I’ve been writing about the best ETFs in Canada since 2006, including my favourite Canadian Dividend ETFs, and more recently the best Canadian all-on-one ETFs (aka: Portfolio ETFs).

That said, several readers have asked for us to create an Ultimate 2021 Best ETFs in Canada Guide that has all of the information in one place. Because different investors will have wildly different investing needs, it’s impossible to state definitely what the Best ETF for your situation will be. That said, what we can do is compare the top Canadian ETFs in multiple categories – across three key metrics:

1) Diversification – how many equities do you get exposure to?

2) Cost – namely their MER fees

3) Tax efficiency (which doesn’t really matter for RRSP and TFSAs, but can make a big difference in a non-registered portfolio).

Bottom Line:

iShares Core Equity ETF Portfolio (XEQT) – The easiest possible ETF solution.

Best In Class ETFs:

  • Horizons Horizons S&P/TSX 60 ETF (HXT) – Best TSX ETF
  • BMO Aggregate Bond Index ETF (ZAG)- Best Canada bond ETF
  • Horizons S&P 500 Index ETF (HXS)- Best U.S stocks ETF for Canadians
  • Vanguard FTSE Global All Cap ex Canada Index ETF (VXC) – Best international ETF for Canadians
  • Vanguard All-Equity ETF Portfolio (VEQT) – Best all-in-one ETF
  • FTSE Canadian High Dividend Yield Index ETF (VDY) – Best dividend ETF
  • Vanguard FTSE Canada Capped REIT Index ETF (VRE) – Best Canadian REIT ETF
  • iShares Canadian Growth ETF (XCG) – Best Canada growth ETF

Scroll down below the the comparison chart for full descriptions for each ETF, but without further ado, here’s the MDJ editorial team’s Best in Canada ETF List.

Our Exclusive Best ETFs in Canada List

Type

Ticker

ETF Name

Composition

MER

# of Holdings

TSX ETF

HXT

Horizons S&P/TSX 60 ETF

Canada Stocks

0.04%

60

TSX ETF

VCN

Vanguard FTSE Canada All Cap Index ETF

Canada Stocks

0.06%

180

TSX ETF

XIC
iShares Core S&P/TSX Capped Composite Index ETF

Canada Stocks

0.06%

219

TSX ETF

ZCN

BMO S&P TSX Capped Composite Index ETF

Canada Stocks

0.06%

222

Canada Bond ETF

ZAG
BMO Aggregate Bond Index ETF

Canada Government and Corporate Bonds

0.08%

1,330

Canada Bond ETF

VAB
Vanguard Canadian Aggregate Bond Index ETF

Canada Government and Corporate Bonds

0.09%

1,030

Canada Bond ETF

ZDB
BMO Discount Bond Index ETF

Tax Efficient Canada Bond Exposure

0.10%

195

Canada Bond ETF

VSB

Vanguard Canadian Short-term Bond Index ETF

Short Term Canada Bonds 

0.11%

420

American ETF (CAD) to Buy in Canada

HXS

Horizons S&P 500 Index ETF

USA Stocks

0.10%

500

American ETF (CAD) to Buy in Canada

XUU

iShares Core S&P U.S. Total Market Index ETF

USA Stocks

0.07%

3590

American ETF (CAD) to Buy in Canada

VFV

Vanguard S&P 500 Index ETF

USA Stocks

0.09%

509

American ETF (CAD) to Buy in Canada

ZSP

BMO S&P 500 Index ETF (CAD)

USA Stocks

0.09%

507

International ETFs to Buy in Canada

VXC

Vanguard FTSE Global All Cap ex Canada Index ETF

The World’s Stocks - Minus Canada

0.26%

10,270

International ETFs to Buy in Canada

XAW

iShares Core MSCI All Country World ex Canada Index ETF

The World’s Stocks - Minus Canada

0.22%

8,888

International ETFs to Buy in Canada

VEE

Vanguard FTSE Emerging Markets All Cap Index ETF

Emerging Markets

0.24%

5,048

International ETFs to Buy in Canada

VIU

Vanguard FTSE Developed All Cap ex North America Index ETF

Developed Markets - Minus Canada and USA

0.22%

3,739

All in One ETF

XEQT

iShares Core Equity ETF Portfolio

All Global Stocks

0.20%

4 ETFs (thousands of underlying stocks)

All in One ETF

VEQT

Vanguard All-Equity ETF Portfolio

All Global Stocks

0.25%

7 ETFs (thousands of underlying stocks)

All in One ETF

ZGRO

BMO Growth ETF

Global Stocks and Bonds (80% stocks, 20% bonds)

