Are you looking to invest in the broad Canadian stock market but have no idea how to start?
Data from S&P Dow Jones Indices outlines that investors have roughly saved US $403 billion in management fees over the past 26 years by investing in index funds.
In Canada, two important Canadian equity indices are the S&P/TSX 60 Index and the S&P/TSX Composite Index.
We will cover the best TSX index ETFs below and outline some of their key features.
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The S&P/TSX 60 Index Vs the S&P/TSX Composite Index
The two main Canadian stock market indices are fairly different.
The S&P/TSX 60 Index is an index of the 60 largest Canadian stocks by market capitalization.
The S&P/TSX Composite Index is a much broader index, including about 70% of the companies on the Toronto Stock Exchange (by market capitalization). This results in an index with roughly 250 companies.
These two indices can be thought of as the Canadian equivalents of the S&P 500 Index and the S&P Total Market Index in the US.
Pros and Cons of TSX Index ETFs
TSX index ETFs, or Canadian equity index ETFs, come with their advantages and disadvantages, similar to most investments.
Pros
- Extremely low management expense ratios (or fees)
- One-ticket solution allowing you to invest in a diversified basket of Canadian stocks
- Accessing a higher dividend yield (relative to US broad-market indices)
- Canadians do not have to worry about changing currency exchange rates
Cons
- They are concentrated in sectors such as financials, energy, and materials
- Lack of active management can lead to larger downside risks
- Investing only in Canadian equities does not diversify you outside of Canada
- They are concentrated in sectors such as financials, energy, and materials
- Lack of active management can lead to larger downside risks
- Investing only in Canadian equities does not diversify you outside of Canada
Overall, TSX index ETFs (Canadian equity index ETFs) are a great way for Canadians to begin investing in the broad Canadian stock market.
Best TSX Index ETFs
We will cover three ETFs that aim to cover the broad Canadian market (tracking or similar to the S&P/TSX Composite Index) as well as three ETFs that cover approximately 60 of the largest Canadian companies by market capitalization (tracking or similar to the S&P/TSX 60 Index)
Canadian Broad-Market Index ETFs (S&P/TSX Composite Index)
1. TD Canadian Equity Index ETF
TD has taken steps to offer extremely low-cost passive ETFs to Canadians over the past several years. The TD Canadian Equity Index ETF is a broad Canadian stock market index ETF that invests in over 300 individual Canadian stocks.
The ETF is passively managed, with approximately 50% of the ETF’s investments falling into one of the following sectors:
- Financial Services
- Energy
- Basic Materials
The ETF has a medium-length performance track record and is large in terms of assets. TTP offers a great dividend yield and pays distributions to investors on a quarterly basis.
TTP is one of the lowest-cost options to consider among Canadian broad-market index ETFs.
iShares is a well-known name in Canada as a provider of low-cost index ETFs. The XIC ETF in particular is absolutely massive in terms of assets and is one of the most commonly-encountered Canadian broad-market index ETFs.
XIC is passively managed and has over 50% of its assets in the financials, energy, and industrials sectors.
The ETF has a long performance track record and ranks among the largest ETFs in Canada by assets. XIC also offers a great yield, with distributions being paid to investors on a quarterly basis.
XIC is an excellent option to consider for investing in the broad Canadian market, although it is marginally more expensive than TTP (in terms of MER).
3. BMO S&P/TSX Capped Composite Index ETF
BMO Global Asset Management is one of the first Canadian bank investment arms to enter the low-cost ETF space over a decade ago. The ZCN ETF is another very popular choice with Canadian investors for targeting the broad Canadian stock market.
ZCN is passively managed and like other broad Canadian equity peers, has over 50% of its assets in the financials, energy, and industrials sectors (with materials coming in as a close 4th sector).
The ETF has a long performance track record and is a massive Canadian ETF in terms of assets under management. ZCN offers a good yield, with distributions also being paid to investors on a quarterly basis.
ZCN is another great option to consider for broad Canadian stock exposure, currently being offered at the same MER as iShares’ XIC ETF.
Canadian Large Capitalization Index ETFs (S&P/TSX 60 Index)
4. Vanguard FTSE Canada Index ETF
Vanguard is a well-known global asset manager that provides low-cost ETFs. In Canada, Vanguard’s VCE ETF tracks a similar group of stocks as those contained within the S&P/TSX 60 Index. It invests in roughly 50 of the largest Canadian stocks by market capitalization.
