Is VFV a Good ETF for Canadians?

Maximize your returns with ETF investing. Learn about exposure to market indices without the risks of concentration.

Puja Tayal

Author Bio

Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

Education

Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

Areas of Expertise

Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Favorite Investment Quote

"Risk comes from not knowing what you're doing." — Warren Buffett

Published October 15, 4:00 pm EDT

ETF investing is all about market returns. The base objective is to get exposure to a market index or commodities while removing the risk of concentration and fund manager bias. The Vanguard S&P 500 Index ETF (TSX: VFV) is a good investment vehicle to get exposure to the United States market. The investing case for America is very strong. In the MSCI World Index, the United States alone accounted for 72.9%, while Canada accounted for 3.3% as of September 2026.

ETF stands for Exchange Traded Fund — Source: Getty Images

Should Canadians get exposure to US markets?

Each country has its strengths, and Canada’s strength lies in mining and energy stocks. These two sectors are the biggest exporters and constitute 18.4% and 16.3% of the TSX Composite Index as of September 30, 2026. In the large-cap space, the big six banks dominate the index. The nature of these businesses is gradual growth and dividends, making Canadian stocks good for passive income.

While Canadian stocks bring familiarity, there is concentration risk. The US markets give you exposure to the world’s largest stocks by market capitalization. Be it large-cap industrial or technology stocks of the United States and other countries, they all trade on the Nasdaq and NYSE because of their global outreach and access to enormous capital. Many Canadian companies, from Celestica to Royal Bank of Canada, trade on the US stock exchange as they outgrow opportunities at home.

The sheer size and volume of the American markets make it imperative for Canadians to get a piece of US markets for better growth opportunities. Market-linked ETFs are a good investment vehicle for it.

Are ETFs a good way for Canadians to get US market exposure?

The two major indices represent the US large caps: the S&P 500 Index and the Nasdaq 100 Composite Index.

The S&P 500 Index takes the top 500 stocks by market cap, including those trading on the NYSE and Nasdaq across sectors, giving a well-diversified sector exposure and steady long-term returns.

The Nasdaq 100 Index takes the top 100 stocks by market cap and excludes NYSE-listed stocks and financial stocks. Thus, it is more concentrated towards the volatile technology sector.

The Nasdaq 100 is a high-growth, high-risk index with 68.1% of its weight in technology, whereas the S&P 500 has 39.7% weightage in information technology and 11.4% in financials.

Comparing the performance of the above two indices with the TSX Composite Index, US indices have outperformed significantly in the long term. The 10-year annualized returns gap speaks for itself.

Annualized Return	TSX Composite Index	S&P 500 Index	Nasdaq 100 Index
1-year	20.6%	20.2%	24%
3-Year	22.7%	25%	37.5%
5-Year	11.8%	17%	-24.7%
10-Year	9.4%	16.6%	24.1%

Looking at the exposure and performance of the S&P 500 Index against the TSX Composite Index, investing in US markets presents a good investing opportunity for Canadians.

You can’t directly invest in an index. ETFs are an efficient way to do the same. They try to replicate the index performance by investing in the same stocks at the same index weightings. Several ETFs replicate the S&P 500 Index, but the important aspect is the management expense ratio (MER) and exposure to the CAD-USD exchange rate. An ETF that is not currency hedged is more beneficial to Canadians, as the US dollar is stronger than the Canadian dollar.

Is VFV a good ETF for Canadians?

We looked at three ETFs that give unhedged exposure to the S&P 500 Index, based on MER and historical performance.

The Vanguard S&P 500 Index ETF with an MER of 0.08%
The BMO S&P 500 Index ETF (TSX: ZSP) with MER of 0.09%
The iShares Core S&P 500 Index ETF (TSX: XUS) with MER of 0.09%

Average annual return as of Sep 30, 2026	1-Year	3-year	5-year	10-year
Vanguard S&P 500 Index ETF	18.1%	24.5%	16.1%	15.9%
iShares Core S&P 500 Index ETF	17.9%	24.6%	16.1%	15.8%
BMO S&P 500 Index ETF	18%	24.5%	16.1%	15.9%
S&P 500 Index	20.2%	25%	17%	16.6%

The Vanguard S&P 500 Index ETF tops the performance and has the lowest MER, making it a good option for Canadians seeking exposure to US markets for long-term investing.