Recommended ETFs

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 (†). Those that hedge their exposure to foreign currency are marked with an asterisk (*).

Canadian equity
Name Ticker MER Description
BMO S&P/TSX Capped Composite ZCN 0.17 Canada’s largest 250+ stocks
iShares S&P/TSX Capped Composite XIC 0.26 Canada’s largest 250+ stocks
Vanguard MSCI Canada VCE 0.11 Canada’s largest 100 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
iShares S&P/TSX Completion XMD 0.58 Midcap and small-cap stocks
iShares S&P/TSX Small Cap XCS 0.53 Small-cap stocks only

Canadian real estate
BMO Equal Weight REITs ZRE 0.62 Uses equal-weight strategy
iShares S&P/TSX Capped REIT XRE 0.58 Uses cap-weighted strategy

Canadian bonds
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
iShares DEX All Government Bond XGB 0.39 Government bonds only
iShares 1-5 Yr Laddered Gov’t Bond CLF 0.17 Short government bonds only
iShares DEX All Corporate Bond XCB 0.44 Corporate bonds only
iShares 1-5 Yr Laddered Corp Bond CBO 0.28 Short corporate bonds only

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

US equity
Vanguard Total Stock Market † VTI 0.05 Over 3,300 US stocks
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 US Broad Market * VUS 0.17 VTI with currency hedging

International equity
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

Global equity
Vanguard Total Int’l Stock Market † VXUS 0.18 All countries except US
iShares MSCI World XWD 0.46 US, EAFE countries and Canada