Best Canadian ETFs: Ranked on What Reaches You
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Every list of the best Canadian ETFs ranks on the same two numbers: the management expense ratio, and last year’s return. Both are published by the fund companies, both are easy to copy, and neither answers the question a buyer is actually asking, which is how much of the market’s return ends up in your account.
There is a number that answers it, and the funds publish it themselves. Every index ETF sold in Canada files an annual Management Report of Fund Performance, and inside it sits a table comparing the fund’s own compound return against the return of the index it promises to track. iShares Canada prints the gap as a row labelled “Difference”. Vanguard prints the two returns and lets you subtract. Either way, the number is the whole cost of ownership in a single figure: the management fee, the trading costs, the unrecoverable foreign withholding tax, the slippage on rebalancing days, net of any securities lending revenue handed back.
We pulled that table from the 2025 annual reports of twenty-nine Canadian ETFs and ranked ten of them on it. The results are not what the fee tables suggest. One fund beat its index over one, three, five and ten years. Two funds charging the same 0.09% fee for the same index are 0.39 percentage points a year apart. And the single widest gap we found is not in this ranking at all: it belongs to a covered call fund that holds another fund on this page and gave up $1,049 per $1,000 over a decade for downside protection worth three tenths of one percentage point when it was needed.
All fund figures below come from the funds’ own filed documents, cited by document and page. Nothing here is taken from a data aggregator, which is the standard this page previously failed: its entire fund table was sourced to a third-party website rather than to the reports the funds file with regulators. Where those two disagree, the filing wins.
How to buy ETFs in Canada
Every fund on this page trades on the Toronto Stock Exchange under a ticker, exactly like a share of Royal Bank does. Buying one takes an account, some cash and about ninety seconds. The sequence matters more than the fund choice, because an account opened this month starts compounding this month.
Step 1: pick the account before you pick the fund
The account decides how much tax you pay on the same fund, and the difference is larger than any fee on this page. Canadians have five to choose from, and most people should open them in this order:
- TFSA. Gains and withdrawals are never taxed. The annual limit is set by the CRA and unused room carries forward from 2009 or the year you turned 18, whichever is later. Our TFSA contribution room calculator works out your own number, and the TFSA rules guide covers withdrawals, re-contributions and the penalty for overshooting.
- RRSP. Contributions are deducted from taxable income now and taxed on withdrawal later. It is also the only account that escapes US dividend withholding tax, which matters for three of the funds ranked below. The RRSP contribution room calculator and the RRSP rules guide handle the limits and deadlines.
- FHSA. Deductible going in like an RRSP and tax-free coming out like a TFSA, if the money buys a first home. See how the FHSA works and, for what belongs inside one, FHSA investment strategy by your buying date.
- RESP. For a child’s education, and the government adds a grant on top of what you put in. Our guide to the best RESP investments by your child’s age covers the fund choice, which changes as the withdrawal date approaches.
- Non-registered. No limits and no shelter. Canadian dividends earn the dividend tax credit here and capital losses can be claimed, neither of which is true inside a registered account.
Step 2: open the account
You need a Social Insurance Number, a piece of government identification, an address and employment details, plus banking information to move money in. It takes about ten minutes and no minimum deposit at the major online brokers. Our walkthrough of how to open a brokerage account in Canada covers the questions the application asks and why it asks them, including the risk-tolerance section that trips people up.
Step 3: choose a broker on what it charges to buy an ETF
This is where ETF buyers get it wrong. The headline stock trading commission is close to irrelevant if you are buying an index fund every payday; what matters is what the broker charges on the buy side of an ETF order, because that is the transaction you will make several hundred times.
Questrade charges nothing to buy an ETF. You pay a commission when you sell, which for a buy-and-hold investor is a cost deferred by decades. On a $500 monthly purchase, a $9.95 buy-side commission would be 2% of every contribution, which is more than triple the fee on the most expensive fund ranked below. A flat commission does that to every small purchase and almost nothing to a large one, which our guide to trading fees in Canada works through alongside the currency conversion and the spread.
Open a Questrade account and start buying ETFs
Wealthsimple is the alternative if you want the simpler interface and are happy to trade Canadian-listed funds only. We compare the two in detail in Questrade vs Wealthsimple, and if this is your first account, the best broker for beginners in Canada weighs the trade-offs differently than a page written for active traders would. For a TFSA specifically, where the account transfer rules and fee schedules differ between firms, see the best broker for a TFSA. The full field is ranked in our guide to the best investing apps in Canada.
If you already hold ETFs somewhere else, you do not have to sell them to move. A direct transfer keeps the shelter intact and avoids triggering a taxable disposition, and we walk through it in how to transfer a TFSA or RRSP to a new broker tax-free.
Step 4: place the order
Type the ticker, choose a quantity, and use a limit order rather than a market order. A limit order names the highest price you will pay; a market order accepts whatever is on offer. On a fund like ZEB, where the average bid-ask spread was 0.02% over the twelve months to December 31, 2025, the distinction is academic. On a thin specialty fund it is not. If the bid, the ask and the spread are unfamiliar terms, how to read a stock quote explains the screen you are looking at, and how to buy your first stock walks through an order end to end.
Step 5: automate it, then stop watching
Set a recurring contribution on payday and a recurring purchase behind it. This is the step that does the work, and it is the step most new investors skip. The timing study further down this page found no evidence that waiting for a better entry helped: the sell signal was followed by larger gains than the buy signal.
How we ranked these ten
One criterion, taken from each fund’s own annual report: the gap between the index the fund tracks and the return its unitholders received, compounded over ten years.
That gap is the honest measure of a passive fund, because a passive fund makes exactly one promise. It does not promise to beat anything. It promises to hand you an index minus a fee, and the gap says how well it kept that promise, all-in, after everything. A fund advertising a 0.09% management expense ratio that delivers its index minus 0.19% a year is charging you twice what the fee table says. A fund advertising 0.06% that delivers its index minus 0.03% is charging you half.
Three things follow from choosing this criterion, and it is worth stating them plainly because they shape the list.
The ranking measures execution, not suitability. A gold miners fund with a wide gap is not a worse purchase than a bond fund with a narrow one; they do different jobs. So we chose ten funds covering ten distinct jobs a Canadian portfolio needs filling, then ranked those ten strictly on the measured gap. Tenth place is the fund that tracked its index least faithfully, not the fund you should want least.
Some funds cannot be scored at all. The all-in-one portfolio funds, XEQT and VEQT and VGRO among them, track no index. Their own reports say so: they compare themselves to a broad-based index “for comparative purposes only” and state that the fund “is not managed relative to the composition of any of the indices”. A fund-minus-index gap for those funds would be a number with no meaning, so we did not compute one. They get their own section instead, and they remain the right answer for a large share of readers.
Ten years is the window, where a fund has ten years. XDIV launched in 2017, so its column is since-inception rather than ten-year and is marked as such. Comparing an eight-year record to a ten-year one is a small unfairness, and hiding it would be a larger one.
