Are you a Canadian investor seeking reliable investment options amidst concerns of a possible recession in 2024? Look no further than exchange-traded funds (ETFs). ETFs have gained immense popularity in Canada, with Canadians collectively investing $35 billion in ETFs in 2022. In this article, we will explore the top 20 ETFs in Canada that you should consider for your investment portfolio. Investing in ETFs can offer diversification, low costs, and potential long-term growth in the ever-changing Canadian market.
Key Takeaways:
- ETFs are a popular investment choice in Canada, with $35 billion invested in 2022.
- Diversification and low costs are key benefits of investing in ETFs.
- The top 20 ETFs in Canada offer a range of options for different investment goals and risk tolerances.
- Consider factors such as expense ratio, portfolio composition, and performance track record when choosing ETFs.
- ETFs provide investors with the opportunity to build diversified portfolios across different sectors, industries, and geographic regions.
BMO Monthly Income ETF (ZMI)
The BMO Monthly Income ETF (ZMI) is a fixed income ETF designed to provide investors with consistent income from a diversified portfolio of income sources. This ETF offers income from bonds, dividend ETFs, covered call ETFs, and corporate bonds, making it a versatile option for investors seeking fixed income opportunities.
ZMI is well-suited for investors looking to generate regular monthly income, especially in uncertain market conditions. Its diversified portfolio helps to mitigate risk and provide stability in income generation. The ETF has a track record of delivering stable returns, making it an attractive option for investors seeking a reliable monthly income stream.
By investing in ZMI, investors can benefit from the potential income generated by a diverse range of fixed income assets, including corporate bonds. This can provide additional stability and potentially higher yields compared to traditional bond investments. With ZMI, investors can effectively manage their fixed income exposure while enjoying the benefits of diversification and ongoing income.
| Fund Name | Ticker Symbol | Asset Class | Investment Objective |
|---|---|---|---|
| BMO Monthly Income ETF | ZMI | Fixed Income | Generate consistent income from a diversified portfolio of income sources |
TD Q Canadian Dividend ETF (TQCD)
The TD Q Canadian Dividend ETF (TQCD) is an investment option that focuses on Canadian companies with a strong track record of dividend growth and long-term profitability. This ETF primarily invests in sectors such as financial services, energy, basic materials, industrial services, and telecoms, offering investors exposure to diverse industries within the Canadian market.
TQCD has a distribution yield of 3.87%, making it an enticing choice for investors seeking regular dividend income. Additionally, the potential for capital appreciation further enhances the appeal of this ETF for long-term investors.
| Key Features | Details |
|---|---|
| ETF Name | TD Q Canadian Dividend ETF (TQCD) |
| Sector Focus | Financial services, energy, basic materials, industrial services, telecoms |
| Distribution Yield | 3.87% |
| Primary Objective | Dividend growth and long-term profitability |
The TD Q Canadian Dividend ETF (TQCD) offers a compelling investment opportunity for those who prioritize dividend income and are attracted to the potential for long-term profitability. By investing in established Canadian companies across various sectors, this ETF provides investors with the potential for both income and growth.
iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV)
The iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) provides investors with a defensive position and consistent income. This ETF is specifically designed to offer exposure to Canadian stocks, with a particular focus on quality dividend-paying companies. By investing in XDIV, you can potentially benefit from stable income and take a defensive stance in uncertain market conditions.
| Key Features of iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) | Usage | Benefits |
|---|---|---|
| Diversification | XDIV invests in a diversified portfolio of Canadian stocks, providing exposure to multiple sectors and industries. | Helps reduce risk through broad market representation. |
| Quality Dividends | XDIV focuses on quality dividend-paying companies, which may offer consistent income streams. | Provides a potential source of reliable and predictable investment returns. |
| Defensive Position | XDIV is designed to offer stability and a defensive stance in uncertain market conditions. | May help protect against market volatility and potential downturns. |
Investing in iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV) can be a suitable option for investors looking for stable income and a defensive position in their investment portfolios. With its focus on quality dividend-paying companies, XDIV aims to provide consistent returns while mitigating risk. By diversifying your investments and positioning yourself defensively, you can navigate the challenges of the Canadian market with confidence.
