Updated March 2025 · 10 min read
Best ETFs for Canadians 2025: Complete Guide
What is an ETF? An Exchange-Traded Fund trades like a stock on a stock exchange but holds a basket of securities — stocks, bonds, or other assets. ETFs combine the diversification of mutual funds with the low cost and tradability of stocks.
ETFs have transformed how Canadians invest. With management expense ratios (MERs) as low as 0.05%, they dramatically outpace the 2%+ fees charged by most Canadian mutual funds. This guide covers the best ETFs across every category for Canadian investors in 2025.
ETF Basics: What Every Canadian Investor Needs to Know
- MER (Management Expense Ratio): Annual fee charged by the fund, expressed as a percentage of assets. Lower is better.
- Bid-Ask Spread: The difference between buy and sell price. Larger, more liquid ETFs have tighter spreads.
- Distribution yield: Annual income paid out (dividends, interest), expressed as a % of price.
- Assets Under Management (AUM): Larger AUM generally means better liquidity and lower spreads.
- CAD-hedged vs unhedged: Hedged ETFs remove currency risk; unhedged lets you benefit from USD strength.
Best All-in-One ETFs (Simplest Option)
| ETF | Provider | Equity/Bond | MER | Best For |
|---|
| XEQT | iShares | 100/0 | 0.20% | Long-term growth, 20+ yr horizon |
| VEQT | Vanguard | 100/0 | 0.24% | Long-term growth, 20+ yr horizon |
| XGRO | iShares | 80/20 | 0.20% | Growth with mild cushion |
| VGRO | Vanguard | 80/20 | 0.24% | Growth with mild cushion |
| XBAL | iShares | 60/40 | 0.20% | Balanced, 5–15 yr horizon |
| VBAL | Vanguard | 60/40 | 0.24% | Balanced, 5–15 yr horizon |
Best Canadian Equity ETFs
| ETF | Index | MER | Yield |
|---|
| VCN | FTSE Canada All Cap | 0.05% | ~3.0% |
| XIC | S&P/TSX Capped Composite | 0.06% | ~3.0% |
| ZCN | S&P/TSX Capped Composite | 0.06% | ~3.0% |
| XIU | S&P/TSX 60 | 0.18% | ~2.8% |
Best U.S. Equity ETFs for Canadians
| ETF | Index | MER | Notes |
|---|
| VFV | S&P 500 | 0.09% | Best for RRSP (no withholding tax) |
| XUS | S&P 500 | 0.10% | iShares equivalent to VFV |
| ZSP | S&P 500 | 0.09% | BMO option |
| VUN | U.S. Total Market | 0.16% | Broader than S&P 500 |
| QQC | NASDAQ-100 | 0.20% | Tech-heavy growth |
Best International ETFs
| ETF | Coverage | MER |
|---|
| XEF | Developed markets ex-NA | 0.22% |
| VIU | Developed markets ex-NA | 0.23% |
| XEC | Emerging markets | 0.27% |
| VEE | Emerging markets | 0.24% |
Best Bond ETFs
| ETF | Type | MER | Yield |
|---|
| ZAG | Canadian aggregate bonds | 0.09% | ~3.5% |
| VAB | Canadian aggregate bonds | 0.09% | ~3.5% |
| XBB | Canadian aggregate bonds | 0.10% | ~3.5% |
| ZST | Short-term bonds | 0.15% | ~4.0% |
| VSB | Short-term bonds | 0.11% | ~4.0% |
Best Dividend ETFs for Canadians
| ETF | Focus | MER | Yield |
|---|
| VDY | Canadian high-dividend stocks | 0.21% | ~4.5% |
| XDV | Canadian dividend index | 0.22% | ~4.3% |
| ZDV | Canadian dividend index | 0.39% | ~4.4% |
| CDZ | Canadian dividend aristocrats | 0.66% | ~3.8% |
How to Buy ETFs in Canada
You need a brokerage account to buy ETFs. Best options for Canadians:
- Wealthsimple Trade: Commission-free, beginner-friendly, TFSA/RRSP available
- Questrade: Free ETF purchases, $4.95–$9.95 for sells, more advanced tools
- National Bank Direct Brokerage: Commission-free ETF trading
ETF vs Mutual Fund Fees: A $100,000 portfolio paying 2% in mutual fund fees costs $2,000/year. The same portfolio in an ETF with 0.20% MER costs $200/year. Over 25 years at 7% growth, the fee difference compounds to over $200,000 in lost wealth.
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