Is VFV a Good ETF for Canadians?

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.            

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.  

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%

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.