The ten at a glance
Jump to any fund: 1. XUS · 2. XIC · 3. VXC · 4. VIU · 5. VCN · 6. XIU · 7. XDIV · 8. VDY · 9. XQQ · 10. XGD
| # | Ticker | The job it does | Gap vs its index, 10 yr | MER | Trading | Net assets |
|---|---|---|---|---|---|---|
| 1 | XUS | The S&P 500 core | +0.20 | 0.09% | 0.00% | $10.72B |
| 2 | XIC | The Canadian core | -0.03 | 0.06% | 0.00% | $21.88B |
| 3 | VXC | Everything outside Canada, one ticker | -0.06 | 0.22% | 0.00% | $2.88B |
| 4 | VIU | Developed markets outside North America | -0.06 | 0.23% | 0.00% | $7.77B |
| 5 | VCN | The Canadian core, Vanguard’s version | -0.08 | 0.06% | 0.00% | $12.78B |
| 6 | XIU | Canadian large cap, deepest liquidity | -0.18 | 0.18% | 0.00% | $20.33B |
| 7 | XDIV | Canadian dividends, cheapest in category | -0.19* | 0.11% | 0.01% | $3.73B |
| 8 | VDY | Canadian high dividend yield | -0.27 | 0.22% | 0.00% | $5.57B |
| 9 | XQQ | US growth satellite | -0.64 | 0.39% | 0.00% | $4.20B |
| 10 | XGD | Gold miners satellite | -0.84 | 0.60% | n/a | $3.77B |
The ten, ranked
1. XUS, iShares Core S&P 500 Index ETF
The job: the United States in one ticker, in Canadian dollars, unhedged. The gap: +0.20 percentage points a year over ten years. All-in cost: 0.09% management expense ratio, 0.00% trading expense ratio.
XUS is the only fund we measured that handed its unitholders more than the index it tracks, and it did so over one year, three years, five years and ten. Its own report gives the arithmetic for 2025: the fund returned 12.06% against the index’s 11.92%, and BlackRock attributes the 0.14 percentage point difference to management fees of -0.08% and “other miscellaneous factors” of +0.22% (mrfp-xus, Results of Operations, page 3). Over the full ten years the fund compounded at 14.27% against the index’s 14.07%, a Difference row of +0.20 (page 8).
That is not alchemy and it is worth being precise about what it is not. A fund cannot conjure return from nothing. The plus side comes from securities lending revenue credited back to the fund and from the fact that an index is a paper construct that pays no withholding tax and never has to trade, while the fund holds a US-domiciled iShares fund whose actual tax treatment works out slightly better than the index calculation assumes. What it demonstrates is narrow and useful: the structural drag on a Canadian-listed US equity fund is not fixed, and one provider has engineered it to net out favourably for a decade.
The macro case. You are buying the largest companies in the world’s largest economy, currently weighted heavily toward the firms building out artificial intelligence infrastructure. The exposure is to US corporate earnings and to the Canadian dollar: unhedged, a falling greenback takes a bite out of your return even when the index rises, and a rising one flatters it. Canada is roughly 3% of global market capitalisation, so a portfolio without this exposure is a concentrated bet on one commodity-heavy economy. Several Canadian names ride the same wave from the other side, which we cover in Canadian AI stocks ranked on measured AI exposure.
The technical picture and what followed. As of September 13, 2026, XUS trades with its 50-day moving average above its 200-day, the configuration chartists call a golden cross regime. We computed every crossover in the fund’s history and the forward returns after each. After a golden cross, the median 90-day return was +7.7% and all six instances were positive. After a death cross, the median 90-day return was +16.8%, positive in four of five. In other words the sell signal was followed by more than twice the gain of the buy signal, on samples of six and five. Six observations is a story, not a base rate, which is exactly why we publish the count beside the median.
Where it belongs. The RRSP, if you have the room, for reasons covered in the withholding tax section. It works perfectly well in a TFSA too, and the drag is smaller than most people fear.
2. XIC, iShares Core S&P/TSX Capped Composite Index ETF
The job: the entire investable Canadian stock market. The gap: -0.03 percentage points a year over ten years. All-in cost: 0.06% management expense ratio, 0.00% trading expense ratio.
A three basis point gap over a decade is close to the theoretical floor. The fund charges a 0.05% management fee, runs a 0.06% expense ratio, and gave up three hundredths of a percentage point a year against the S&P/TSX Capped Composite over ten years (mrfp-xic, Annual Compound Returns, page 6). For 2025 the fund returned 31.59% against the index’s 31.68%, and BlackRock breaks the 0.09 point difference into management fees of -0.05% and other factors of -0.04% (page 3). There is nothing left to optimise here.
It is also now the largest fund on this page by a wide margin. Net assets went from $14,501.2 million at the end of 2024 to $21,876.4 million at the end of 2025, of which $2,867.4 million was new money and $4,507.8 million was investment gains (page 3).
The macro case. You own Canada’s concentration problem on purpose. Financials, energy and materials dominate the composite, so this fund is a levered bet on bank profitability, the oil price and the gold price rather than a diversified holding in any global sense. That has been the right bet recently and will not always be. The individual names behind the index are covered in Canadian bank stocks, Canadian energy stocks ranked on what survives $70 oil and Canadian mining stocks.
The technical picture and what followed. The 50-day sits above the 200-day as of September 13, 2026. Across thirteen crossovers since 2016, the median 90-day return after a golden cross was +5.5% (n=7, positive in 86%) and after a death cross +8.1% (n=6, positive in 83%). The distributions overlap so heavily that the signal carries no usable information for an index buyer, which is the conclusion the timing section draws out.
Where it belongs. Anywhere. Canadian dividends face no withholding tax in any account, which makes this the one fund on the page with no account-placement wrinkle at all.
3. VXC, Vanguard FTSE Global All Cap ex Canada Index ETF
The job: every listed company on earth except the Canadian ones, in a single purchase. The gap: -0.06 percentage points a year over ten years. All-in cost: 0.22% management expense ratio, 0.00% trading expense ratio.
VXC is the fund that makes a two-ticket portfolio possible: this plus a Canadian core is a globally diversified equity holding, finished. Over ten years it compounded at 11.17% against its benchmark’s 11.23% (VCN’s sibling document, VXC_MRFP_EN, Annual Compound Returns, page 4), and in 2025 it actually beat the benchmark by 0.25 points, returning 16.18% against 15.93%.
Vanguard is unusually candid about where the deviation comes from, and the explanation is the most useful sentence in any of these documents. The fund holds US-domiciled Vanguard funds rather than the underlying shares, and the report states that deviations “are a result of the wrapped fund structure; this can be broken down into market price differential, foreign withholding tax, and expense ratio differences between the US- and Canadian-domiciled products” (page 1). That is the entire hidden cost of international ETF ownership, named by the manager, and it is why the gap on a global fund is structurally harder to close than on a domestic one. VXC closing it to six hundredths of a point is the achievement here, not the headline fee.
The macro case. Roughly two-thirds US, the balance Europe, Japan, the emerging markets and everything else. It is a bet that global equity earnings grow, with no view on which region wins, which is the correct view to hold if you do not have one. The currency exposure is a basket rather than a single pair, which dampens the swings that an all-US fund carries.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses were followed by a median +7.7% at 90 days, all five positive; death crosses by +10.8%, positive in three of four. Nine events in a decade. Same pattern, same small samples.
Where it belongs. The RRSP is marginally better because of the US sleeve, but the fund is so diversified that the account choice barely moves the outcome.
4. VIU, Vanguard FTSE Developed All Cap ex North America Index ETF
The job: Europe, Japan, Australia and the developed Pacific, with no US and no Canada. The gap: -0.06 percentage points a year over ten years. All-in cost: 0.23% management expense ratio, 0.00% trading expense ratio.
