Exchange-traded funds (ETFs) continue to be a preferred investment vehicle for many investors looking for exposure to the market. Whether an investor is looking to actively pick individual stocks or simply own the market, there’s a place in every investor’s portfolio for ETFs.
These funds can allow investors to build a long-term base and add around the edges. Investors can also buy and hold one or two (or more) ETFs to create an even more diversified portfolio over time.
The good news for Canadian investors is that there are a number of Canada-based ETFs worth considering. Here are three I think provide the best value for Canadians right now.
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iShares MSCI EAFE IMI Index ETF
iShares MSCI EAFE IMI Index ETF (TSX: XEF) is an excellent choice for investors seeking international exposure beyond North America. This ETF provides broad exposure to developed markets outside Canada and the U.S., including Europe, Asia, and Australia.
XEF offers exposure to over 2,500 companies across various industries and geographies, reducing concentration risk. With a focus on markets such as Japan, the U.K., France, and Germany, XEF allows investors to participate in global economic growth.
Moreover, with a management expense ratio (MER) of approximately 0.22%, XEF is an affordable way to gain global diversification compared to actively managed international funds. Investing in international stocks through XEF helps mitigate risks associated with economic downturns in Canada.
Hence, with global markets poised for recovery and growth in 2025, XEF provides a solid foundation for Canadian investors looking to expand their international holdings.
Vanguard FTSE Canada All Cap Index ETF
Canadian investors looking to capitalize on domestic growth should consider Vanguard FTSE Canada All Cap Index ETF (TSX: VCN). This ETF tracks the FTSE Canada All Cap Index, which includes large-, mid-, and small-cap Canadian stocks, offering broad exposure to the country’s equity market.
Unlike ETFs focusing only on large-cap stocks, VCN provides exposure across all market capitalizations, ensuring a more complete investment in Canada’s economy. VCN’s portfolio is well-balanced to take advantage of these strong industries. With a low MER of approximately 0.30%, VCN is a cost-effective way to gain diversified exposure to Canadian stocks.
Many Canadian companies, particularly in the banking and energy sectors, offer strong dividend yields, making VCN attractive to income-seeking investors. With Canada’s economy expected to remain resilient in 2025, VCN presents an opportunity for investors who want to maintain a strong home-country bias while benefiting from domestic growth.
BMO S&P/TSX Capped Composite Index ETF
Another great choice for investors looking for Canadian market exposure is BMO S&P/TSX Capped Composite Index ETF (TSX: ZCN). This ETF mirrors the performance of the S&P/TSX Capped Composite Index, which includes nearly all publicly traded Canadian stocks while limiting individual company weightings.
ZCN provides exposure to over 200 Canadian companies, ensuring a well-rounded investment in the country’s stock market. By capping the weight of individual stocks, ZCN prevents over-concentration in the largest companies, offering a more balanced approach compared to uncapped ETFs.
With an MER of approximately 0.06%, ZCN remains a low-cost investment vehicle for broad Canadian market exposure. The S&P/TSX Composite Index has historically delivered steady long-term returns, making ZCN a reliable choice for investors focused on sustained growth. Hence, ZCN is an excellent option for investors who want a diversified, low-cost way to invest in the Canadian economy while avoiding overweight positions in top companies.
