The exchange-traded fund (ETF) market had a fantastic year in 2021, with an estimated $53 billion flowing into the market last year. Investing in ETFs has never been this popular in Canada, and it appears that it could become increasingly popular in the coming years.
Provided that you can find the right fund, ETF investing can offer you the opportunity to enjoy the benefits and convenience of a portfolio of assets managed by professionals on your behalf. Whether you are an investor searching for a way to instantly diversify your investment capital or you want a hands-off approach to stock market investing, so you don’t have to manage a self-directed portfolio, the right ETF can help you achieve your financial goals.
Today, I will discuss two of the top ETFs in Canada that you can consider if you want to diversify your portfolio and inject high-growth potential with a hands-off approach.
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BMO S&P/TSX Capped Composite Index ETF
BMO S&P/TSX Capped Composite Index ETF (TSX: ZCN) is a fund that seeks to provide you with investment returns by replicating the performance of the S&P/TSX Capped Composite Index before expenses and fees. The fund invests in equity securities as they are held within the underlying index, comprising over 200 of the top Canadian stocks that represent 95% of the Canadian stock market.
ZCN ETF is one of the best ways to get exposure to a group of the top 200 publicly traded Canadian companies in the form of a single investment. At writing, the fund’s net assets are worth over $7.44 billion. It is a low-cost fund with a management expense ratio of just 0.06%, and its annualized distribution yield is 2.67%.
Vanguard Growth ETF Portfolio
Vanguard Growth ETF Portfolio (TSX: VGRO) is a fund of funds and one of the most popular Canadian ETFs today. VGRO is a growth-focused fund that invests in a wide range of securities across various sectors of the economy. Unlike other funds, VGRO does not invest in a basket of securities to align with its investment goals. Instead, the fund invests in other ETFs that align with its objectives, providing you with even greater diversification.
At writing, VGRO boasts assets under management of over $3.30 billion. It comes with a higher MER of 0.24%, and it boasts a 1.82% annualized distribution yield. The fund might be more costly than ZCN ETF, but it offers a more growth-focused approach to deploying your capital that could make it an attractive investment to consider for your portfolio.
Foolish takeaway
One of the biggest advantages that come with diving into ETF investing is that it significantly reduces the hassle of monitoring your investment portfolio and rebalancing it to align it with your investment goals. The fund managers adjust the holdings held by the fund to realign them with predetermined investment goals.
Additionally, ETFs also diversify your investment capital across several securities, making it a low-risk investment compared to a narrow self-directed portfolio. ZCN ETF and VGRO ETF could be excellent investments if you want to create a diversified portfolio of assets that can add high-growth potential to your investment portfolio.