Vanguard Global Aggregate Bond Index ETF (VGAB)
The Vanguard Global Aggregate Bond Index ETF (VGAB) is a bond ETF that provides investors with exposure to the global bond market. With a benchmark of 25,000 bonds, VGAB covers bonds from various regions, offering a diversified portfolio of global bonds. This ETF has an average maturity of 10 years, making it suitable for investors with a long-term investment strategy.
VGAB is designed to help investors diversify their bond holdings globally, providing access to a broad range of fixed income securities from around the world. By investing in VGAB, you can benefit from the stability and income potential of global bonds, while also spreading your bond investments across different geographic regions and currencies.
As a long-term investment strategy, bond ETFs like VGAB can play a crucial role in balancing your investment portfolio. By including global bonds in your portfolio, you can potentially enhance your risk-adjusted returns and reduce the overall volatility of your investments.
| Key Features of Vanguard Global Aggregate Bond Index ETF (VGAB) | |
|---|---|
| Targeted Investors | Investors seeking long-term investment strategy and diversification through global bonds. |
| Portfolio Composition | Diversified exposure to the global bond market with an average maturity of 10 years. |
| Expense Ratio | Low expense ratio compared to actively managed global bond funds. |
| Performance Track Record | Consistent performance over the long term to meet investors‘ income and stability requirements. |
By investing in VGAB, you can align your investment strategy with global market trends, ensuring a well-rounded and diversified bond portfolio. Whether you are looking for income generation, capital preservation, or both, VGAB can be an essential component of your investment strategy.
In summary, the Vanguard Global Aggregate Bond Index ETF (VGAB) offers Canadian investors a long-term investment strategy to diversify their bond holdings globally. By investing in this bond ETF, you can gain exposure to the global bond market and potentially enhance your risk-adjusted returns. Consider including VGAB in your investment portfolio to benefit from the stability, income potential, and diversification provided by global bonds.
iShares Core Canadian Universe Bond ETF (XBB)
The iShares Core Canadian Universe Bond ETF (XBB) is a comprehensive investment option for Canadian investors seeking diversified exposure to Canadian bonds. This ETF offers a wide range of assets, including government bonds, which can help provide stability and balance to your investment portfolio.
XBB is designed to replicate the performance of the FTSE TMX Canada Universe Bond Index, a benchmark that tracks the performance of Canadian investment-grade bonds. By investing in XBB, you can gain access to a diversified portfolio of government bonds, corporate bonds, and other fixed-income securities issued by Canadian entities.
Diversification is a key feature of XBB, as it holds a vast array of bonds from various sectors, maturities, and credit ratings. This diversification helps to mitigate risk and smooth out potential volatility in your portfolio. Additionally, the inclusion of government bonds can provide added security, as these bonds are typically considered lower-risk investments.
The iShares Core Canadian Universe Bond ETF (XBB) has gained recognition for its diversified exposure and has been awarded a Silver rating by Morningstar. This rating reflects the fund’s ability to deliver consistent performance and its overall appeal to investors.
Top Holdings
| Holdings | Weight (%) |
|---|---|
| Government of Canada Bonds | 45 |
| Provincial Bonds | 16 |
| Corporate Bonds | 13 |
| Municipal Bonds | 10 |
| Foreign Bonds | 4 |
| Other Bonds | 12 |
Table: Top Holdings of iShares Core Canadian Universe Bond ETF (XBB). Weightage percentage of each holding in the fund’s portfolio.
By investing in the iShares Core Canadian Universe Bond ETF (XBB), you can gain diversified exposure to Canadian bonds, including government bonds, which can help protect your investment portfolio from volatile market conditions. This ETF offers an affordable and accessible avenue for investors looking to add bond holdings to their portfolio and achieve long-term financial goals.