VIU is the fund for a portfolio that already owns North America and wants the rest of the developed world without doubling up. Over ten years it returned 7.97% against its index’s 8.03% (VIU_MRFP_EN, page 4), and the gap is a flat six hundredths of a point at one, three, five and ten years, which is the most consistent tracking record in this ranking. Portfolio turnover has run between 3.6% and 5.2% over five fiscal years, which is why the trading expense ratio rounds to zero.
The macro case. This is the anti-US trade in a portfolio sense rather than a directional one. Developed markets outside North America carry more banks, industrials, luxury goods and autos, and far less software; they are cheaper on most earnings measures and have been for a decade, which is either an opportunity or a value trap depending on who you ask. The 27.91% return in 2025 was the strongest of any developed region on this page, after years of trailing badly. Owning it means accepting long stretches of underperformance in exchange for not needing to call the turn.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses: median +4.9% at 90 days, four of six positive. Death crosses: median +8.5%, three of five positive. The weakest golden-cross record among the broad funds ranked here, on the smallest sample.
Where it belongs. A TFSA is fine. International dividends face withholding tax that no Canadian account recovers, so there is no account that solves it and no reason to let it drive the decision.
5. VCN, Vanguard FTSE Canada All Cap Index ETF
The job: the Canadian core, Vanguard’s version. The gap: -0.08 percentage points a year over ten years. All-in cost: 0.06% management expense ratio, 0.00% trading expense ratio.
VCN and XIC are close to interchangeable and the choice between them is a coin toss that ends up decided by which fund family you already hold. Over ten years VCN compounded at 12.54% against its benchmark’s 12.62% (VCN_MRFP_EN, page 4), five hundredths of a point behind XIC’s record against a slightly different Canadian index. Net assets reached $12.78 billion at the end of 2025, up from $4.71 billion in 2021.
One correction worth making, because this page carried the wrong number for a year. VCN’s management expense ratio is 0.06% for the fiscal year ended December 31, 2025, per the Ratios and Supplemental Data table on page 3. It was 0.05% in each of the four preceding years. The figure previously published here, sourced to a third-party data site, was 0.05%. The difference is one basis point and changes nothing about the recommendation; it is corrected because a page that cites a filing should cite it accurately.
The macro case. Identical to XIC: banks, oil and materials, with no cushion. VCN’s index is a hair broader in small caps and a hair different in its financials weighting (34.3% of net asset value at December 31, 2025, per the Summary of Investment Portfolio on page 4), but a bad year for Canadian banks is a bad year for both.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses were followed by a median +6.3% at 90 days with all seven positive; death crosses by +7.3%, five of six positive. Thirteen events, and again the sell signal reads better than the buy signal.
Where it belongs. Anywhere, same as XIC. If you hold it in a non-registered account, the eligible Canadian dividends inside it earn the dividend tax credit, which our dividend income calculator will price for your own bracket.
6. XIU, iShares S&P/TSX 60 Index ETF
The job: the sixty largest Canadian companies, with the deepest liquidity on the TSX. The gap: -0.18 percentage points a year over ten years. All-in cost: 0.18% management expense ratio, 0.00% trading expense ratio.
XIU is Canada’s original ETF and still one of the most heavily traded securities on the exchange. Over ten years it returned 12.60% against its index’s 12.78% (mrfp-xiu, page 6). The gap is three times XIC’s and the fee is three times XIC’s, which is the whole explanation: you are paying 0.18% for a narrower slice of the same market.
Its filings contain one number no fee table shows, and it is striking. Portfolio turnover was 125.18% in 2025, and 221.45% in 2022 (Financial Highlights, page 5). A passive fund tracking sixty large caps should turn over a few per cent a year; XIC’s turnover in the same years was 22.26% and 61.08%. The five-year record for XIU reads 125%, 108%, 141%, 221%, 204%. We are not going to pretend to know the full explanation, and BlackRock does not give one in the document. Index reconstitution alone cannot produce it. What we can say is that the fund is used as an institutional trading and derivatives vehicle as much as a buy-and-hold holding, and that level of activity is consistent with the wider gap. If you want the sixty largest Canadian names, you already own every one of them inside XIC, because the S&P/TSX 60 is drawn from the same Composite that XIC replicates, at a third of the cost.
The macro case. More concentrated in the banks than the broad composite, so it is a purer bet on Canadian financial sector profitability. The companies inside it are the ones we assess in Canadian blue chip stocks ranked on stress, not size, which found that six standard large-cap names fell further in the 2025-26 rotation than they did in March 2020.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses: median +6.2% at 90 days, seven of seven positive. Death crosses: median +9.1%, six of six positive. Thirteen events in ten years, every single one of them followed by a gain ninety days later, which says more about the decade than about the signal.
Where it belongs. Any account. The one real argument for XIU over XIC is trading depth, which matters to an institution moving millions and not to someone buying $500 a month.
7. XDIV, iShares Core MSCI Canadian Quality Dividend Index ETF
The job: Canadian dividend income with a quality screen, at an index-fund fee. The gap: -0.19 percentage points a year since inception. All-in cost: 0.11% management expense ratio, 0.01% trading expense ratio.
XDIV is the cheapest serious dividend ETF in Canada and it is not close. The management expense ratio has been 0.11% in each of the past five fiscal years (mrfp-xdiv, Financial Highlights, page 5), against 0.55% for XDV and 0.66% for CDZ. The fund launched in 2017, so its long column is since-inception: 12.23% against the index’s 12.42%, a gap of 0.19 points (page 6). In 2025 it returned 27.92% against 28.22%.
A second correction to what this page previously published: XDIV’s management expense ratio is 0.11%, not the 0.12% shown here before. The trading expense ratio adds another 0.01%, so 0.12% is the correct all-in figure and 0.11% is the correct MER. Both numbers now appear, labelled.
The quality screen matters more than the name suggests. MSCI’s methodology filters on payout sustainability and balance sheet health before yield, which is why the fund holds fewer names than a pure yield screen would and why it can lag when low-quality high yielders rally. Turnover runs 32% to 62% a year, high for an index fund, because the screen forces it to sell names that stop qualifying.
The macro case. Canadian dividend funds are a bet on the banks, the pipelines and the utilities, which makes them a bet on the interest rate path. Falling rates lift the present value of a long stream of distributions and make a 4% yield look better against a shrinking return on cash; rising rates do the reverse. The individual names are ranked in our guide to the best Canadian dividend stocks.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses: median +4.1% at 90 days, five of six positive. Death crosses: median +7.2%, and all five were positive. The fund has existed for only eight years, so eleven events is the entire record.
Where it belongs. A non-registered account has a genuine claim on this one, because eligible Canadian dividends carry the dividend tax credit there and lose it inside a TFSA or RRSP. That is the reasoning our RRSP stocks page, ranked on tax saved rather than yield, works through in detail.
8. VDY, Vanguard FTSE Canadian High Dividend Yield Index ETF
The job: the highest-yielding large Canadian payers, monthly. The gap: -0.27 percentage points a year over ten years. All-in cost: 0.22% management expense ratio, 0.00% trading expense ratio.
VDY is the popular Canadian dividend fund and it tracks its index less faithfully than the cheaper XDIV tracks its own: 13.28% against 13.55% over ten years, a 0.27 point gap (VDY_MRFP_EN, page 4). Vanguard states the drag directly, saying management fees and operating expenses “reduced performance relative to the Benchmark by 0.22 percentage points” in 2025, with other factors accounting for the rest (page 1). Net assets are $5.57 billion.
