Some exchange-traded funds (ETF) soar as they sit right where the money is already flowing. When strong markets keep climbing, low-cost index ETFs can rise steadily without asking investors to pick individual winners. That can make them especially attractive for a Tax-Free Savings Account (TFSA), where gains and distributions can compound tax free.
For Canadians, global ETFs can also fix a common problem: too much home bias. Vanguard found Canadians still allocate about 50% of their equity exposure to domestic stocks even though Canada makes up only about 2.6% of the global equity market. So, let’s look at some easy ways to diversify.
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ZSP
BMO S&P 500 Index ETF (TSX:ZSP) is the simplest of the bunch, and sometimes simple wins. It tracks the S&P 500, so it gives TFSA investors exposure to the biggest U.S. companies in one shot. That means you get broad access to tech, healthcare, financials, and consumer giants without needing to guess which single stock will keep leading. As of writing, ZSP traded around $100, which shows just how widely used it has become.
It also looks like a strong TFSA fit because it is cheap to own and easy to understand. BMO highlights it as a cost-effective core holding for investors who want U.S. market growth without stock picking. The outlook still looks solid if large U.S. companies keep delivering earnings growth, though the obvious risk is valuation. After a strong run, U.S. stocks are not exactly hiding in the bargain bin. Still, as a long-term TFSA core holding, ZSP remains hard to argue with.
ZEA
BMO MSCI emerging Markets Index ETF (TSX:ZEA) adds the developed-world diversification many Canadian investors miss. It tracks the MSCI EAFE Index, which covers large- and mid-cap stocks across Europe, Australasia, and the Far East, while excluding both Canada and the U.S. That gives investors exposure to markets like Japan, the U.K., France, Switzerland, and Germany. As of writing, ZEA had about $12..5 billion in net assets and traded around $28.50.
That matters as a TFSA should not have to lean only on Canada and the U.S. ZEA’s top exposures include financials, industrials, healthcare, and consumer names, which gives it a different flavour than a North America-heavy portfolio. BMO also flagged international equities as one of its notable ideas for 2026. The risk is that overseas markets can move more slowly and face currency swings, but the valuation backdrop outside the U.S. still looks more reasonable, which gives ZEA a nice role as a steady diversifier.
ZEM
BMO MSCI EAFE Index ETF (TSX:ZEM) rounds out the trio by adding emerging markets. It tracks the MSCI Emerging Markets Index, giving investors exposure to countries and companies tied to faster-growing economies. As of writing, it had about $3 billion in net assets and traded around $28. That is a lot smaller than ZSP or ZEA, but still sizeable enough to show strong investor interest.
This is the most adventurous of the three, but that is exactly why it can work in a TFSA. Emerging markets can benefit from improving China sentiment, stronger commodity demand, and faster long-term economic growth. BMO’s strategy team specifically pointed to emerging markets as a 2026 theme, noting that commodity exporters in Latin America and improving activity in smaller Asian markets could attract capital. The downside is volatility. ZEM will be bumpier than ZSP or ZEA. But for investors with time on their side, that extra growth potential can be worth it.
Bottom line
Put the three together and the TFSA case looks pretty strong. ZSP gives you U.S. leadership, ZEA adds developed-market diversification outside North America, and ZEM adds emerging-market upside. Different engines, different regions, one account. All together, it’s a pretty smart way to buy into ETFs that are already moving higher without putting all your money in one corner of the world.