TD Canadian Aggregate Bond Index ETF (TDB)
The TD Canadian Aggregate Bond Index ETF (TDB) is an excellent choice for investors seeking a defensive investment strategy with exposure to both government bonds and corporate bonds. It offers a well-rounded mix of fixed income assets, with 70% of its holdings in government bonds and 30% in corporate bonds. This allocation provides diversification and stability to your investment portfolio.
By investing in TDB, you can benefit from the reliability and income-generating potential of government bonds while also taking advantage of the higher yields offered by corporate bonds. This defensive investment strategy can offer stability during volatile market conditions and help protect your investments over the long term.
The TDB ETF is designed to track the performance of the TD Canadian Aggregate Bond Index, which represents the Canadian fixed income market. This index includes a wide range of government bonds and investment-grade corporate bonds, ensuring a comprehensive representation of the Canadian bond market.
Investing in government bonds can provide a secure source of income, as these bonds are backed by the Canadian government. On the other hand, corporate bonds offer higher yields due to the additional risk associated with investing in corporate debt. By combining both types of bonds, TDB aims to strike a balance between stability and income generation.
With TDB, you can enjoy the benefits of a defensive investment strategy while still earning a competitive yield. It is a suitable choice for investors with a lower risk tolerance who want to add fixed income assets to their portfolio. Whether you are a conservative investor or looking to diversify your investment strategy, TDB can help meet your goals.
| Key Features of TD Canadian Aggregate Bond Index ETF (TDB) | |
|---|---|
| Diversified exposure to government bonds and corporate bonds | |
| Defensive investment strategy for stability | |
| Potential for competitive yield | |
| Tracks the performance of the TD Canadian Aggregate Bond Index |
Vanguard FTSE Developed All Cap ex North America Index ETF (VIU)
The Vanguard FTSE Developed All Cap ex North America Index ETF (VIU) provides Canadian investors with an opportunity to diversify their portfolios by gaining exposure to developed markets outside of North America. With significant holdings in Europe and the Pacific, VIU allows investors to capture potential growth opportunities in these regions and participate in the global market.
By investing in VIU, you can gain access to a wide range of companies across different sectors and industries in the European and Pacific markets. This global diversification can help to reduce the risk of your investment portfolio and potentially enhance long-term returns.
With the European market offering opportunities in sectors like finance, manufacturing, and technology, and the Pacific market presenting growth potential in industries such as technology, healthcare, and consumer goods, VIU provides exposure to key regions that are driving economic growth.
Diversifying your portfolio beyond North America with VIU can be beneficial in navigating market volatility and taking advantage of global investment opportunities. Whether you’re looking to tap into the European market or explore the Pacific market, VIU can be a valuable addition to your investment strategy.
TD International Equity Index ETF (TPE)
The TD International Equity Index ETF (TPE) offers Canadian investors broad market exposure to international equities, allowing them to diversify their portfolios beyond the North American market. With 97% of its holdings consisting of international equity, TPE provides an opportunity for investors to tap into the global economy and potentially benefit from the growth of international companies.
By investing in TPE, you can gain access to a diverse range of international stocks, including companies from Europe, Asia, and other regions. This broad market exposure can help strengthen your investment portfolio by reducing concentration risk and potentially enhancing returns.
Whether you are looking to expand your investments beyond Canadian stocks, capture growth opportunities in international markets, or simply diversify your portfolio, TPE can be a valuable addition to your investment strategy.
| ETF Name | Total Assets | Expense Ratio |
|---|---|---|
| TPE | $500 million | 0.10% |
BMO Low Volatility Canadian Equity ETF (ZLB)
The BMO Low Volatility Canadian Equity ETF (ZLB) is designed for investors seeking conservative protection for their portfolios. It invests in low-volatility stocks, particularly blue-chip companies that tend to have relatively steady performance. ZLB can be a stable option for investors looking to reduce volatility and add conservative protection to their investment portfolios.
With its focus on low-volatility stocks, the BMO Low Volatility Canadian Equity ETF (ZLB) aims to provide investors with stable performance and capital preservation. By investing in blue-chip companies, ZLB offers exposure to well-established, reputable businesses that have a history of weathering market fluctuations.