VCE is passively managed and is even more concentrated than the broad Canadian market index ETFs that we covered further up. Almost 70% of the ETF’s investments are concentrated in the financials, energy, and basic materials sectors.
The ETF has a long performance track record and is a very large ETF in terms of assets under management. VCE offers a good yield and pays investors a quarterly distribution.
VCE is an excellent, low-cost ETF to consider if you would like to invest in large-capitalization Canadian stocks.
5. Horizons S&P/TSX 60 Index ETF
- Ticker: HXT.TO
- Inception Date: September 14, 2010
- Assets under Management: $3.73 Billion
- Management Expense Ratio: 0.04%
- Management Style: Passive
- Risk Rating: Medium
- Distributions: None
- Distribution Yield: 0%
- Stock Price: $50
- YTD Return: 4.52%
Horizons is a well-known provider of low-cost ETFs here in Canada, focusing specifically on tax efficiency. Some of Horzions’ total return ETFs (including HXT) do not pay distributions to investors, increasing tax efficiency in non-registered accounts.
HXT follows the performance of a basket of the 60 largest Canadian stocks by market capitalization. Financials, energy, and industrial services (as sectors) make up approximately 65% of the ETF.
The ETF is extremely large in terms of assets under management and has a long performance track record. Since the ETF does not pay distributions to investors, HXT will not be appealing to investors that are looking for constant income from dividends.
If you are concerned with tax efficiency and do not require an income from your Canadian equity ETF, HXT is a great fund to consider.
iShares also offers an extremely popular large-capitalization Canadian equity index ETF through XIU. The ETF invests in the 60 largest Canadian companies by market capitalization.
XIU is passively managed and is more concentrated than iShares’ XIC ETF. Over 65% of XIU’s investments fall within the financials, energy, or industrials sectors.
Although XIU ranks among the largest Canadian ETFs by market capitalization, it is extremely expensive relative to its peers (likely due to its iShares and S&P index branding). XIU invests in a similar group of stocks as both VCE and HXT but is at least three times more expensive in terms of fees.
The ETF has a very long performance track record, with a track record of over 22 years.
Given XIU’s high relative fees, we do not recommend it over peers such as HXT or VCE.
Are TSX Index ETFs Worth the Fees?
TSX index ETFs also referred to as Canadian equity ETFs, are an excellent addition to most portfolios that typically invest in stocks. The ability to invest in a basket of tens or hundreds of Canadian stocks for several basis points is extremely valuable.
Whether you are looking to invest with more of a large capitalization focus or more broadly, low-cost Canadian equity index ETFs save you a lot of time. The alternative would be to divide your money across the different stocks and individually buy and then sell each.
For most Canadians, Canadian stocks are an important part of an investment portfolio (one that includes equities), and the above ETFs are good options to consider for easily adding this exposure.
How to Buy the Best TSX Index ETFs
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
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To learn more, check out my full breakdown of thebest trading platforms in Canada.
Conclusion
TSX index ETFs are a very cost-efficient way of investing in Canadian stocks through a well-diversified approach.
In a lot of cases, these ETFs are either focused on the broad Canadian market as a whole or solely on some of the largest Canadian companies by market capitalization.
If you are new to trading ETFs, make sure to read our guide, which outlines how to buy ETFs in Canada.
FAQs
What is the best TSX ETF? ›
- BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN)
- iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC)
- iShares S&P/TSX 60 Index ETF (TSX:XIU)
- S&P/TSX Canadian Dividend Aristocrats Index Fund (TSX:CDZ)
- iShares S&P/TSX Capped Info Tech ETF (TSX:XIT)
| Ticker | 3-yr Total Return | |
|---|---|---|
| Vanguard S&P 500 ETF | VFV | 8.80 |
| Horizons S&P 500 ETF | HXS | 8.72 |
| iShares Core S&P 500 ETF | XUS | 8.88 |
| Vanguard US Total Market ETF | VUN | 8.08 |
Horizons S&P/TSX 60™ Index ETF (HXT) provides exposure to the performance of the S&P/TSX™ 60 Index (Total Return).
What is the cheapest TSX ETF? ›STIC currently takes the crown for the cheapest Canadian equity ETF on the market, with a very low 0.03% expense ratio.