0.20%

7 ETFs (thousands of underlying stocks)

All in One ETF

XGRO

iShares Core Growth ETF Portfolio

Global Stocks and Bonds (80% stocks, 20% bonds)

0.20%

8 ETFs (thousands of underlying stocks and bonds)

All in One ETF

VGRO

Vanguard Growth ETF Portfolio

Global Stocks and Bonds (80% stocks, 20% bonds)

0.25%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

VBAL

Vanguard Balanced ETF Portfolio

Global Stocks and Bonds (60% stocks, 40% bonds)

0.25%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

XBAL

iShares Core Income Balanced ETF Portfolio

Global Stocks and Bonds (60% stocks, 40% bonds)

0.20%

8 ETFs (thousands of underlying stocks and bonds)

All in One ETF

ZBAL

BMO Balanced ETF

Global Stocks and Bonds (60% stocks, 40% bonds)

0.20%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

VCNS

Vanguard Conservative ETF Portfolio

Global Stocks and Bonds (40% stocks, 60% bonds)

0.20%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

XCNS

iShares Core Conservative Balanced ETF Portfolio

Global Stocks and Bonds (40% stocks, 60% bonds)

0.20%

8 ETFs (thousands of underlying stocks and bonds)

All in One ETF

ZCON

BMO Conservative ETF

Global Stocks and Bonds (40% stocks, 60% bonds)

0.20%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

VCIP

Vanguard Conservative Income ETF Portfolio

Global Stocks and Bonds (20% stocks, 80% bonds)

0.25%

7 ETFs (thousands of underlying stocks and bonds)

All in One ETF

XINC

iShares Core Income Balanced ETF Portfolio

Global Stocks and Bonds (20% stocks, 80% bonds)

0.20%

8 ETFs (thousands of underlying stocks and bonds)

Canada Growth Stock ETF

XCG

iShares Canadian Growth ETF

Canada High Growth Stocks

0.55%

47

Canada Dividend ETF

CDZ

S&P/TSX Canadian Dividend Aristocrats Index Fund

Canadian Dividend Stocks

0.66%

86

Canada Dividend ETF

XDV

iShares Canadian Select Dividend Index ETF

Canadian Dividend Stocks

0.55%

29

Canada Dividend ETF

VDY

FTSE Canadian High Dividend Yield Index ETF

Canadian Dividend Stocks

0.22%

60

Canada Dividend ETF

XEI

IShares Core S&P/TSX Composite High Dividend Index ETF

Canadian Dividend Stocks

0.22%

60

Canada Dividend ETF

ZDV

BMO Canadian Dividend ETF

Canadian Dividend Stocks

0.38%

51

Canada Dividend ETF

XDIV

iShares Core MSCI Canadian Quality Dividend Index ETF

Canadian Dividend Stocks

0.11%

21

Canada REIT ETFs

VRE

Vanguard FTSE Canada Capped REIT Index ETF

Canada REIT

0.38%

15

Canada REIT ETFs

ZRE

BMO Equal Weight REITs Index ETF

Canada REIT

0.61%

22

Canada REIT ETFs

XRE

IShares S&P TSX Capped REIT INDEX ETF

Canada REIT

0.61%

19

Canada REIT ETFs

RIT

CI First Asset Canadian REIT ETF

Canada REIT

0.97%

36

Specialty Canadian ETF

VRIF

Vanguard Retirement Income Fund

Worldwide Income ETF

0.32%

13,337 stocks, 18,330 Bonds

Specialty Canadian ETF

BTCC.B

Purpose Bitcoin ETF

Bitcoin ETF

1.00%

N/A

Specialty Canadian ETF

QQC-F

Nasdaq 100 ETF

100 Largest Tech Companies in USA

0.25%

100

Specialty Canadian ETF

AVDV

Avantis International Small Cap Value ETF

Small Cap Value from Non-USA Countries

0.36%

1,181

Specialty Canadian ETF

ZESG

BMO Balanced ESG ETF

Socially Responsible Investing

0.20%

6 ETFs (thousands of underlying stocks and bonds)

This is the short list of best Canadian ETFs taken from the 37 ETF providers in Canada, including BMO Asset Management. Vanguard Investments Canada Inc., BlackRock Canada, and Horizons ETFs Management (Canada) Inc.

