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Canadian ETFs are an excellent way to passively gain exposure to the best Canadian stocks. With an index ETF, the management fees are low, allowing you to maximize your returns. If you are searching for the best Canadian ETFs, this article will list some of the most popular ones.
Disclaimer:
Equity investments are subject to market risks and may not be suitable for all investors. If you have any doubts as to the merits of an investment, you should seek advice from an independent financial advisor. So please invest at your own risk.
Table of Contents
What Is an ETF?
An ETF (exchange-traded fund) is similar to a conventional mutual fund since it invests in a basket of equities and charges a management expense ratio. So whether you want exposure to the Dow Jones Industrial Average, emerging markets, or corporate bonds, there is an ETF that will suit your needs. Companies like Horizons ETFs Management provide these securities to investors and provide investment advice.
Compared to mutual funds, ETFs incur fewer fees since there is a low turnover ratio. However, it is crucial that you research the best ETFs to invest in to ensure you pay as little management fees as possible.
If tax efficiency is a top priority, ETFs are the best choice since mutual funds will buy and sell assets more often. Additionally, you must understand the net asset value, which is a fund’s total assets minus its total liabilities.
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Best Canadian ETFs
If you want to compare ETFs, here is a list of some of the best Canadian ETFs created and available for you to buy today. If you want to gain exposure to the best Canadian equities on the Toronto Stock Exchange, the following Canadian ETFs are an excellent choice for your portfolio.
While historical returns do not promise future returns, it is crucial that you understand how volatile real assets within the fund are. For example, a Bitcoin ETF will be much more volatile than an ETF that invests in securities like stocks and fixed income.
Vanguard Balanced ETF Portfolio (VBAL)
The Vanguard Balanced ETF is an excellent fund for creating a balanced portfolio instantly. This exchange-traded fund implements a strategy that invests 60% of its assets in equity and the other 40% in fixed-income securities.
The 60/40 is one of the classic investment strategies and is best for investors with moderate risk tolerance. Bonds and bond ETFs tend to be less risky than equities, making them an excellent way to reduce portfolio volatility while still providing investment returns.
The management expense ratio of this ETF is 0.24%, which is reasonable compared to the other options available.
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Vanguard Growth ETF Portfolio (VGRO)
The Vanguard Growth ETF is another excellent fund to gain exposure to the overall Canadian market and bonds. However, this fund only allocated 20% of its capital to bonds instead of the classic 40%. Exchange-traded funds with most of their assets in equity is a more volatile investment strategy, making this ETF better suited for investors with a higher risk tolerance.
The Vanguard Growth ETF has a management expense ratio of 0.24%, similar to the other ETF options. Buying ETFs with low turnover and expense ratios is crucial to maximizing your returns. Low-cost ETFs allow you to receive diversification benefits without paying tons of management fees.
iShares MSCI Canada ETF (EWC)
The iShares MSCI Canada Blackrock ETF seeks to track the returns of the underlying index. Total market index ETF are great because they come with lower management fees than actively managed mutual funds. Index ETFs also have a low turnover compared to conventional mutual funds since they are not required to buy and sell assets as much.
Equity index ETFs are the cheapest way to gain exposure to a diversified basket of stocks. Stocks tend to be risky on their own, and investing in ETFs gives you instant diversity without the need to research the best companies.
The management expense ratio of the iShares MSCI Canada ETF is 0.50%, which is higher than most on this list. However, Blackrock is one of the most reputable investment management companies, which may be worth the additional management fees.
BMO Low Volatility Canadian Equity ETF (ZLB)
BMO Global Asset Management is a popular investment management company. The BMO Low Volatility Canadian Equity ETF provides investors with exposure to Canadian stocks and no fixed income. Therefore, this is one of the best Candian ETFs for investors who do not want the safety of bond ETFs.
Since the fund is only invested in one asset class, you must understand how to diversify the rest of your portfolio. There are other securities and investment strategies you can invest in, such as fixed income and commodities with futures contracts.
Invesco CurrencyShares Canadian Dollar Trust (FXC)
The Invesco CurrencyShares Canadian Dolar Trust ETF seeks to track the price of Canadian dollars. This ETF benefits investors who want exposure to Canadian dollars without making an additional account aside from their regular online brokerage. The benefit of the stock market is you can invest in various asset classes aside from just stocks.
The management expense ratio of the Invesco CurrencyShares Candian Dollar Trust is 0.40%, which is reasonable compared to the other funds on the list. If you are bullish on Canadian dollars, this is likely the best etf to take advantage of the price movements.
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JPMorgan BetaBuilders Canada ETF (BBCA)
The JPMorgan BetaBuilders Canada ETF seeks to track the returns of the underlying stocks within the Toronto Stock Exchange. The trading costs of this fund are minimal due to its low turnover ratio of 1.73%. Additionally, ETFs with low turnover ratios are more tax efficient since fewer taxable events exist.
The top holdings include Canadian banks such as the Royal Bank of Canada and Toronto-Dominion. The management expense ratio of the JPMorgan BetaBuilders Canada ETF is relatively low at 0.19%. Due to this ETFs passive investment strategy, you will save on taxes and management fees.
Best Canadian ETFs | Bottom Line
If you are searching for exposure to Canadian stocks, Canadian ETFs are an excellent way to invest using your online brokerage passively. Companies like BMO Asset Management provide these ETFs to retail investors to simplify the investment process.
Additionally, inverse ETFs are created so that investors can hedge their portfolios if they believe stocks will decline. Regardless, the best index ETF have low management expense ratios and trading costs.
Canadian equities are a great place to invest your money to generate passive income on the stock market. Fund managers automatically manage the underlying stocks within the Canadian ETFs, meaning you will not have to pick stocks for your portfolio actively.
- Lowest and most transparent commissions
- Large number of tradable security types
- Robust suite of research tools
- Low margin rates, from 0.75% to 1.59%
- Access to 40,000+ funds worldwide & 7,700+ funds with no transaction fees
For a better seamless experience & minimum fees, we highly recommend investing in Canadian ETFs with Interactive Brokers.
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