What are the highest yielding stocks on the TSX? ›| Rankings | Symbol | DIVIDEND YIELD |
|---|---|---|
| 1 | PUMA | 128.21 % |
| 2 | ITE | 40.82 % |
| 3 | FFN | 23.05 % |
| 4 | ZUM | 20.00 % |
| ETF | Ticker | Net Assets |
|---|---|---|
| Vanguard 500 Index Fund | (NYSEMKT:VOO) | $744.8 billion |
| Invesco QQQ Trust | (NASDAQ:QQQ) | $145.9 billion |
| Vanguard Growth Fund | (NYSEMKT:VUG) | $132.3 billion |
| Avantis Small-Cap U.S. Value ETF | (NYSEMKT:AVUV) | $4.72 billion |
- Vanguard FTSE All Cap Index ETF (VCN) VCN provides exposure to large, mid, and small-cap companies in Canada. It holds 185 stocks and has a low MER of 0.05%. ...
- BMO S&P/TSX Capped Composite Index ETF (ZCN) This equity ETF includes 241 stocks that constitute 95% of the Canadian equity market.
Canada is often overlooked as a market for U.S. investors, even those who are looking for international exposure. You can invest in Canadian ETFs to gain access to the country's entire economy, to certain industries, or even to certain asset classes.
What is the best way to choose an ETF in Canada? ›- Choose the lower-cost ETF. ...
- Choose the ETF with the lowest volatility. ...
- Choose the bigger ETF. ...
- Consider Canadian- versus U.S.-listed ETFs. ...
- How to get started.
TSX ETFs trade on that stock exchange throughout the day, much like ordinary stocks. So you can buy them through a broker whenever the stock market is open, and generally you pay the same commission rate that you pay to buy stocks.
How many ETFs are on the TSX? ›
offers the following 21 ETFs listed on the TSX: TSX: VCE – Vanguard FTSE Canada Index ETF. TSX: VCN – Vanguard FTSE Canada All Cap Index ETF. TSX: VDY – Vanguard FTSE Canadian High Dividend Yield Index ETF.
Who are the largest Canadian ETF providers? ›Three ETF providers dominate the market: iShares, BMO, and Vanguard.
What is the best Canadian S&P 500 ETF? ›- Vanguard S&P 500 Index ETF (VFV)
- Vanguard S&P 500 Index ETF CAD Hedged (VSP)
- iShares Core S&P 500 Index ETF (XUS)
- BMO S&P 500 Index ETF (ZSP)
- Horizons S&P 500 Index ETF (HXS & HXS.U)
today announced the final December 2022 cash distributions for certain Vanguard ETFs, listed below, that trade on Toronto Stock Exchange (TSX). Unitholders of record on December 30, 2022 will receive cash distributions payable on January 09, 2023.
Can I buy TSX on Schwab? ›Virtually all Canadian stocks can be traded online at Schwab.com or through a broker via phone. Online quotes on most Canadian securities are provided by the Toronto Stock Exchange and are displayed in U.S. dollars.
Where to invest in 2023 Canada? ›...
- 5 Stocks To Add To Your Portfolio In A Market Pullback. ...
- Alimentation Couche-Tard. ...
- CN Rail. ...
- Constellation Software. ...
- TMX Group. ...
- Descartes Systems. ...
- A&W Revenue Royalties Income Fund. ...
- Brookfield Infrastructure.
- Nuvei (TSE:NVEI)
- Sunlife Financial (TSE:SLF)
- Shopify (TSE:SHOP)
- Telus (TSE:T)
- Parkland Fuels (TSE:PKI)
- Goeasy Ltd (TSE:GSY)
- Dollarama (TSE:DOL)
- TFI International (TSE:TFII)
| Rank | Fund | 3-year return to 1 Feb (%) |
|---|---|---|
| 1 | Fundsmith Equity | 20.1 |
| 2 | Vanguard LifeStrategy 80% Equity | 13.9 |
| 3 | Vanguard LifeStrategy 100% Equity | 26.9 |
| 4 | Vanguard US Equity Index | 31.2 |
- Vanguard S&P 500 ETF. The Vanguard S&P 500 ETF (VOO -0.17%) is an index fund designed to track the S&P 500 index. ...
- Invesco S&P 500 Equal Weight ETF. ...