If you want the most simple solution, just consider your risk tolerance, and buy one of our top rated all-in-one ETFs.  The more risk you can handle, the more stock exposure you’ll want.  ZBAL is a solid option if you’re feeling overwhelmed.

If you want the lowest cost indexed portfolio – along with the ability to do your own portfolio math and overweight Canadian stocks – go with the combination of HXT, VXC, and ZAG.

If the goal for your portfolio is to generate income (as opposed to maximizing growth opportunities while cutting costs) then looking at VRIF, VRE, and VDY are great places to start.

See below for a more detailed explanation on our best in class.

How To Buy ETFs in Canada

Check out our article on how to buy stocks in Canada and our Canadian online brokers comparison for a detailed look on how to buy ETFs in Canada.  

The basic idea is that if stocks or bonds are individual bananas, then you first need to pick a store that you like to go to, and then decide which bunch of bananas you want.

1) Pick a Canadian online broker and sign up. Read our Qtrade review to see why we think it’s the best.

2) While you’re in the sign up stage, do yourself a favour and sign up for a TFSA, and RRSP, and a non-registered account.  You might never use one or two of them, but it’s easier to just do it all at once while you’re doing the initial setup.

3) Dedicate 30 minutes to understanding how “shopping at this store” works.  Each broker will have a little tutorial that shows you how to type in your ETF ticker symbol, and then how many units of the ETF you want to buy.  Our how to buy stocks guide also illustrates this.

4) Decide which “bunch of bananas” looks best, by reading our best ETFs in Canada guide above.

5) Once you have chosen your bunch of bananas, you pay for them by deciding how much money you want to invest at that time, and then dividing that number by the cost of the ETF.

For example, let’s say I have $1,000 to invest this month, and I want to use VEQT.  I would enter the initials VEQT into my stock purchase screen, and see that one unit of VEQT costs $37.07.  So I would divide $1,000 by $37.07 to get 26.97.

While I have close to enough money to purchase 27 units of VEQT, I can’t quite make it, so instead I enter “26” into my purchase screen, then click “market order” (you can also use limit order, it just adds a little complexity), and you will see a confirmation message pop up that says something like:

“Would you like to purchase 26 units of VEQT for $963.82?”  

Then you hit “Buy” – and boom – you just bought a batch of 10,000+ stock bananas from all over the world!

Best Canadian Stock Market ETF

It is amazing how much easier and cheaper it is to invest in a Canadian stock market ETF today than it was when I started investing roughly 15 years ago.

Competition has worked its magic and fees have come down substantially across the asset class. You can’t go wrong with any of our top 4 options: HXT, VCN, XIC, or ZCN.

Best In Class: Horizons Horizons S&P/TSX 60 ETF (HXT)

  • Lowest Fee (after rebate) of 0.04%
  • Top 60 Stocks in Canada
  • Swap-based ETF means low tracking error
  • Perfect for tax-efficient investing

I personally love HXT not only for its slight cost advantage, but also for its tax advantages in non-registered accounts.  If you’re investing in a non-registered account or a corporate account, turning those Canadian dividends into tax-deferred capital gains can make a big difference.

Honourable Mentions:

  1. Vanguard FTSE Canada All Cap Index ETF (VCN)
  2. iShares Core S&P/TSX Capped Composite Index ETF (XIC)
  3. BMO S&P TSX Capped Composite Index ETF (ZCN)
  • All have identical low MERs of 0.06%
  • All give access to some smaller-cap Canadian stocks
  • Excellent value – especially in an RRSP or TFSA

Best Canada Bond ETFs

Sure, there isn’t a lot of love out there for bonds these days. That said, they can still perform a valuable stabilizing function for your portfolio. When it comes to Bond ETFs, we’re all about getting low fee access to super-stable government and blue-chip corporate bonds.

Best In Class: BMO Aggregate Bond Index ETF (ZAG)

  • Ultra Low MER 0.08%
  • Access to broadest diversification of bonds
  • Safe and stable – perfect for rebalancing

Honourable Mentions:

  1. Vanguard Canadian Aggregate Bond Index ETF (VAB)
  2. BMO Discount Bond Index ETF (ZDB)
  3. Vanguard Canadian Short-term Bond Index ETF (VSB)
  • VAB almost identical to ZAG
  • ZDB has some interesting tax efficiency features for non-registered accounts
  • VSB uses only short-term bonds to protect against rising inflation rates

Best USA Stocks ETF for Canadians

If this is the type of ETF you are most interested in, i suggest you also read our more detailed breakdown and comparison in this best Canadian dollar ETFs for U.S equity article.