The reason to own it over XDIV is concentration, and the reason to avoid it is the same. VDY screens on yield without a quality filter, which tilts it harder into financials and energy. That produced a 30.92% return in 2025 while the banks rallied. It will produce the mirror image when they do not.
The macro case. A leveraged version of the Canadian rate and bank trade. If you want the reasoning behind the individual banks inside it, our Canadian bank stocks page covers the Big Six and the smaller names, and the covered call study further down this page is a warning about the most common way Canadians try to squeeze more yield out of exactly these six companies.
The technical picture and what followed. Above its 200-day as of September 13, 2026. Golden crosses: median +2.2% at 90 days, four of seven positive. Death crosses: median +7.8%, five of six positive. This is the widest golden-versus-death spread in the ranking and it runs against the signal: buying VDY on the bullish crossover produced the weakest forward returns of any broad fund measured here, on seven observations.
Where it belongs. Non-registered, for the dividend tax credit, or a TFSA if you want the income shielded and do not need the credit.
9. XQQ, iShares NASDAQ 100 Index ETF
The job: concentrated US growth, in Canadian dollars. The gap: -0.64 percentage points a year over ten years. All-in cost: 0.39% management expense ratio, 0.00% trading expense ratio.
XQQ is where the ranking starts to cost you real money. Over ten years the fund compounded at 17.80% against the index’s 18.44% (mrfp-xqq, page 6), a gap of 0.64 points a year, which is 0.25 points wider than the stated management expense ratio can explain. In 2025 the fund returned 18.41% against 18.98%.
That said, look at the absolute number. A 17.80% ten-year compound return is the best on this page by a distance, and a fund giving up 0.64 points a year on an 18-point index is keeping 96.5% of it. The gap is the criterion we chose and it ranks XQQ ninth; the return is the reason people own it. Both things are true, and a ranking that pretended otherwise would be dishonest.
The macro case. A hundred non-financial US companies, weighted so that a handful of megacap technology names drive the result. This is the most concentrated bet on the artificial intelligence capital cycle available in a Canadian-listed wrapper, and it is priced for that cycle continuing. Position it as a satellite, not a core. The Canadian names levered to the same build-out are in our AI ranking.
The technical picture and what followed. Above its 200-day as of September 13, 2026. XQQ is one of only two funds in this ranking where the golden cross beat the death cross: median +12.6% at 90 days (n=6, five positive) against +10.2% (n=5, four positive). At 180 days the golden-cross median is +23.5%. Both distributions are strongly positive because the sample covers a decade in which this index did almost nothing but rise, which is precisely the limitation of a ten-year backtest on a one-direction market.
Where it belongs. RRSP if you have the room, for the withholding treatment. Size it as a satellite regardless of account.
10. XGD, iShares S&P/TSX Global Gold Index ETF
The job: gold miners, as a hedge or a speculation. The gap: -0.84 percentage points a year over ten years. All-in cost: 0.60% management expense ratio.
XGD is last on the criterion and it earns the position: 21.19% against the index’s 22.03% over ten years, and in 2025 alone the fund returned 144.21% against the index’s 146.24%, a two point miss in a single year (mrfp-xgd, page 6). When an index moves 146% in twelve months, tracking it becomes genuinely hard, and the 0.60% fee is only part of the two points.
The 144% is not a typo and it is the most important number on this page for anyone thinking about satellites. Gold miners were the trade of 2025 by a distance no other asset came close to. That is what a levered play on a commodity does when the commodity runs, and it is what the same play does in reverse. The fund’s ten-year compound return of 21.19% is excellent; the path to it was not something most investors would have held through.
The macro case. Miners are an option on the gold price with a cost structure attached. Their profits rise faster than bullion when gold climbs, because mining costs are largely fixed, and they fall faster when it drops. The gold price itself responds to real interest rates, central bank buying and currency debasement worries. We rank the individual producers, and explain why the miners lagged bullion for years before this, in Canadian gold stocks, with the broader picture in Canadian mining stocks.
The technical picture and what followed. XGD is the one fund in this ranking trading below its 200-day moving average as of September 13, 2026, after the 2025 run. Its crossover record is also the worst: median 90-day return after a golden cross of -1.4% (n=5, two of five positive), and after a death cross -2.3% (n=4, one of four positive). Neither signal has worked in this fund, in either direction, on nine observations. The honest reading is that a nine-event sample on the most volatile holding on the page tells you nothing, and that anyone buying gold miners on a moving average crossover is trading on noise.
Where it belongs. A TFSA if you are going to hold it at all, because the upside is the only reason to own it and the TFSA is where large gains escape tax. Keep the position small enough that a 50% drawdown is survivable.
Ready to own one of these
Every fund above trades on the TSX under the ticker shown, so any Canadian brokerage account can buy them. The buy-side cost is the one that compounds against you: on a monthly purchase plan, a commission charged on every buy is a permanent tax on contributions, while a fund’s expense ratio is charged on assets. Questrade charges no commission to buy an ETF, which is the single structural advantage that matters for the strategy this page describes.
Open a Questrade account or open a Wealthsimple account if you prefer the simpler interface. Undecided? Compare the full field of Canadian brokers.
The all-in-one funds, and why they are not in the ranking
XEQT, VEQT, VGRO, XGRO and VBAL are the most important development in Canadian retail investing of the past decade, and none of them appears in the ranking above. That is not a judgement on them. It is that the criterion cannot score them.
An asset allocation fund tracks no index. It holds a fixed blend of underlying funds, rebalances itself back to that blend, and compares itself to a broad market index only for context. Vanguard’s report for VEQT states the position exactly: the fund “returned 21.66%” for the twelve months ended March 31, 2026, and “The FTSE Global All Cap Index, a broad-based equity index, returned 17.15%” (VEQT_MRFP_EN, Results of Operations, page 1). The fund did not beat an index by 4.5 points through skill; it holds a different mix than that index, with a deliberate home-country overweight to Canada, and Canada had a spectacular year. Reporting that 4.5 points as outperformance would be a fabrication, so we do not.
What can be compared is what they cost and what they hold.
| Fund | Stocks / bonds | MER | Trading | Net assets | Turnover | Fiscal year end |
|---|---|---|---|---|---|---|
| XEQT (iShares Core Equity) | 100 / 0 | 0.20% | 0.01% | $12.19B | 13.60% | Dec 31, 2025 |
| VEQT (Vanguard All-Equity) | 100 / 0 | 0.22% | 0.00% | $12.27B | 3.26% | Mar 31, 2026 |
| XGRO (iShares Core Growth) | 80 / 20 | 0.20% | 0.01% | $4.02B | 6.28% | Dec 31, 2025 |
| VGRO (Vanguard Growth) | 80 / 20 | 0.22% | 0.00% | $9.04B | 2.60% | Mar 31, 2026 |
| VBAL (Vanguard Balanced) | 60 / 40 | 0.22% | 0.00% | $4.89B | 7.61% | Mar 31, 2026 |
The honest summary is that XEQT and VEQT cost the same to within two basis points, hold a similar global blend, and will produce similar outcomes over a long horizon. The choice between them does not deserve the debate it gets. The choice between an all-in-one fund and a self-assembled portfolio of the funds ranked above is a real one: you pay roughly 0.14 percentage points a year for the convenience of never rebalancing, and you accept a preset Canadian overweight you did not choose.
