Canadian ETFs are a low-cost way to build a diversified portfolio in a TFSA, RRSP, or FHSA, but three common mistakes eat into returns: paying bank mutual-fund fees, holding currency-hedged ETFs for decades, and owning overlapping funds that one fund could replace. This guide is general education, not financial advice.
Below are the top Canadian ETF picks for 2026 by category, with each fund’s MER and where to buy it. YieldMaple checked the MERs on this page against the iShares Canada product list and the Vanguard Canada and BMO fund pages in September 2026; fund companies cut fees from time to time, so the fund page is the final word.
Individual ETF reviews: VFV (S&P 500) · ZSP (BMO S&P 500) · XIC (Canadian) · VDY (dividend) · XEQT (one-fund) · VEQT (one-fund). For dividend-focused: Best Canadian Dividend ETFs 2026.
What is the best one-ticker Canadian ETF?
XEQT is the cheapest all-stock one-ticker Canadian ETF, with a 0.19% MER against 0.22% for Vanguard’s VEQT. These asset-allocation ETFs are funds-of-funds that hold thousands of stocks across global markets in a fixed stock/bond mix and rebalance themselves.
| Feature | Ticker | Provider | Equity % | MER |
|---|---|---|---|---|
| XEQT | iShares | 100% | 0.19% (better on this row) | |
| VEQT | Vanguard | 100% | 0.22% | |
| XGRO | iShares | 80% | 0.19% | |
| VGRO | Vanguard | 80% | 0.22% | |
| XBAL | iShares | 60% | 0.18% | |
| VBAL | Vanguard | 60% | 0.22% | |
| XCNS | iShares | 40% | 0.18% | |
| VCNS | Vanguard | 40% | 0.22% |
MERs from the iShares Canada product list and Vanguard Canada fund pages, checked September 30, 2026. Verify before purchase — fees change.
The iShares versions are cheaper at every risk level: XGRO costs 0.19% against 0.22% for VGRO, XBAL 0.18% against 0.22% for VBAL, and XCNS 0.18% against 0.22% for VCNS.
Top pick: XEQT. It has the lowest MER of the all-stock options at 0.19%. VEQT holds more stocks (13,721 per Vanguard, against 8,296 for XEQT per iShares), but at that breadth the risk and return are functionally the same. The MER gap is 0.03 percentage points, which on a $10,000 holding is about $3 a year. A recurring deposit into either fund is a complete portfolio.
If you want bonds in the mix, XGRO (80% equity) is the standard “moderate growth” choice. Investors with long time horizons often hold 100% equity (XEQT) rather than the 60/40 split common in US-focused advice; the right mix depends on how large a drop you can sit through. The guide to bond ETFs in Canada covers the funds for holding bonds as a separate position.
What is the best Canadian ETF for the S&P 500?
VFV (Vanguard S&P 500 Index ETF) is the cheapest way to hold the S&P 500 in Canadian dollars, with a 0.08% MER per Vanguard Canada. VFV holds the S&P 500 unhedged, meaning you take the currency risk along with the equity risk. The guide to S&P 500 ETFs in Canada sets VFV beside the other funds that track the index.
Alternatives:
- ZSP (BMO S&P 500 Index ETF) — same exposure, 0.09% MER. Functionally identical to VFV.
- XUS (iShares Core S&P 500 Index) — 0.09% MER. Same exposure.
- VSP (Vanguard S&P 500 CAD-hedged) — 0.08% MER. Hedges the US dollar back to Canadian dollars; the cost of hedging shows up as tracking difference rather than in the MER.
Top pick: VFV. Its 5-year annualized NAV return to September 30, 2026 was 16.14%, per Vanguard Canada. Past returns don’t predict future ones.
What are the best Canadian dividend ETFs?
VDY, XEI, ZDV and CDZ are the main Canadian dividend ETFs, and VDY and XEI share the lowest MER at 0.22%. They hold Canadian dividend payers such as banks, telecoms, pipelines and utilities.
| Feature | Ticker | Provider | Yield | MER | Style |
|---|---|---|---|---|---|
| VDY | Vanguard | 3.11% | 0.22% (better on this row) | Cap-weighted high yield | |
| XEI | iShares | 3.51% | 0.22% | High-yield TSX stocks | |
| ZDV | BMO | 2.76% | 0.39% | Selected dividend payers | |
| CDZ | iShares | 3.05% | 0.66% | Aristocrats (5+ years of increases) |
Yields from each provider's fund page in September and October 2026: VDY, XEI and CDZ are 12-month trailing yields; ZDV is BMO's annualized distribution yield. Yields move with prices and payouts.
In sentence form: VDY yields 3.11%, XEI 3.51%, ZDV 2.76% and CDZ 3.05%, per each provider’s page. ZDV’s MER is 0.39% and CDZ’s is 0.66%.
Top pick: VDY. VDY’s market-cap weighting puts the heaviest weight on the largest payers (the Big 5 banks, Enbridge, BCE) and its MER ties for the lowest in the category. Inside a TFSA, its 3.11% trailing yield is paid tax-free; unlike a savings account, though, the unit price can fall.
CDZ has the highest MER in the group. The “Aristocrat” screen sounds appealing, but it costs 0.44 percentage points a year more than VDY.
Best Canadian bond ETFs
Bonds are not exciting, but in fixed income the fee is a large share of the return, so the cheapest broad fund usually wins. Two ETFs cover the whole Canadian investment-grade bond market:
- VAB (Vanguard Canadian Aggregate Bond) — broad investment-grade Canadian bond market. MER 0.08% per Vanguard Canada.