- iShares Russell 1000 Growth ETF. ...
- Vanguard Real Estate ETF.
...
Top Performing ETFs Of All Time.
| Ticker | TECL |
|---|---|
| Fund Name | Direxion Daily Technology Bull 3x Shares |
| Inception | 12/17/2008 |
| Return % Since Inception | 3,259.93 |
How many ETFs should I own Canada? ›
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification. But the number of ETFs is not what you should be looking at. Rather, you should consider the number of different sources of risk you are getting with those ETFs.
Which Canadian ETF has the highest dividend yield? ›- BMO Canadian Dividend ETF (ZDV)
- Vanguard Canadian High Dividend Yield ETF (VDY)
- iShares Canadian Select Dividend ETF (XDV)
- iShares S&P/TSX High Dividend Index ETF (XEI)
- Horizons Active Canadian Dividend ETF (HAL)
- Invesco Canadian Dividend ETF (PDC)
| Symbol | Name | 5-Year Return |
|---|---|---|
| XSD | SPDR S&P Semiconductor ETF | 174.68% |
| QCLN | First Trust NASDAQ Clean Edge Green Energy Index Fund | 162.78% |
| SMH | VanEck Semiconductor ETF | 133.06% |
| SOXX | iShares Semiconductor ETF | 129.69% |
If you have Social Security credits in both the United States and Canada, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.
What is the Canadian version of QQQ? ›Invesco is the fund manager for one of the most significant NASDAQ 100 funds in North America, QQQ. It is definitely a giant with over $155B in AUM and 53M in daily volume. Their Canadian version, QQC, is not quite as large. But it still provides substantial exposure to the index.
What is the best total US market ETF in Canada? ›...
Specifically, you'll need ETFs to cover the following:
- Canadian Index.
- US Index.
- International Index (MSCI)
- Emerging Markets.
- Canadian Bond Index.
The best way to invest in the TSX is to sign up for an online brokerage account or a robo-advisor. You can also invest in TSX stocks using a financial planner, though this often costs more in management fees than you'll have to pay to manage your investments on your own.
How do I choose an index fund in Canada? ›...
When you're comparing index funds, here are some things to consider:
- Expense Ratio. This is the cost to administer the fund each year. ...
- Other Fees. ...
- Investment Minimums.
Regarding dividend payouts, VOO also has the edge: its dividend yield is 1.59% compared to VFV's dividend yield of 1.24% (as of February 17, 2023). However, VOO's cheaper MER and higher dividend yield are offset by the 15% withholding tax on dividends, which reduces total returns.
What is the Canadian version of the S&P 500? ›The S&P/TSX 60 index is a large cap index for Canada, the Canadian equivalent of the S&P 500. Standard & Poor's is a provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. For more information, visit www.standardandpoors.com.
Can I buy stock directly from TSX? ›
Canadian investors can purchase stocks traded on the TSX-V directly using brokerage and self-directed brokerage accounts. U.S. investors can purchase stocks traded on the TSX-V directly using brokerage accounts that support such foreign trades.
Where to buy ETF Canada? ›- iShares ETFs can be bought and sold during normal trading hours through your broker or trading platform. ...
- In Canada, iShares ETFs are listed either on the Toronto Stock Exchange or the NEO exchange.
...
Article Contents
- Royal Bank of Canada.
- Toronto Dominion Bank.
- Enbridge Inc.
- Brookfield Asset Management Inc.
- Bank of Nova Scotia.
- Canadian National Railway Co.
- Canadian Natural Resources.
- Bank of Montreal.
The iShares MSCI Canada ETF seeks to track the investment results of an index composed of Canadian equities.
How many ETF is enough? ›Generally speaking, fewer than 10 ETFs are likely enough to diversify your portfolio, but this will vary depending on your financial goals, ranging from retirement savings to income generation.
Is there a TSX Index Fund? ›iShares S&P/TSX 60 Index Fund
As its name suggests, this index fund tracks the S&P/TSX 60 market index, which contains the 60 biggest stocks by market cap trading on the TSX.
| Rank | Symbol | Fund Name |
|---|---|---|
| 1 | IVV | iShares Core S&P 500 ETF |
| 2 | VTI | Vanguard Total Stock Market ETF |
| 3 | VOO | Vanguard S&P 500 ETF |
| 4 | QQQ | Invesco QQQ Trust Series I |
The largest Vanguard ETF is the Vanguard Total Stock Market ETF VTI with $277.15B in assets. In the last trailing year, the best-performing Vanguard ETF was VDE at 17.05%. The most recent ETF launched in the Vanguard space was the Vanguard Ultra-Short Bond ETF VUSB on 04/05/21.