Best in Class: Horizons S&P 500 Index ETF (HXS)

  • Slightly higher MER than competitors
  • Valuable tax-efficient structure can save investors $$$ on dividend taxation
  • Almost zero tracking error due to swap-based structure

Honourable Mentions:

  1. iShares Core S&P U.S. Total Market Index ETF (XUU)
  2. Vanguard S&P 500 Index ETF (VFV)
  3. BMO S&P 500 Index ETF (ZSP)
  • XUU has the lowest MER fee at 0.07% 
  • XUU has the broadest exposure to smaller American stocks
  • VFV and ZSP are nearly identical in terms of holdings and fees

Best International ETFs for Canadians

Best In Class: Vanguard FTSE Global All Cap ex Canada Index ETF (VXC)

  • Super easy access to the entire world of stocks outside of Canada
  • Widest possible exposure (wider than XAW)
  • Perfect for the “Two ETF Portfolio”

Honourable Mentions:

  1. iShares Core MSCI All Country World ex Canada Index ETF (XAW)
  2. Vanguard FTSE Emerging Markets All Cap Index ETF (VEE)
  3. Vanguard FTSE Developed All Cap ex North America Index ETF (VIU)
  • XAW is a close second to VXC offering a slightly lower MER for less overall diversification
  • VEE is perfect for targeted investors who want instant access to emerging markets
  • VIU is perfect for targeted investors who want instant access to developed markets outside of the USA and Canada

Best Canadian All-in-One Portfolio ETFs

We’ve got a detailed breakdown on Canadian all-in-one ETFs that we have updated every couple of years since the very first portfolio ETF by Vanguard came out a few years ago.

Long story short, these instant diversifiers have been a game changer for the entire industry.  With shrinking fees and the value of simplicity on their side, it is an excellent solution for the “set it and forget it” investor.

Best Canadian Dividend ETFs

Choosing the Best Dividend ETF in Canada has been our jam at MDJ since they first came to Canada.  While many readers now prefer to pick their own specific Canadian Dividend Stocks, there is no denying the straightforward, simple value of instantly diversifying your Canadian dividend income with one ETF purchase.

As more of the original readers who have stuck with MDJ for over a decade entered into retirement (at a wide variety of ages) the focus on generating income as opposed to risk-embracing growth, has pulled to the forefront.  Fortunately, the Canadian market offers some of the most consistent dividend payers around!

Best Canadian REIT ETFs

Similar to Canadian Dividend ETFs, Real Estate Investment Trusts (REITs) hold a special place in the income-investors heart. While the asset class has had a bit of a rough go of it lately, in an income-starved world they offer a simple way to invest in real estate.  (Something many Canadians are after in their portfolios.)

You can also read my guide to investing in Canadian REITs and our comparison between holding a Canadian REIT ETFs and an individual REIT.

Best In Class: Vanguard FTSE Canada Capped REIT Index ETF (VRE)

  • By far the lowest MER 0.38%
  • Solid exposure to a wide variety of real estate sectors
  • Similarly, excellent geographical diversity

Honourable Mentions:

  1. BMO Equal Weight REITs Index ETF (ZRE)
  2. IShares S&P TSX Capped REIT INDEX ETF (XRE)
  • Slightly more holdings than VRE
  • Significantly higher cost – important for an income-specific product

Best Canada Growth ETF: iShares Canadian Growth ETF (XCG)

While many MDJ investors gravitate toward mature companies with a steady record of dividend increases, there are always investors out there with an appetite for risk, and who want growth at all potential costs.  For them. XCG rules the roost.

  • Relatively high MER at 0.55% that I hope to see decrease with more competition
  • Quick access to Canada’s fastest growing tech companies
  • Has performed quite well over the last couple of years

Best Specialty Canadian ETFs

This was our catch-all category for the best Canadian ETFs that didn’t really fit neatly into any category.  Each of these does something completely different:

Best Retirement Income ETF: Vanguard Retirement Income Fund (VRIF)

  • Invested in a wide variety of investment grade bonds from around the world, as well as a sprinkling of stock indexes
  • Great option for a retiree who doesn’t want the risk of a pure-stock portfolio
  • Stated goal is a consistent 4% return each year (after fees)
  • MER of 0.32%

Best Bitcoin ETF: Purpose Bitcoin ETF (BTCC.B) 