Our view: if the alternative to an all-in-one fund is not building the three-fund portfolio, the all-in-one fund wins by a mile, because the failure modes it removes cost far more than 0.14% a year. Overtrading and never rebalancing are what actually destroy retail returns, and both are engineered out of a single ticker. The case for assembling it yourself is strongest when you have a reason to deviate from the preset mix, such as holding US equity in an RRSP and Canadian dividends in a taxable account, which the account placement section covers.
The covered call experiment BMO ran for us
This is the part of the page with no equivalent anywhere, and it exists because two documents filed on the same day by the same manager describe a controlled experiment.
BMO runs two funds on Canada’s six big banks. ZEB holds the six in equal weight and does nothing else. ZWB holds ZEB and writes call options against it, selling away part of the upside in exchange for option premium paid out as monthly income. ZWB’s own ETF Facts document states that it “is currently invested in the BMO Equal Weight Banks Index ETF”. Same six banks. Same manager. One variable: the options.
Covered call funds are sold on two claims. They generate more income, and they cushion the downside. Both claims are testable against the funds’ own published returns, and both documents are dated January 23, 2026.
What the ten-year record says
Each ETF Facts document states, on page 2, what $1,000 invested ten years earlier had become at December 31, 2025.
- ZEB: annual compound return of 15.0%. $1,000 became $4,046.
- ZWB: annual compound return of 11.6%. $1,000 became $2,997.
The covered call cost $1,049 per $1,000 invested, or 26% of the ending value, over ten years in the same six companies.
What the downside protection was worth
Here the claim fails on its own terms. Both documents disclose the number of down years and the worst three-month stretch of the decade.
| Measure, ten years to December 31, 2025 | ZEB, plain | ZWB, covered call | Difference |
|---|---|---|---|
| Annual compound return | 15.0% | 11.6% | -3.4 points a year |
| $1,000 grew to | $4,046 | $2,997 | -$1,049 |
| Calendar years with a loss | 2 of 10 | 2 of 10 | none |
| Worst three-month return | -22.3% | -22.0% | 0.3 points |
| Best three-month return | +18.9% | +15.1% | -3.8 points |
| Calendar years it led | 9 of 10 | 1 of 10 | 2018, by 0.9 points |
| 2022, the worse down year | -10.4% | -11.1% | ZWB fell further |
| Management expense ratio | 0.28% | 0.72% | +0.44 points |
| Trading expense ratio | 0.00% | 0.19% | +0.19 points |
| All-in expenses | 0.28% | 0.91% | +0.63 points |
Read the two rows in the middle together. Over a decade containing a pandemic crash and a rate shock, the covered call fund’s worst quarter was 0.3 percentage points better than the plain fund’s. That is the entire protection delivered. The price of it was 3.4 percentage points of compound return every year, in both directions, in all ten years.
And in the worse of the two losing years, it did not protect at all. In 2022 ZWB returned -11.1% against ZEB’s -10.4%. Writing calls capped the recovery inside the year without capping the decline.
Where the 3.4 points went
Costs explain less than a fifth of it. ZWB’s all-in expenses are 0.91% against ZEB’s 0.28%, a difference of 0.63 percentage points. The remaining 2.8 points a year is the upside handed to whoever bought those call options. In a decade when Canadian banks compounded at 15%, selling the right to their gains above a strike price every month was an expensive trade, and the wider the annual gain the wider the loss: ZWB trailed by 8.5 points in 2021 and 8.7 points in 2025, the two strongest years for the banks.
That is the mechanism, and it is the reason the trade is structurally unattractive for a long-term holder rather than merely unlucky. A covered call writer collects a small premium in exchange for an unlimited claim on the best outcomes. Over one month that is a reasonable trade for someone who needs the income. Over a hundred and twenty consecutive months in a rising asset, it is a transfer.
When a covered call fund does make sense. If you need a predictable monthly cash distribution and are prepared to pay for it in total return, ZWB does what it says: it paid monthly throughout, and its distributions were larger than ZEB’s. A retiree drawing income who would otherwise be selling units to fund withdrawals is not obviously worse off. What nobody should do is hold one in a TFSA or RRSP for decades expecting it to beat the plain version, because ten years of the manager’s own data say it will not.
The six banks themselves, and whether to own them directly instead, are assessed in our Canadian bank stocks ranking.
What an ETF is
An exchange-traded fund is a pooled investment that trades on a stock exchange under a ticker. You buy a unit the way you buy a share. That unit represents a proportional claim on everything the fund holds, which for the funds on this page means hundreds or thousands of companies.
The mechanism that makes it work is worth understanding once, because it explains why ETFs stay close to the value of their holdings. Large institutions called designated brokers can create new units by delivering the underlying basket of shares to the fund, or redeem units by taking the basket back. If the market price of an ETF drifts above the value of what it holds, creating units is profitable and the supply increases until the gap closes. If it drifts below, redeeming is profitable. That arbitrage runs all day and is why the average bid-ask spread on ZEB was 0.02% over 2025 and on ZWB 0.05%, as disclosed in their ETF Facts documents.
A unit is not a share of a company. You have no vote in the businesses inside the fund and no direct claim on their assets. If that distinction is new, what a stock is, and what you actually own sets out what a common share gives you, which is precisely the set of rights a fund unit does not.
How ETFs work in Canada
Four mechanics cover almost everything a Canadian buyer needs.
They track something. Every index ETF names an index in its prospectus and reports against it annually. XIC tracks the S&P/TSX Capped Composite. VCN tracks the FTSE Canada All Cap Domestic Index. The fund either replicates the index by holding everything in it in the same proportions, or samples it by holding a representative subset. XIC uses a replicating strategy, which its report states directly.
They are weighted, usually by size. In a market capitalisation weighted fund, the largest companies get the largest allocation, so your money follows the market’s own verdict. Equal weight funds like ZEB give each holding the same slice, which tilts toward the smaller members and requires regular rebalancing. Neither is better in the abstract; they behave differently in concentrated markets, and Canada is a concentrated market.
They distribute what they collect. Dividends received from the underlying holdings, less the fund’s expenses, are paid out. VDY and XDIV pay monthly. Most broad equity funds pay quarterly. Some distributions include return of capital, which is not income and instead reduces your adjusted cost base, a distinction that matters only in a non-registered account. Our guide to adjusted cost base works through what happens when years of return of capital grind a cost base down to zero, and is exactly what our adjusted cost base tracker exists to keep straight.
They charge on assets, not on trades. The management expense ratio is deducted daily from the fund’s net asset value. You never see a bill. This is why a fee comparison feels abstract and why the fee section below puts a dollar figure on it.
ETF vs mutual fund
The difference that matters is cost, and the gap in Canada is unusually wide.
| ETF | Mutual fund | |
|---|---|---|
| How you buy it | On an exchange, at a price that moves all day | From the fund company, at one price struck after the close |
| Annual cost | 0.06% to 0.91% across the funds on this page | Commonly 1.5% to 2.5% on Canadian equity funds |
| Trailing commission | None on the funds here, as their ETF Facts state | Frequently embedded, paying your advisor annually |
| Minimum | One unit | Commonly $500 or more |
| Tax efficiency | Better, because redemptions happen in kind | Weaker, because redemptions force sales inside the fund |
On a $100,000 holding compounding at 7% before costs, the difference between 0.06% and 2.00% a year comes to roughly $207,000 over 25 years. Our mutual fund fee calculator runs that comparison on your own balance and time horizon, which is a more persuasive exercise than reading about it.
