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How to Buy S&P 500 in Canada 2026 — VFV vs ZSP vs XUS

The S&P 500 is the world's most-watched stock market index — 500 of the largest US companies, covering roughly 50% of global market capitalization. For Canadian investors, buying the S&P 500 is straightforward: you don't need a US brokerage account. Several excellent Canadian-listed ETFs let you buy S&P 500 exposure in your TFSA or RRSP, in Canadian dollars, with no currency conversion required at the point of purchase.

Best S&P 500 ETFs for Canadians

VFV vs ZSP: Which S&P 500 ETF Is Better for Canadians?

VFV and ZSP are almost identical in every meaningful way:

• Both track the S&P 500 Index
• Both charge 0.09% MER
• Both trade on the TSX in Canadian dollars
• Both are unhedged (your returns include CAD/USD currency movement)
• Both have $10B+ in assets under management

The main differences: ZSP distributes monthly (better for income investors), while VFV distributes quarterly. VFV holds Vanguard's US-listed S&P 500 fund as its underlying asset; ZSP holds S&P 500 stocks directly. In practice, neither distinction matters for long-term buy-and-hold investors. Choose VFV if you prefer Vanguard's brand; ZSP if you prefer monthly distributions or already hold BMO ETFs.

CAD Hedged vs Unhedged S&P 500 ETFs

Currency hedging protects you from CAD/USD fluctuations — if the US dollar falls relative to the Canadian dollar, a hedged ETF won't lose value from that FX move. But hedging has a cost:

• Currency hedging contracts cost approximately 0.3–0.8% annually (implicit drag, not in MER)
• Over the past 30 years, hedged and unhedged returns have been similar, but hedging adds volatility drag
• The Canadian dollar tends to weaken when oil prices fall and Canadian stocks underperform — exactly when you want USD exposure as a hedge

For long-term investors (10+ year horizon), unhedged (VFV, ZSP) is the dominant recommendation. The academic evidence supports leaving currencies unhedged for equity holdings.

Should You Buy US-Listed ETFs Instead?

If you have $50,000+ in US equities and use Questrade or a brokerage that allows USD accounts, buying VOO directly (MER 0.03%) instead of VFV (MER 0.09%) saves 0.06% annually — approximately $60/year per $100,000. To do this efficiently, Canadian investors use Norbert's Gambit: buy shares of DLR.TO (a USD/CAD ETF), journal them to DLR.U.TO, and sell in USD — converting dollars at the mid-market rate instead of paying the brokerage's 1.5–2% FX spread.

For most investors with under $200,000 invested in US equities, the complexity of Norbert's Gambit and USD account management isn't worth the fee saving. Stick with VFV or ZSP and spend your time on higher-value financial decisions.

S&P 500 ETF in TFSA vs RRSP: Account Placement

This is one of the most important decisions for Canadian S&P 500 investors:

• In a TFSA: Dividends from S&P 500 companies are subject to 15% US withholding tax (Canada-US treaty rate for managed accounts). On a 1.3% S&P 500 yield, this costs about 0.20% annually — a meaningful drag over decades.
• In an RRSP: Under the Canada-US tax treaty, US dividends in an RRSP are exempt from the 15% withholding tax. This makes the RRSP the optimal account for S&P 500 ETFs.
• In a non-registered account: The 15% withholding is creditable against your Canadian tax bill via the Foreign Tax Credit — less efficient than RRSP but better than TFSA for US equities.

S&P 500 Historical Returns for Canadian Investors

In Canadian dollar terms (including dividends and currency effects):

• 10-year (2016–2025): approximately 16.2% annualized — exceptional due to USD strength
• 20-year (2006–2025): approximately 11.4% annualized
• 30-year (1996–2025): approximately 10.8% annualized

The 10-year figure is unusually high due to both strong S&P 500 returns (technology bull market) and a weakening Canadian dollar. Investors should plan for more moderate returns over the next decade.

S&P 500 vs TSX: Which Has Performed Better for Canadians?

The S&P 500 has significantly outperformed the TSX over the past 10–20 years, primarily due to the dominance of US technology companies (Apple, Microsoft, Nvidia, Amazon, Alphabet). The TSX's heavy weighting in financials, energy, and materials limited its growth potential in a low-oil-price, high-tech environment.

That said, past performance doesn't guarantee future results — many strategists argue that the valuation premium of US stocks (S&P 500 P/E ~22x vs TSX ~14x) will compress over time, favouring value-oriented markets like Canada. The prudent approach: own both through a global ETF like XEQT.

S&P 500 Growth Calculator

How to Buy VFV or ZSP in Canada

1. Open a TFSA or RRSP at Wealthsimple Trade (free ETF trades) or Questrade (free ETF purchases)
2. Fund the account via e-Transfer or EFT
3. Search "VFV" or "ZSP" in the trading app
4. Place a market order during TSX market hours (9:30 AM – 4:00 PM ET)
5. Set up automatic monthly contributions

Related Guides on bremo.io

• Best ETFs in Canada
• TSX Composite Index Guide
• Index Funds for Beginners
• TFSA Investing Strategy
• RRSP Investing Strategy
• Foreign Withholding Tax Guide

Last updated: March 2026. For informational purposes only. Not financial advice.