhedged exposure to the S&P 500 at a very low cost |
6 | Vanguard US Total Market Index ETF | VUN | U.S. Equities | 0.15 | 0.17 | 3,953 | Market-weighted all-cap US equity fund |
7 | iShares Core MSCI All Country World ex Canada Index ETF | XAW | Global Equities | 0.20 | 0.22 | 9,065 | Global all-cap fund that holds 6 iShares ETFs representing everywhere but Canada |
8 | Vanguard FTSE Global All Cap ex Canada Index ETF | VXC | Global Equities | 0.20 | 0.22 | 11,431 | One-stop foreign equity funds with exposure to developed and developing markets |
9 | iShares Core MSCI EAFE IMI Index ETF | XEF | Global Equities | 0.20 | 0.22 | 2,601 | Broad coverage of Japan, Europe & Australia |
10 | BMO Aggregate Bond Index ETF | ZAG | Fixed Income | 0.08 | 0.09 | 1,464 | Broad universe of Canadian investment grade government and corporate bonds |
11 | Vanguard Canadian Short-Term Bond Index ETF | VSB | Fixed Income | 0.10 | 0.11 | 487 | Canadian investment grade short-term government & corporate bonds |
12 | iShares Core Canadian Short Term Bond Index ETF | XSB | Fixed Income | 0.09 | 0.10 | 568 | Slightly cheaper than VSB, similar credit risk and rating profiles |
13 | iShares Core Equity ETF Portfolio | XEQT | All-in-one | 0.18 | 0.20 | 9,287 | Aggressive global fund holding 4 iShares ETFs, 100% equities |
14 | iShares Core Growth ETF Portfolio | XGRO | All-in-one | 0.18 | 0.20 | 20,664 | Holds 8 iShares ETFs, 80% equities and 20% bonds |
15 | BMO Growth ETF | ZGRO | All-in-one | 0.18 | 0.20 | 7,140 | Holds 8 BMO ETFs; 80% equities and 20% bonds |
16 | Avantis International Small Cap Value ETF | AVDV | Desert-island picks | n/a | 0.36 | 1,295 | U.S.-listed equity fund comprised of small-caps in developed markets overseas |
17 | DFA Dimensional US Small Cap Value ETF | DFSV | Desert-island picks | 0.28 | 0.31 | 978 | U.S.-listed small-cap value fund designed to mitigate risk factors |
18 | TD One-Click Moderate ETF Portfolio | TOCM | Desert-island picks | 0.25 | 0.28 | 4,252 | 70/30 balanced portfolio with a slight factor tilt, still moderate fees |
19 | Horizons Nasdaq 100 Index ETF | HXQ.U | Desert-island picks | 0.25 | 0.28 | 100 | If you still believe tech will save (or eat) the world, this is a way for Canadians to capitalize |
20 | BMO Low Volatility Equity ETF | ZLU | Desert-island picks | 0.35 | 0.33 | 101 | Exposure to U.S. markets with dampened downside of low-volatility factor |
21 | Horizons Gold Yield ETF | HGY | Desert-island picks | 0.6 | 0.9 | n/a | Fund invested in gold bullion that generates income using a covered call option strategy |
22 | Horizons Growth TRI ETF Portfolio | HGRO | Desert-island picks | 0.17 | 0.17 | n/a | Tax-efficient, low-fee, all-in-one fund for both taxable and registered accounts |
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Do-it-yourself (DIY) investors in Canada these days suffer from an overabundance of choices. There are more than 1,299 exchange-traded funds (ETFs) from 42 providers now listed on Canadian exchanges, making the task of constructing a simple “couch potato” portfolio that’ll likely do just as well as the investing pros more daunting than it has ever been.
Never fear—the MoneySense expert panel is back with our 11th annual list of Best ETFs for Canadian DIY investors to put together an affordable, diversified portfolio. The fact that we’re now in our second decade discerning the best funds on offer is a clue that the ETF industry is no longer a “kid.” It’s a force to be reckoned with in financial services, with $328 billion in assets under management in Canada as of Feb. 28, 2023, according to National Bank Financial. (The bank’s methodology excludes “ETFs of ETFs” that serve to double-count some assets.)
