Exchange traded funds (ETFs) are excellent options for long-term investors looking to generate meaningful long-term wealth. There are a number of key upsides for investors holding ETFs for the long haul, and we’ll get into a few in this article.
But for those looking to increase their exposure to Canadian stocks, I think three ETFs are the most pertinent to look at. These are the top funds by assets under management tracking the Canadian market.
Accordingly, those looking to broaden their exposure to some of the best global stocks may want to have a look. With rock-bottom expense ratios and solid underlying holdings, these ETFs provide relative stability and predictability. In today’s market, that’s hard to come by.
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Vanguard S&P 500 Index ETF (VFV)
First on this TSX-listed grouping of ETFs Canadian investors may want to consider is the Vanguard S&P 500 Index ETF (TSX: VFV). This ETF tracks the U.S.-listed S&P 500 Index, but is a fund that’s traded on the TSX, opening up the range of investment prospects for Canadian investors looking for exposure to the world’s most valuable market.
This ETF has shown rather consistent price appreciation over time, outside of the recent tariff-induced dip. Long-term investors who have bought this fund and held on for long periods of time have consistently done well, and I’d expect that trend to continue moving forward. Much like the next pick on this list, investors looking for exposure to top ETFs with broadly diversified portfolios and very low fees have a good one here.
BMO S&P 500 Index ETF (ZSP)
Moving on to the BMO S&P 500 Index ETF (TSX: ZSP), this ETF tracks a similar portfolio of stocks, and it has seen very similar price appreciation over the past five years.
What I find particularly interesting about this ETF is the premium it has tended to demand over and above its net asset value, suggesting long-term investors find outsized value in holding this ETF. And given the fact that this ETF is offered by top Canadian bank BMO, a solid percentage of the Canadian public has accessibility to this particular ETF.
I’m of the view that either option is a stellar choice for long-term investors who want North American exposure in their portfolios right now.
iShares S&P/TSX 60 Index ETF (XIU)
For investors looking to amplify their exposure to Canadian stocks, the iShares S&P/TSX 60 Index ETF (TSX: XIU) is an attractive option to consider.
As this fund’s name suggests, XIU tracks the 60 largest Canadian companies. And with so many worthy names in the Canadian market available at relatively attractive valuations, this is perhaps my top pick of the three right now.
Notably, this fund hasn’t performed as well as its U.S. counterpart over the past five years. But with the TSX now trading at an all-time high, so is this ETF.
For investors looking to have at least a percentage of their portfolio dedicated to Canadian stocks, XIU would be my preferred option. This ETF offers investors a juicy dividend yield of nearly 3%, which is much better than what investors can expect out of other U.S.-tracked ETFs.