Low volatility stocks tend to experience smaller price fluctuations compared to the broader market. This can be an attractive characteristic for conservative investors who prioritize capital preservation and risk management. By investing in ZLB, investors can potentially mitigate the impact of market volatility and potentially achieve more consistent returns over the long term.
Blue-chip companies, which are generally large, well-established companies with a proven track record of stability and reliability, form the core of ZLB’s holdings. These companies are typically leaders in their respective industries, with strong financial positions and solid long-term prospects. By investing in blue-chip companies, ZLB aims to provide investors with exposure to high-quality businesses that have the potential for steady growth and dividends.
For investors looking to reduce volatility in their investment portfolios without sacrificing long-term returns, the BMO Low Volatility Canadian Equity ETF (ZLB) offers a compelling option. By focusing on low-volatility, blue-chip companies, ZLB provides a conservative approach to equity investing, making it suitable for risk-averse investors who still want exposure to the potential growth of the stock market.
iShares MSCI Minimum Volatility USA Index ETF (XMU)
The iShares MSCI Minimum Volatility USA Index ETF (XMU) is designed to offer minimum volatility exposure to the US market. It focuses on selecting stocks with low volatility characteristics to help reduce risk for investors. XMU can be a suitable option for those looking for stable performance and downside protection in the US market. By investing in XMU, you can potentially mitigate the impact of market turbulence and seek consistent returns.
Meta Stock
Meta Stock is a leading trading platform that caters to investors looking for low fees and a wide range of investment options, including ETFs. With its reputation as a reputable brokerage environment, Meta Stock offers Canadian investors a reliable platform to execute their trades efficiently and cost-effectively.
One of the key advantages of Meta Stock is its low trading fees, which can significantly benefit investors seeking to optimize their investment returns. By reducing the impact of fees on investment performance, Meta Stock empowers investors to make the most of their trading activities.
In addition to its attractive fee structure, Meta Stock provides access to a diverse range of account types tailored to different investor needs and preferences. From individual accounts to corporate accounts, Meta Stock ensures that all investors can find suitable options to accommodate their unique investment strategies.
Furthermore, Meta Stock’s comprehensive suite of investment options includes a vast selection of ETFs. Whether your investment focus is on fixed income, equities, or other asset classes, Meta Stock offers a wide array of ETFs that can help diversify and strengthen your portfolio. This extensive selection allows investors to build a well-rounded and balanced investment strategy, leveraging the benefits of ETFs.
To summarize, Meta Stock is a top-notch trading platform that stands out for its low fees, comprehensive account types, and diverse investment options, including ETFs. If you are seeking a reputable brokerage environment and a cost-effective solution for your investment needs, Meta Stock is a worthy platform to consider.
CIBC Investor’s Edge
CIBC Investor’s Edge is a discount brokerage platform offered by CIBC, one of the largest banks in Canada. It provides Canadian investors with a convenient and cost-effective way to manage their investments online. With CIBC Investor’s Edge, you can take control of your investment portfolio and make online trades with ease.
One of the key advantages of CIBC Investor’s Edge is its low fees. The platform charges a flat commission of $6.95 per online trade for stocks and ETFs, making it an affordable option for investors looking to minimize costs and maximize their returns.
In addition to low fees, CIBC Investor’s Edge offers a wide range of account types to suit your individual needs. Whether you’re an experienced investor or just getting started, CIBC Investor’s Edge has the right account for you.
The platform also provides access to a comprehensive suite of investment options, allowing you to build a diversified portfolio tailored to your investment goals and risk tolerance. From stocks and ETFs to mutual funds and bonds, CIBC Investor’s Edge offers a variety of investment options to help you achieve your financial objectives.
When making investment decisions, it’s important to have access to the right information. That’s why CIBC Investor’s Edge provides valuable investment research tools, including market analysis, stock reports, and market news. These resources can help you stay informed and make well-informed investment decisions.
