Best ETFs for 2024: Best Canadian equity ETFs - MoneySense (2024)

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Many in the media and the investment community dismiss Canadian equities, which definitely have underperformed U.S. stocks over the past decade. And, true enough, Canadian retail investors too often have a strong home-country bias, considering that stocks listed here account for less than 3% of global market capitalization.

But, there are still good reasons to hold Canadian equity exchange-traded funds (ETFs) in your portfolio.

For one, they are tax-efficient in non-registered accounts because the dividend distributions they pay enjoy a lower tax rate than foreign dividends.Secondly, their dividend yield is higher (close to 3% right now) than either U.S. or international equity index ETFs. And finally, they offer diversification in the form of commodity exposure, which can be an inflation hedge.

This category used to be owned by the big three of index investing—iShares, BMO and Vanguard—but an interloper, TD’s Canadian Equity Index, vaulted to the top of our voting this year, thanks to its ultra-low management expense ratio (MER) of 0.05%. It also tracks the Solactive Canada Broad Market Index, an alternative to the more common S&P/TSX and FTSE Canada indices. That makes it possible to dodge superficial loss rules when buying or selling larger funds with substantially similar exposure, such as iShares Core S&P/TSX Capped Composite Index ETF (XIC) and Vanguard FTSE Canada All Cap Index ETF (VCN).

“I think the ideal use for this ETF, beyond a core portfolio holding, is as a tax-loss harvesting partner for the Vanguard and iShares ETFs, given that they have similar holdings and historical performance but track different indices, thus sidestepping the CRA’s superficial loss rule,” says panellist Tony Dong.

There was a three-way tie for the runner-up position, with VCN, XIC and ZCN (BMO S&P/TSX Capped Composite Index ETF) all placing. All the funds mentioned have razor-thin MERs of 0.05% or 0.06%.

In the table below, you’ll find the best Canadian equity ETFs, as judged by our panel. Slide the columns right or left using your fingers or mouse to reveal more data. You can download the data to your device in Excel, CSV and PDF formats.

Best Canadian equity ETFs 2024

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