  • Canada’s most popular and liquid Bitcoin ETF
  • Easy exposure
  • Bitcoin isn’t really my thing personally… but if you want an easy way to get in on it…
  • MER of 1.00% is indicative of the fees in this space

Best Technology ETF: Invesco Nasdaq 100 ETF (QQC-F)

  • If you think the tech sector is going to experience explosive growth going forward, the easiest way to invest using Canadian Dollars is QQQ
  • Tracks the Nasdaq-100 index (100 biggest tech companies in the USA)
  • A very reasonable MER of 0.25%

Best Value ETF: Avantis International Small Cap Value ETF (AVDV)

  • Full credit to Ben Felix for this recommendation and for his push to explain factor investing to Canadians
  • Main idea here is that over the long-term small-cap value stocks tend to outperform the larger market-cap indexes (such as the S&P 500 or the TSX 60) 
  • 0.36% MER

Best ESG ETF: BMO Balanced ESG ETF (ZESG)

  • Created for investors looking to invest alongside their socially responsible values
  • 60% Equity, 40% Fixed Income
  • 50% Canada, 35% USA, 15% Other
  • A  competitive 0.20% MER

Best Canadian ETFs for RRSP and TFSA

For the vast majority of Canadians with investments in the stock market, their entire portfolio consists of their RRSP and TFSA.

Hey, if you can consistently max out those registered accounts each year, you’re doing pretty darn well!

When it comes to choosing the exact best ETFs for your RRSP and TFSA it boils down to the following questions:

1) How much do you value simplicity?

2) Are you comfortable doing a little math a few times a year in order to rebalance your portfolio and cut MER fees to the absolute bone?

3) Do you want a specific tilt toward Canadian stocks, income-producing investments, or another niche?

Depending on your answers to these questions, the best ETF in Canada will vary from person to person.

When making a recommendation to a broad audience I absolutely love VEQT for young investors, and then the rest of the all-in-one ETF family.  There is just too much value to keeping it simple, and getting people to take action by logging into their online broker account one a month and buying the same ETF over and over again.

If we want to re-balance our portfolios in the old-school way, we can shave a few MER points off by using HXT, ZAG, and XUU for our Canadian equity, Canadian bond, and American equity portions respectively.

Finally, if you’re just looking for a very safe and stable pure income play, I really think that VRIF is worth a close look.

Top Canadian ETFs: FAQ

ETFs vs Mutual Funds – Why MER Can Make a Huge Difference

When looking at ETFs vs mutual funds in Canada the real key to understand is the amount of money that you will be paying each year in fees. 

There are some other benefits, but by far the most important factor when comparing ETFs and mutual funds in Canada is the Management Expense Ratio – or MER fee. This fee is expressed as a percentage of your total assets, and it gets charged to you each year whether your investments make money or lose money!

Over time, even a very small difference in MER can make a massive difference in just how quickly your investments compound.  We’re talking hundreds of thousands of dollars for the average Canadian!

The average equity mutual fund in Canada has somewhere around 10x-40x the annual fees that Canadian ETFs have.  Once you understand that key fact, it’s easy to see why new investors now vastly prefer ETFs to the traditional mutual funds that our parents and grandparents invested in years ago!

Here’s a few other minor considerations when it comes to deciding between Canadian ETFs and mutual funds:

  • Buying and selling an ETF is pretty simple – just open an online broker account and follow our how to buy ETFs steps above.  Mutual funds usually involve calling customer services, filling out paperwork with an advisor, etc.
  • In general, most ETFs are substantially more tax efficient than their closest comparable mutual funds.
  • ETFs allow you a greater degree of control in your overall investment portfolio, as you are free to buy and sell, or rebalance in whatever fashion you wish.

Which Canadian ETF Should You Buy?

There is no perfect ETF and there is no way to know which of the ETFs on our list will outperform the others in the year to come.

All we can do instead is focus on the areas that we CAN control:

  • Keeping fees low.
  • Diversifying our investment portfolios.
  • Avoiding unnecessary taxation.

Our list of the top Canadian ETFs gives multiple portfolio options that prioritize all three of these objectives.

We’ll keep updating the Ultimate Guide to the best ETFs in Canada for 2021 each month, and as the top ETF companies keep jockeying for position, we’ll make sure to add in anything new for 2022 as well.

Let us know in the comments below if you have a particular favourite ETF that we overlooked for some reason! With so many new options popping up each year now that the market is maturing, we’re always looking to refine our list!

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FT

FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.
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