And all that after one of the worst market performance years in the ETF’s existence in Canada! Assets under management actually declined slightly over the course of 2022, due to the combination of wealth destruction in both the stock and bond markets and tepid net inflows from investors. Self-directed investors in Canada had few places to hide with the rare one-two punch of correlated losses in both equities and fixed income.
Fortunately, as evidenced so far in 2023, the normalization of interest rates and bond yields over the past year-plus has restored the diversification benefits between the two asset classes. This time, when stock markets went down, bond prices increased, which gives us confidence that decently diversified ETF investors will fare better this year and into 2024.
And affordable diversification is really what ETFs are all about, right?
As in past years, we’ve divided our selections into five categories that we think are really all you need to manage your own investment portfolio. On the equity side, we have separate categories for Canadian, U.S. and international stocks. Another category covers the best fixed-income options, which include bond funds but also money-market funds that have become popular over the past year thanks to rising interest rates and their lack of volatility. For investors who’d rather not get into the weeds of portfolio construction and rebalancing, we have a category of “one decision” (known in the industry as all-in-one or asset allocation) ETFs that cover all the bases.
And just for argument’s sake, we challenged our panellists to name more exotic “desert island” picks than usual; ETFs that don’t make it through our mainstream filters and are still worth a look. These are listed in a sixth bonus category.
If you’ve been following our Best ETF picks over the years, you may have noticed a pattern. The whole point of owning ETFs, in our view, is that they’re on the side of the little guy. Those with nest eggs worth millions of dollars can access lower fees for advice and active management, though many still choose ETFs to construct their portfolio nonetheless.
High net worth investors represent only a small proportion of Canadian households, however.
The best most of us can hope for is passively capturing the returns of the primary asset classes without paying exorbitant fees, which ETFs allow us to do. Consistent with that worldview, our panel generally favours index ETFs with the lowest costs. Actively managed funds have to have very competitive management expense ratios (MERs) and other compelling attributes to make our lists.
Our decision in the past to exclude the many thematic ETFs out there was largely vindicated over the past year; almost all of these were crushed in the equity market volatility.
That, sadly, applied to ESG funds screening for environmental, social and governance criteria too. We would like at some point to include a socially responsible investing category, but until a common set of reporting standards emerges, it is very difficult to evaluate these ETFs on an apples-to-apples basis.
So there you have it. There’s no shortage of options to populate your brokerage account. But from the 22 ETFs listed here, we think you should be able to find everything you need to succeed as a DIY investor.
Watch: MoneySense – BMO ETFs – ETFs and Mutual Funds fees
Ben Felix is a portfolio manager and head of research with PWL Capital in Ottawa. He has a bi-weekly YouTube series called Common Sense Investing, and he co-hosts the weekly Rational Reminder podcast. PWL is a wealth management firm managing $3 billion in assets using low-cost ETFs and index funds.
Cameron Passmore joined PWL Capital in 1997. He is a partner in the firm and its executive chairman, as well as a portfolio manager in Ottawa. Passmore co-hosts the Rational Reminder podcast.
Yves Rebetez, CFA, is a partner at Credo Consulting, a brand analytics and research firm focused on the Canadian financial services industry. Rebetez ran ETFinsight between 2011 and 2018 and is now working on several ETF and advisor engagement initiatives.
Dale Roberts is a former investment advisor with Tangerine, founder of the Cut the Crap Investing blog and a regular MoneySense contributor.
Mark Seed is the blogger behind the My Own Advisor website, which caters to do-it-yourself investors and takes a hybrid approach to investing in both ETFs and individual securities.
Ioulia Tretiakova is vice-president and director of quantitative strategies at PUR Investing Inc. She specializes in risk management and quantitative portfolio construction, and she is the lead author of several peer-reviewed papers in the Rotman International Journal of Pension Management and the Journal of Retirement.
Mark Yamada is CEO of Toronto’s PUR Investing Inc., which provides the ETF screener for the TMX Money website. He writes about investment issues for Advisor, appears regularly at ETF conferences and publishes academic papers about advanced pension strategies.
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Ben Felix is on your side. His YouTube videos are amazing. I look forward to viewing them. Common sense is not so common so do yourself a favour and subscribe to Ben Felix’s YouTube channel. He’s not selling anything … a good sign!
Why don’t you address non-cash (phantom) payments made to ETF accounts that are listed in T5’s and are a surprise come Tax time.
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.