Canada’s exchange-traded fund (ETF) scene is getting pretty stacked these days, with so many banks and financial institutions looking to get a piece of the growing passive investment market. Undoubtedly, there are so many hands-off options for passive investors to look through. While not all of them will deserve your undivided attention, I think it’s worth hunting down some of the ETF products that can help make managing a long-term TFSA portfolio easier, cheaper, and more efficient.
At the end of the day, solid ETFs are best held for extremely lengthy durations. For a new investor just getting started, ETFs are a great place to look, not just because they make investing quick and easy but because many folks tend to be less tempted to trade them over the near term. Indeed, many of the ETFs you come across probably won’t get all too much air time from those talking heads on television.
Though some of the portfolio holdings may, I still think ETFs are great options for those who want to “set and forget.” That way, they can do well over time and not be tempted to get in at peaks (when sentiment and valuations are on the higher end) and get out in troughs (when sentiment and valuations may actually be quite low).
In this piece, we’ll look at two of my favourite underrated ETFs that could be solid performers in 2025 and beyond. Of course, I view the name as a great pick-up for investors looking to invest for the next 10 years or more.
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BMO Equal Weight Banks Index ETF
The setup for the Canadian bank stocks looks pretty good for 2025. Indeed, the banks have picked up traction in the past six months.
This momentum, I believe, can carry into this new year. Of course, you can pick up any one of the big bank stocks on their own at these levels and still do well. However, the reason I prefer BMO Equal Weight Banks Index ETF (TSX: ZEB) is that it’s a quick and easy way to expose yourself to the Big Six banks without having to rebalance yourself and pay all that commission for broader exposure to the industry. For new retail investors, the ZEB is a great option while the yield is still at a relatively attractive 4%.
With a modest 0.28% management expense ratio (MER) and a relatively equal weighting across Canada’s top banks, the ZEB stands out as a potentially overlooked option for the new year as the banking scene finally feels enough relief to shoot for new highs.
Vanguard S&P 500 Index ETF
Vanguard S&P 500 Index ETF (TSX: VFV) is another fantastic low-cost option for Canadian investors to ride the S&P 500’s ascent in the new year. Indeed, the U.S. market has been outrunning the TSX Index for quite a while.
And while nobody knows if it can continue to beat the TSX in 2025, I still think gaining exposure to American stocks is a must for Canadians who may be guilty of giving into home country bias with their investments.
The VFV is such a cheap and simple option from one of the legends in passive investments. Vanguard is one of the gold standards and one that I think Canadian investors should consider stashing away for the long run.