ETF vs index fund
These are not opposites, which is the source of most of the confusion. An index fund is any fund that tracks an index rather than picking stocks. It can be structured as a mutual fund or as an ETF. Most of the funds on this page are index funds in the ETF wrapper.
So the real comparison is between an index mutual fund and an index ETF tracking the same thing. The ETF usually wins on cost and always wins on intraday liquidity; the index mutual fund wins on the ability to buy an exact dollar amount and to set up automatic purchases at any brokerage without placing an order. If your broker supports fractional or automatic ETF purchases, that last advantage disappears.
The opposite of an index fund is an actively managed fund, where a manager picks holdings and charges more for the attempt. The measured record on this page is a quiet argument about that: the index funds ranked above gave up between 0.03 and 0.84 percentage points a year against their targets. An active manager has to beat the index by more than its own higher fee before the comparison even starts.
The advantages of ETF investing in Canada
Instant diversification. One purchase of XIC buys every meaningful public company in Canada. The single-company risk that sinks an individual stock portfolio is engineered out.
Cost, and it compounds. The cheapest funds here charge $6 a year per $10,000 invested. The difference against a traditional mutual fund is not a rounding error over a working life, as the chart below shows.
Access to markets you cannot otherwise reach. A retail investor in Canada is not going to assemble a portfolio of Japanese and European mid caps. VIU does it for 0.23%. The same applies to gold miners worldwide, US growth companies, and bonds, where individual issues trade in sizes retail buyers cannot access.
Liquidity you can rely on. ZEB traded on all 251 trading days of 2025, averaging 6.18 million units a day, with a 0.02% average spread. You can get out at a fair price on any business day, which is not true of many other asset classes.
Transparency. Every fund on this page publishes its holdings, its costs and its performance against its index in a document filed with regulators. That is a higher standard of disclosure than almost any other product sold to Canadian retail investors, and it is what made the analysis on this page possible.
Tax efficiency. The in-kind creation and redemption mechanism means an ETF rarely has to sell holdings to meet redemptions, so it distributes fewer capital gains than an equivalent mutual fund. Turnover figures in the filings bear this out: VEQT turned over 3.26% of its portfolio in its latest fiscal year.
The risks of ETF investing
A diversified fund removes one risk and leaves several standing. Anyone selling you ETFs as safe is selling you something.
Market risk, in full. An index fund falls exactly as far as its index. Broad Canadian equity funds lost more than 30% in the 2020 crash before recovering, and XIC’s own report shows calendar-year losses of -8.83% in 2018 and -5.85% in 2022. There is no cushion in an index fund by design. If the difference between a normal decline and a serious one is unclear, correction vs bear market sets out how each has behaved.
Concentration disguised as diversification. A Canadian broad market fund sounds diversified and is not: financials alone were 34.3% of VCN’s net asset value at the end of 2025, with materials at 17.6% and energy at 14.4%. Three sectors, two-thirds of the fund. Owning XIC and VCN and XIU together is one bet held three times, not three bets.
Product proliferation. There are now more listed funds in Canada than listed companies on the TSX worth owning. Many are narrow thematic products launched to catch a trend, with high fees, small asset bases and real closure risk. Every fund ranked on this page manages at least $2.8 billion for a reason.
Cost you cannot see. The management expense ratio is the advertised number. The trading expense ratio sits beside it in the same filed table and is almost never quoted: ZWB’s is 0.19%, which takes its true cost to 0.91%. Reading the second number is the single most useful habit in fund selection.
Currency. Unhedged US and international funds move with the exchange rate as well as the market. This cuts both ways and it is not a reason to pay for hedging, which has its own costs, but it is a reason not to be surprised when a rising index produces a flat Canadian dollar return. Those costs are measurable, and we have measured them: our guide to Canadian Depositary Receipts takes the one hedged product that publishes its daily hedge ledger and finds a cost of 2.11% to 2.85% a year, most of it the gap between Canadian and U.S. short-term interest rates rather than a fee. The same gap is charged inside every CAD-hedged fund on this page.
Tracking failure. The whole premise of this page. A fund can promise an index and deliver meaningfully less, and the difference is invisible unless you open the annual report.
Why the fee matters more than almost anything else
The management expense ratio is deducted from the fund’s return every year, in rising markets and falling ones. It is the one variable you control completely at the moment of purchase, and it is the only input to a long-term outcome that is known in advance.
Take $100,000 compounding at 7% a year before costs for 25 years:
- At XIC’s 0.06%, you finish with roughly $535,000.
- At ZEB’s 0.28%, roughly $506,000.
- At ZWB’s 0.91% all-in, roughly $432,000.
- At a 2.00% mutual fund fee, roughly $328,000.
Same market, same quarter century. The gap between the first and last lines is roughly $207,000 that stays with the fund company instead of with you. Nothing else on this page is worth that much. Our mutual fund fee calculator will run the same comparison on your actual balance, and compounding explained covers why the damage accelerates rather than accumulating in a straight line.
Two refinements to the usual advice, both drawn from the filings above.
Use the all-in number, not the MER. Add the trading expense ratio. For every plain index fund on this page it rounds to zero, so the two numbers are the same. For anything that trades actively, including every covered call product, it does not: 0.72% plus 0.19% is 0.91%.
The fee is a floor on the gap, not the gap itself. XQQ charges 0.39% and gave up 0.64 points a year. XGD charges 0.60% and gave up 0.84. XUS charges 0.09% and gave up nothing at all. Between two funds tracking the same index the cheaper one usually wins, but “usually” is doing real work in that sentence, and XUS against VFV is the counterexample.
The two funds that prove the point
XUS and VFV both track the S&P 500. Both charge a 0.09% management expense ratio. Both have a 0.00% trading expense ratio. On any fee table published anywhere they are identical, and most Canadians own VFV: its net assets were $27.60 billion at the end of 2025 against XUS’s $10.72 billion.
Over ten years, XUS returned its index plus 0.20 points a year. VFV returned its index minus 0.19 (VFV_MRFP_EN, page 4: fund 14.34%, Spliced S&P 500 Index 14.53%). That is a 0.39 percentage point annual spread between two funds with the same fee tracking the same index, and it goes the opposite way from the asset flows. Neither is a bad fund and the difference will not decide anyone’s retirement. It does show that the fee table is not the whole answer, and that the answer is published once a year in a document almost nobody opens.
Four strategies that work with ETFs
Dollar cost averaging. Buy a fixed dollar amount on a schedule regardless of the price. You buy more units when prices are low and fewer when they are high, and more importantly you remove the decision entirely. This is the strategy the rest of this page assumes, and it is the reason the buy-side commission matters more than the fee.
Reinvesting distributions. Most brokerages offer a dividend reinvestment plan that buys additional units with each distribution automatically. Every return figure quoted on this page assumes distributions were reinvested, which is stated in each fund’s report. Taking distributions in cash produces a materially different outcome from the one the performance tables describe.
Core and satellite. A large low-cost core covering the whole market, with small deliberate positions around it. On this page the core is XIC or VCN plus XUS and VXC; the satellites are XQQ and XGD. Sizing is the whole discipline: a satellite large enough to matter when it works is large enough to hurt when it does not.