Is there a Canadian Vanguard ETF? ›...
Viewing 37 of 43 funds.
| Select | Vanguard FTSE Global All Cap ex Canada Index ETF |
|---|---|
| Ticker | VXC |
| Fund Name/Share Class | Vanguard FTSE Global All Cap ex Canada Index ETF |
| 1YR | − 1.32% |
| 3YR | + 9.16% |
International investing
We suggest consulting with a financial advisor, tax specialist and/or accountant with expertise in Canadian and U.S. tax law. Please note that Vanguard does not offer investment management accounts directly to retail investors in Canada at this time.
What ETF tracks the S&P TSX? ›
iShares Core S&P/TSX Capped Composite Index ETF.
How do I invest in Vanguard ETF in Canada? ›You can invest in ETFs with the help of a financial advisor, or through an online or discount broker brokerage account. Your brokerage or trading platform will likely charge its customary commissions and/or fees. See our how to buy page.
What is the best foreign currency ETF? ›- 5 Best Currency ETFs Of March 2023.
- Invesco DB US Dollar Index Bullish Fund (UUP)
- WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU)
- Invesco CurrencyShares Japanese Yen Trust (FXY)
- Invesco CurrencyShares Euro Trust (FXE)
- ProShares Bitcoin Strategy ETF (BITO)
- Methodology.
Investing in TSX-listed companies can be accomplished through most online brokerage accounts, such as TD Ameritrade or E-Trade. Commissions may be more than domestic trades but remain reasonable compared to many traditional stockbrokers.
How do I buy Canadian stocks on Schwab? ›You can invest in international stocks on your own with a Schwab One® brokerage account or call our Global Investing Services team at 800-992-4685 to speak with a dedicated broker about foreign trading. Our team is available between 5:30 p.m. ET Sunday and 5:30 p.m. ET Friday.
What is the most popular ETF in Canada? ›The most popular ETF in Canada is the Vanguard S&P 500 ETF, which earns a Morningstar Analyst Rating of Gold. As a reminder, the Morningstar Analyst Rating for Funds is not a short-term market call, but instead provides a forward-looking perspective on a fund's likelihood to outperform.
What is the Canadian equivalent of QQQ? ›Invesco is the fund manager for one of the most significant NASDAQ 100 funds in North America, QQQ. It is definitely a giant with over $155B in AUM and 53M in daily volume. Their Canadian version, QQC, is not quite as large. But it still provides substantial exposure to the index.
What is the Canadian version of the s&p500? ›The S&P/TSX Composite Index is a capitalization-weighted equity index that tracks the performance of the largest companies listed on Canada's primary stock exchange, the Toronto Stock Exchange (TSX). It is the equivalent of the S&P 500 index in the United States, and as such is closely monitored by Canadian investors.
Can Americans buy Canadian ETF? ›Canadian ETFs can be traded with a U.S. brokerage account similar to equities and is easier than trying to buy a foreign stock. Exchange-traded funds (ETFs) offer the diversity of an index with the simplicity of equity.
What are the best funds to invest in Canada? ›- Mackenzie Canadian Equity F Series. ...
- Scotia Canadian Equity F Series. ...
- RBC Canadian Equity Income Fund F Series. ...
- RBC Vision Global Equity Fund F Series. ...
- NBI Global Equity Fund F Series. ...
- Canoe Global Equity F Series. ...
- Beutel Goodman Core Plus Bond Fund F Series.
Is there a Canadian Nasdaq ETF? ›
BMO NASDAQ 100 Equity Hedged to CAD Index ETF
ZQQ is currently the most popular Canadian Nasdaq 100 ETF with just over $1.2 billion in assets under management, or AUM.
There are around 1000 ETFs listed in Canada.
Why not buy Tqqq instead of QQQ? ›In general, QQQ is appropriate for investors who want a large-cap growth stock ETF that can potentially outperform the S&P 500 in the long run. TQQQ is appropriate for investors with a high tolerance for risk and for short-term investment periods.