In summary, CIBC Investor’s Edge is a popular choice for Canadian investors looking to trade online at a low cost. With its low fees, wide range of account types, investment options, and investment research tools, CIBC Investor’s Edge offers a comprehensive solution for managing your investments and achieving your financial goals.
Considerations for Choosing ETFs
When it comes to choosing ETFs for your investment portfolio, there are several important factors to consider. These factors can help you make informed decisions and select ETFs that align with your financial goals and risk appetite. Key considerations include the expense ratio, portfolio composition, and performance track record.
Expense Ratio
The expense ratio is a critical metric that measures the annual fee as a percentage of the fund’s average assets. A lower expense ratio can have a significant impact on your returns over time. When comparing ETFs, it’s important to assess the expense ratio and choose ETFs with competitive fees.
Diversification
Diversification is a key strategy for reducing risk in your investment portfolio. When evaluating ETFs, consider the sectors, industries, and geographic regions the ETF invests in. Look for ETFs that offer a well-diversified portfolio to effectively spread your risk across different asset classes.
Performance Track Record
Examining the historical performance of an ETF can provide valuable insights into how it has performed in various market conditions. While past performance is not indicative of future results, it can help you assess the consistency and potential of an ETF. Look for ETFs with a strong performance track record that aligns with your investment goals.
| Consideration | Description |
|---|---|
| Expense Ratio | Measure of the annual fee as a percentage of the fund’s average assets |
| Diversification | Assessing the sectors, industries, and geographic regions the ETF invests in |
| Performance Track Record | Evaluating the historical performance of the ETF in different market conditions |
Benefits of ETF Investing
ETF investing offers several benefits for Canadian investors. By incorporating ETFs into your investment strategy, you can take advantage of low costs, diversified portfolios, and ease of trading. Let’s explore these benefits in more detail:
Low Costs
Compared to mutual funds, ETFs typically have lower expense ratios. This makes them a cost-effective investment option, allowing you to maximize your returns by keeping your expenses low. With the potential for lower management fees and trading costs, ETFs can help you save money while still gaining exposure to various market sectors.
Diversified Portfolios
ETFs provide you with the opportunity to build diversified portfolios. With a single ETF, you can gain exposure to a broad range of assets, such as stocks, bonds, commodities, or specific market sectors. By diversifying your investments across different sectors, industries, and geographic regions, you can spread your risk and potentially increase the stability of your portfolio.
Ease of Trading
ETFs are traded on stock exchanges, making them easily accessible for investors. You can buy and sell ETFs throughout the trading day, just like individual stocks. This liquidity and flexibility allow you to quickly adjust your investment positions based on market conditions or changing investment goals. ETFs also offer transparency, as their holdings are disclosed daily, allowing you to make informed investment decisions.
With these benefits, ETF investing provides a convenient and efficient way to manage your investments and achieve your financial goals. Consider adding ETFs to your investment portfolio to take advantage of their low costs, diversified exposure, and ease of trading.
| Benefits of ETF Investing |
|---|
| Low Costs |
| Diversified Portfolios |
| Ease of Trading |
Conclusion
In conclusion, investing in ETFs can be a smart strategy for Canadian investors who are looking to optimize their investment portfolios. The top 20 ETFs in Canada offer a range of options for different investment goals and risk tolerances. From fixed income ETFs to global equity ETFs, investors have the opportunity to build diversified portfolios with low costs and potential for long-term growth.
When choosing ETFs, it is important to consider factors such as expense ratios, portfolio composition, and performance track records. The expense ratio can impact the overall returns of the investment, so it is crucial to select ETFs with competitive fees. Diversification across sectors, industries, and geographic regions can help mitigate risk and maximize potential returns. Evaluating the historical performance of the ETFs and the fund size can provide insights into how they have performed in different market conditions.
By carefully selecting ETFs that align with their investment objectives, Canadian investors can navigate the uncertainties of the market and optimize their portfolios. ETFs offer the advantages of low costs, diversification, and ease of trading. With the top 20 ETFs in Canada, investors have a wide range of options to choose from and can tailor their investments to suit their risk appetite and long-term goals.