Buy and hold, and do nothing. Unglamorous and supported by the data in the next section. The costs of activity are certain and the benefits are not.
Does timing your entry help? We checked
The most common technical signal in retail investing is the moving average crossover: the 50-day crossing above the 200-day is read as a buy, crossing below as a sell. It is easy to test, so we tested it on every fund in the ranking, using daily closes and computing the forward return after each crossover.
| Fund | Median 90 days after a golden cross | n | Median 90 days after a death cross | n | Which signal read better |
|---|---|---|---|---|---|
| XUS | +7.7% | 6 | +16.8% | 5 | Death cross |
| XIC | +5.5% | 7 | +8.1% | 6 | Death cross |
| VXC | +7.7% | 5 | +10.8% | 4 | Death cross |
| VIU | +4.9% | 6 | +8.5% | 5 | Death cross |
| VCN | +6.3% | 7 | +7.3% | 6 | Death cross |
| XIU | +6.2% | 7 | +9.1% | 6 | Death cross |
| XDIV | +4.1% | 6 | +7.2% | 5 | Death cross |
| VDY | +2.2% | 7 | +7.8% | 6 | Death cross |
| XQQ | +12.6% | 6 | +10.2% | 5 | Golden cross |
| XGD | -1.4% | 5 | -2.3% | 4 | Golden cross, both negative |
In eight of ten funds, the median return over the ninety days after the bearish signal was larger than the median after the bullish one. In VDY the spread was 5.6 percentage points the wrong way. The two exceptions are XQQ, where both signals were strongly positive, and XGD, where both were negative.
What this does and does not show. It does not show that death crosses are bullish. Five to seven observations per fund is a small sample, the ten years covered were mostly a rising market, and a rising market makes almost any entry point look acceptable ninety days later. What it does show is that the signal carried no information you could have traded on, in either direction, across ten large Canadian-listed funds. If a mechanical rule with a name and a following cannot beat doing nothing, the odds that an individual investor’s discretionary timing will are not good.
The practical conclusion is the boring one. Set the recurring purchase, and let the entry price be whatever it is. For readers who want the mechanics behind price moves rather than a rule, what moves a stock price and how the stock market works are the better use of the same hour.
Which account should hold which ETF
Accounts have jobs, the same way funds do. Putting the right fund in the right one is worth more than the difference between any two funds in the ranking above.
| Account | What belongs there | Why |
|---|---|---|
| TFSA | Your highest-growth holdings: XQQ, XUS, an all-equity fund, XGD if you hold it | Large gains escape tax entirely, and losses cannot be claimed anyway, so the shelter is worth most where the upside is largest |
| RRSP | US equity exposure above all: XUS, VFV, VUN | The Canada-US tax treaty exempts retirement accounts from withholding on US dividends, and no other Canadian account recovers it |
| FHSA | Depends entirely on the buying date, not the fund’s quality | A three-year horizon and a fifteen-year horizon need different holdings; see our FHSA strategy by buying date |
| RESP | Shifts from equity to fixed income as the child approaches eighteen | The withdrawal date is known, which is unusual and should drive the allocation. See RESP investments by your child’s age |
| Non-registered | Canadian dividend funds: XDIV, VDY, VCN | Eligible Canadian dividends earn the dividend tax credit here and lose it inside any registered account, and capital losses become claimable |
The broader case for holding growth rather than income inside a TFSA is worked through in best TFSA stocks in Canada, ranked for growth, and the mirror-image argument for the RRSP, ranked on tax saved rather than yield, is in RRSP stocks in Canada. Current contribution limits for both come from the CRA directly: TFSA contributions and RRSP contribution limits.
The US withholding tax wrinkle, in plain English
US companies withhold tax on dividends paid to foreign investors. For Canadians the rate is 15% under the Canada-United States tax convention, and Article XXI exempts retirement plans from it. Three cases cover nearly every situation a Canadian ETF buyer faces.
1. A US-listed ETF held in an RRSP. No withholding. The treaty exemption applies, and this is the only combination that avoids the tax completely. The cost is that you must convert Canadian dollars to US dollars to buy it, which has its own price. Norbert’s gambit is how to do that conversion for near-zero cost, and it is worth the effort above roughly five figures and not below.
2. A Canadian-listed US equity ETF, in any account. XUS, VFV and ZSP all hold US stocks inside a Canadian wrapper. The 15% is withheld inside the fund before the money reaches you, and neither an RRSP nor a TFSA can recover it. How much is it worth? XUS collected $0.60 per unit of investment income in 2025 against a year-end net asset value of $57.89, an income yield of roughly 1.0% (mrfp-xus, Financial Highlights, page 5). Fifteen per cent of a 1.0% yield is about 0.15 percentage points a year. That is real and it is smaller than most people fear, and it is dwarfed by the difference between a 0.09% fund and a 2% mutual fund.
3. Any US exposure in a TFSA. The 15% applies and is unrecoverable, whether the fund is Canadian-listed or US-listed. The TFSA gives US dividends no protection at all, which is the single most common misunderstanding in Canadian investing.
There is a fourth case worth knowing if you hold international funds. A Canadian fund that holds a US-domiciled fund that holds international shares can be taxed twice on the way through, once in the foreign country and once in the US. Vanguard names this directly in VXC’s report, attributing the deviation from its benchmark to “market price differential, foreign withholding tax, and expense ratio differences between the US- and Canadian-domiciled products” (page 1). It is the reason a global fund’s gap is structurally wider than a domestic fund’s, and it is unavoidable in any Canadian-listed wrapper.
In a non-registered account the withheld amount can be claimed as a foreign tax credit, so nothing is lost there. If you are working out the tax on a sale rather than on distributions, our capital gains tax calculator handles the Canadian side.
ETFs or individual stocks?
An ETF hands you the market’s return minus a small fee, with no single-company disaster risk and nothing to monitor. Individual stocks give you the chance to beat the market, and an equal chance to trail it badly, in exchange for genuine research effort. Most companies underperform their own index over long periods, and index returns are carried by a minority of large winners, which is the quiet argument for owning all of them.
Our own approach, and what this site is organised around, is a low-cost ETF core with individual convictions sized as satellites. That structure lets a single large winner matter without letting a single mistake sink the plan. The convictions we hold are argued out on the individual pages: Canadian stocks is the hub, with blue chips, REITs, crypto-linked equities, growth stocks and penny stocks covering the rest of the risk spectrum.
One honest caveat about that structure. The research on this page took two days of reading filings to rank ten funds on one metric. Doing the equivalent work on thirty individual companies is a different order of commitment, and if you are not going to do it, the core should be the whole portfolio rather than most of it.
What came off this page, and why
This page previously recommended fifteen funds across five categories with every figure sourced to a third-party data website. Three changes are worth explaining rather than making silently.
CDZ is out. The iShares S&P/TSX Canadian Dividend Aristocrats fund charges a 0.66% management expense ratio plus 0.02% trading, and it has charged 0.66% in each of the past five fiscal years. Over ten years it returned 10.21% against its index’s 10.86%, a 0.65 point gap (mrfp-cdz, page 6). The dividend growth screen it runs is a defensible idea. Paying six times XDIV’s fee to run it is not. Over the five years to December 31, 2025, the period both funds have existed for, CDZ compounded at 13.19% against XDIV’s 18.73%, a difference of 5.54 percentage points a year.
