Here are the top exchange-traded funds (ETFs) in Canada, based on assets under management.
- Vanguard FTSE Canada All Cap Index ETF (VCN)
- iShares Core S&P/TSX Capped Composite Index ETF (XIC)
- BMO S&P/TSX Capped Composite Index ETF (ZCN)
- iShares S&P/TSX 60 Index ETF (XIU)
- BMO S&P 500 Index ETF (ZSP)
- iShares S&P 500 Index ETF (XUS)
- BMO MSCI EAFE Index ETF (ZEA)
- iShares MSCI EAFE Index ETF (XIN)
- BMO NASDAQ 100 Index ETF (ZQQ)
- iShares NASDAQ 100 Index ETF (XQQ)
These ETFs are popular because they offer investors a convenient and cost-effective way to diversify their portfolio and gain exposure to a broad range of assets. For example, VCN and XIC offer exposure to the Canadian stock market, while ZSP and XUS provide access to the US stock market. ZEA and XIN offer exposure to international developed markets, and ZQQ and XQQ give investors access to the tech-heavy NASDAQ 100 index.
And here are the top 10 Reasons Why ETFs are great for Canadian Investors.
1. Diversification
ETFs offer investors a simple and cost-effective way to diversify their portfolio and spread risk across a variety of assets. For example, the Vanguard FTSE Canada All Cap Index ETF (VCN) provides exposure to a broad range of Canadian stocks, while the iShares MSCI EAFE Index ETF (XIN) gives investors access to developed international markets.
2. Low Fees
ETFs tend to have lower fees than mutual funds, making them a more affordable option for long-term investors. For example, the iShares Core S&P/TSX Capped Composite Index ETF (XIC) has an management expense ratio (MER) of just 0.06%, compared to an industry average of around 2%.
3. Tax Efficiency
ETFs are generally more tax efficient than mutual funds because they generate fewer capital gains. This is because ETFs are structured as pass-through entities, which means they don’t have to sell underlying securities to meet redemptions.
4. Transparency
ETFs provide investors with full transparency into their holdings, which can be helpful for those who want to know exactly what they’re investing in. For example, the BMO S&P 500 Index ETF (ZSP) holds all 500 stocks in the S&P 500 index, so investors can see exactly which companies they’re invested in.
5. Liquidity
ETFs are highly liquid, which means they can be bought and sold easily on stock exchanges. This is particularly useful for investors who need to quickly buy or sell large amounts of securities.
6. Flexibility
ETFs can be bought and sold throughout the trading day, allowing investors to take advantage of market fluctuations. This is in contrast to mutual funds, which are only priced once per day.
7. Portfolio Construction
ETFs can be used to build a well-rounded portfolio quickly and easily. For example, the BMO MSCI EAFE Index ETF (ZEA) provides exposure to developed international markets, while the BMO NASDAQ 100 Index ETF (ZQQ) gives investors access to the tech-heavy NASDAQ 100 index.
8. Simplicity
ETFs are easy to understand and can be a good choice for novice investors who may not have the time or expertise to research individual stocks.
9. Professional Management
Many ETFs are managed by experienced professionals who use sophisticated investment strategies to select underlying securities. This can be particularly useful for investors who don’t have the expertise or resources to manage their own portfolio.
10. Cost-Effectiveness
ETFs are generally less expensive than actively managed funds, making them a more cost-effective choice for long-term investors. For example, the iShares NASDAQ 100 Index ETF (XQQ) has an MER of just 0.20%, compared to an industry average of around 1.5%.
The top ETF in Canada are a great investment option for Canadian investors who are looking to diversify their portfolio, minimize fees, and enjoy the benefits of professional management. With a wide range of ETFs available to suit different investment objectives and risk tolerances, there’s an ETF to suit every investor’s needs.
