The ETF marketplace has exploded in recent years. There are currently seven firms offering over 300 exchange-traded products in Canada. Canadians can also invest in ETFs listed on US exchanges, which increases the number of choices to well over 1,500.
While choosing the right products is important, it should not be the primary concern of Couch Potato investors. Investing success depends far more on a commitment to saving and disciplined behaviour. If you are overwhelmed by the choices, consider the recommended ETFs below. They cover the major asset classes and were chosen for their low fees, low tracking error, liquidity and index construction. Many of these ETFs are found in my model portfolios.
The list is not comprehensive: experienced investors may make different choices, especially if they want to follow non-traditional strategies or have specific tax considerations.
ETFs that trade on US exchanges are marked with a dagger (†).
|Vanguard FTSE Canada All Cap||VCN||0.14||Canada’s largest 250+ stocks|
|BMO S&P/TSX Capped Composite||ZCN||0.17||Canada’s largest 230+ stocks|
|iShares S&P/TSX 60||XIU||0.17||Canada’s largest 60 stocks|
|Horizons S&P/TSX 60||HXT||0.08||Tax-friendly swap structure|
Canadian real estate
|BMO Equal Weight REITs||ZRE||0.62||Uses equal-weight strategy|
|Vanguard FTSE Cdn Capped REIT||VRE||0.40||Uses cap-weighted strategy|
|iShares DEX Universe Bond||XBB||0.33||Excellent core bond holding|
|BMO Aggregate Bond||ZAG||0.26||Excellent core bond holding|
|Vanguard Canadian Aggregate Bond||VAB||0.26||Excellent core bond holding|
|iShares DEX Short Term Bond||XSB||0.28||Short gov’t and corporate bonds|
|Vanguard Canadian Short-Term Bond||VSB||0.19||Short gov’t and corporate bonds|
Canadian real-return bonds
|iShares DEX Real Return Bond||XRB||0.39||Federal and provincial RRBs|
|BMO Real Return Bond||ZRR||0.25||Federal RRBs only|
|Vanguard Total Stock Market †||VTI||0.05||Over 3,400 US stocks|
|Vanguard US Total Market||VUN||0.17||Canadian version of VTI|
|iShares S&P 500||XUS||0.16||500 large-cap stocks|
|Vanguard S&P 500||VFV||0.18||500 large-cap stocks|
|BMO S&P 500||ZSP||0.17||500 large-cap stocks|
|Vanguard MSCI EAFE †||VEA||0.12||Europe, Australasia, Far East|
|iShares MSCI EAFE IMI||XEF||0.34||Over 2,500 EAFE stocks|
Emerging markets equity
|Vanguard FTSE Emerging Markets †||VWO||0.20||20+ emerging countries|
|iShares MSCI Emerging Markets IMI||XEC||0.39||Over 1,600 emerging stocks|
|Vanguard Total Int’l Stock Market †||VXUS||0.16||All countries except US|
|iShares MSCI World||XWD||0.46||US, EAFE countries and Canada|