XIT is out. The Canadian technology fund charges 0.60% and gave up 0.55 points a year over ten years. More to the point it holds a handful of names, so it is not a diversified holding in any meaningful sense: a reader who wants Canadian technology exposure is better served deciding directly about the individual companies, which we assess in Canadian AI stocks.
The category structure is out. The old page sorted funds into broad market, S&P 500, all-in-one, dividend and specialty, then named two or three “best” funds in each, which meant fifteen recommendations and no ranking. Fifteen recommendations is not a recommendation. The single ranked list forces a judgement, and the funds that did not make it are still discussed where they are relevant: ZSP alongside XUS and VFV, XDV and CDZ alongside XDIV, VUN alongside the US funds.
Three published figures were also wrong and are corrected above: VCN’s management expense ratio is 0.06% for the 2025 fiscal year rather than 0.05%, XDIV’s is 0.11% rather than 0.12% with 0.01% of trading cost on top, and XEQT’s is 0.20% plus 0.01% rather than a flat 0.21%. Each is a single basis point and none changes a conclusion. They are corrected because the filings are the source of record and this page now cites them by page number.
Frequently asked questions about Canadian ETFs
Where can I buy ETFs in Canada?
At any Canadian brokerage. Every fund on this page trades on the Toronto Stock Exchange under a ticker, so you buy it inside a TFSA, RRSP, FHSA, RESP or non-registered account the same way you would buy a share. What differs between brokers is the commission on the buy side, which is the transaction a regular contributor repeats hundreds of times. Questrade charges nothing to buy an ETF and charges on the sell side; Wealthsimple is the simpler alternative for Canadian-listed funds. The full comparison is in the best investing apps in Canada, and the account-opening process is covered step by step in how to open a brokerage account.
What is the best Canadian ETF overall?
For a one-fund portfolio, an all-equity asset allocation fund such as XEQT or VEQT: global diversification, automatic rebalancing, roughly 0.21% all-in, and no decisions after the first one. For a Canadian core inside a self-built portfolio, XIC at 0.06%, which tracked its index to within 0.03 percentage points a year over ten years. There is no single best fund because the funds do different jobs, which is why this page ranks them on how well each keeps its own promise rather than against each other’s returns.
XUS or VFV for the S&P 500?
On the published record, XUS. Both charge a 0.09% management expense ratio with no trading costs, and both track the S&P 500. Over the ten years to December 31, 2025, XUS returned its index plus 0.20 percentage points a year while VFV returned its index minus 0.19, a spread of 0.39 points between two funds that look identical on any fee table. VFV is the larger and more popular fund by a wide margin. Neither is a poor choice and the difference is small in absolute terms; it is simply the opposite of what the asset flows suggest.
Is XEQT better than VGRO?
They are different risk levels rather than better or worse. XEQT is 100% stocks; VGRO holds about 20% bonds. XEQT will return more over long periods and fall harder in a bear market, which is what the bond sleeve is there to dampen. Choose on how large a drawdown you can hold through without selling, not on which returned more last year. Their costs are within two basis points of each other: 0.20% plus 0.01% trading for XEQT, 0.22% for VGRO.
Are covered call ETFs worth it?
For total return, the evidence in the covered call section says no. BMO runs two funds on the same six Canadian banks, one of which holds the other and writes calls on it. Over ten years to December 31, 2025, the plain fund turned $1,000 into $4,046 and the covered call version turned it into $2,997. The downside protection that justifies the structure came to 0.3 percentage points in the worst quarter of the decade, and in 2022, the worse of the two losing years, the covered call fund fell further. They remain defensible for someone who needs predictable monthly cash and accepts a lower total return for it.
Are ETFs safe for beginners?
Broad-market ETFs remove the two biggest beginner risks, which are picking the wrong company and paying a high fee. They do not remove market risk. A diversified Canadian equity fund fell more than 30% in the 2020 crash before recovering, and XIC posted calendar-year losses in 2018 and 2022. The correct summary is that they are safe from single-company disaster and fully exposed to market cycles.
What is a good MER for a Canadian ETF?
Under 0.10% for a broad market index fund, under 0.25% for an all-in-one portfolio or an international fund, and treat anything above 0.50% as needing a specific justification. Add the trading expense ratio before judging: it rounds to zero for plain index funds but reached 0.19% on the covered call fund examined here, taking its true cost to 0.91%. Both numbers sit in the same filed table.
Should I buy VFV in my TFSA or RRSP?
Both work and the RRSP is slightly more efficient. VFV loses 15% of its US dividends to withholding tax in any account, because the treaty exemption covers only US-listed securities held directly in a retirement plan. At an income yield near 1%, that is a drag of roughly 0.15 percentage points a year. It is real, it is unavoidable in a Canadian-listed wrapper, and it is not a reason to complicate a portfolio that is otherwise working.
Do Canadian ETFs pay dividends?
Most equity ETFs distribute the dividends their holdings pay, less the fund’s expenses. VDY and XDIV pay monthly, as does ZEB. Most broad equity funds pay quarterly. Some distributions include return of capital, which is not income: it reduces your adjusted cost base and increases the eventual capital gain, which matters in a non-registered account and is what our adjusted cost base tracker is for. Every return figure on this page assumes distributions were reinvested.
How many ETFs should I own?
One, if it is an all-in-one fund. Three, if you are building it yourself: Canadian, US and international, which on this page would be XIC, XUS and VIU, or XIC and VXC in two. Owning XIC and VCN and XIU together is one Canadian bet held three times, not three bets, because they hold substantially the same companies. Check what a fund holds before adding another.
Where to start
If you take one thing from this page, make it the habit rather than the ticker. The gap between the best and worst fund ranked above is roughly one percentage point a year. The gap between investing monthly for thirty years and waiting for the right moment is the whole outcome.
Open the account, pick a core fund, set the automatic purchase, and let the timing look after itself. The buy-side commission is the one cost that scales with the number of times you contribute, which makes it the one worth choosing a broker on.
Open a Questrade account and buy your first ETF · Open a Wealthsimple account
Sources
Every fund figure on this page comes from a document the fund filed, not from a data aggregator. The primary documents are linked below and each citation in the text names the document and the page.
- iShares Canada annual Management Reports of Fund Performance for the year ended December 31, 2025: XIC, XUS, and the corresponding documents for XIU, XDIV, XQQ, XGD, XEQT, XGRO, XDV and CDZ, published by BlackRock Asset Management Canada Limited.
- Vanguard Canada annual Management Reports of Fund Performance: VCN, and the corresponding documents for VFV, VXC, VIU, VDY, VUN, VEQT, VGRO and VBAL.
- BMO ETF Facts dated January 23, 2026: ZWB, CAD Units and ZEB.
- Contribution limits and account rules from the Canada Revenue Agency, and the withholding treatment from the Canada-United States tax convention published by the Department of Finance, both linked in the sections that use them.
- Moving average crossover records computed from daily closing prices on September 13, 2026. The distribution, the sample size and the counter-examples are published alongside every median.
Fund data reflects each fund’s most recent annual reporting period, which is the year ended December 31, 2025 for all funds except the Vanguard asset allocation portfolios, whose fiscal year ended March 31, 2026, and the BMO funds, whose ETF Facts are dated January 23, 2026. Expense ratios, net assets and yields change; confirm against the fund provider before buying.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Fund data from each fund’s most recent annual Management Report of Fund Performance or ETF Facts, as cited in the text.