- ZAG (BMO Aggregate Bond) — the same exposure from BMO; its current MER is on BMO’s fund page.
Top pick: VAB. Either works.
For short-term cash, CASH (Global X High Interest Savings ETF) and CMR (iShares Premium Money Market) hold bank deposits or short-term money-market securities with minimal interest-rate risk. CASH’s annualized distribution yield was 2.09% as at October 6, 2026, at a 0.11% MER, and it is not eligible for CDIC deposit insurance (CDIC lists ETFs and mutual funds among the products it does not cover). Before choosing it, compare its current yield with Wealthsimple Chequing, which pays 1.25% interest on the Core plan, and Wealthsimple Savings, which pays 2.5% (available to every client, no tiers).
What is the best Canadian ETF for the TSX?
XIC and VCN are the cheapest broad TSX ETFs, at 0.06% and 0.05% MER respectively, per iShares and Vanguard.
- XIC (iShares Core S&P/TSX Capped Composite) — 217 stocks, MER 0.06%.
- VCN (Vanguard FTSE Canada All Cap) — 212 stocks, MER 0.05%. The cheapest by a hair.
- XIU (iShares S&P/TSX 60) — 60 largest TSX stocks, MER 0.17%. More concentrated and more expensive.
Top pick: XIC, with VCN effectively tied on cost. XIU’s fame doesn’t justify an MER almost three times XIC’s.
For a head-to-head breakdown, see XIC vs XIU compared.
Best Canadian ETF for international equity
For developed markets outside North America (Europe, Japan, Australia):
- XEF (iShares Core MSCI EAFE IMI) — 0.22% MER.
- VIU (Vanguard FTSE Developed All Cap ex North America) — 0.21% MER.
Either works.
For emerging markets:
- VEE (Vanguard FTSE Emerging Markets All Cap) — 0.24% MER.
- XEC (iShares Core MSCI Emerging Markets IMI) — 0.28% MER.
Top pick: VEE on cost.
Best Canadian REIT ETFs
For real estate exposure inside a TFSA or RRSP (REIT distributions are tax-inefficient in non-registered accounts):
- XRE (iShares S&P/TSX Capped REIT) — 0.60% MER. Standard exposure.
- VRE (Vanguard FTSE Canadian Capped REIT) — 0.32% MER. Cheaper.
- ZRE (BMO Equal Weight REITs) — equal-weighted; its current MER is on BMO’s fund page.
Top pick: VRE on cost.
Where can you buy Canadian ETFs commission-free?
Wealthsimple, Questrade and BMO InvestorLine charge no commission on stock and ETF trades, and TD, CIBC and RBC waive commissions on lists of selected ETFs. Where you buy matters less than what you buy, but commissions still cost real money over decades.
Free options:
- Wealthsimple Trade — $0 commission to buy or sell listed Canadian and US stocks and ETFs. The catch is currency conversion: US trades from a CAD account carry a 1.5% conversion fee on every conversion. A USD account costs $10 a month for Core clients; free for Premium and Generation, and conversions into or out of it are tiered by size: 1.5% under $10,000; 1.0% from $10,000; 0.5% from $25,000; 0% from $100,000.
- Questrade — $0 to buy and sell Canadian and U.S.-listed stocks and ETFs. At Questrade you can hold USD in registered accounts, so US trades don't force a conversion, which suits investors who hold US-listed ETFs.
- BMO InvestorLine — $0 per stock or ETF trade on Canadian and US exchanges, online or agent-assisted.
Bank-owned brokers with commission-free ETF lists: TD Direct Investing charges $9.99 per trade (Standard); $7.00 per trade (Active Trader); $0 on select ETFs; its commission-free list has 108 ETFs, including VFV, VEQT, VGRO, VBAL, SPY, QQQ and TD's own ETFs such as TEQT, but not XEQT. CIBC Investor’s Edge’s list covers popular ETFs including VFV, VEQT, XGRO and XBAL, but not XEQT, and RBC Direct Investing’s list covers iShares ETFs, including XEQT, XGRO, XBAL, XIC and XUS. An ETF outside a broker’s list pays the full commission: at TD’s standard $9.99 per trade, buying once a month for 20 years means 240 trades and about $2,400 in commissions that would otherwise stay invested.
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What account should I hold Canadian ETFs in?
A common order is TFSA first, then RRSP, then an FHSA for first-time home buyers, with a non-registered account last. Tax efficiency matters. The framework:
- TFSA first. Suits high-growth investments (XEQT, VFV, VEE) because all gains are tax-free, even when withdrawn.
- RRSP second — especially for US-listed ETFs (no US withholding tax under the treaty) and for income you want to defer tax on.
- FHSA if you don’t own a home and are 18–71. Combines TFSA tax-free growth with an RRSP-style deduction: $8,000 a year, $40,000 lifetime.
- Non-registered (taxable) account last. Tax-efficient holdings fit here — broad index ETFs that don’t pay out big distributions, and Canadian dividend ETFs (eligible for the dividend tax credit).
Read the full breakdown: TFSA vs RRSP.
Common mistakes Canadian ETF investors make
These five errors come up most often:
- Holding currency-hedged equity ETFs for decades (VSP, XSP, XEH). Hedging has an ongoing cost, and over long periods currency swings tend to even out. Hedging makes more sense for short-term positions than for 30-year retirement holdings.
- Owning XEQT and VFV and XIC. XEQT already holds US stocks (about 46%) and Canadian stocks (about 25%, through XIC itself). Owning all three double-counts. A one-ticker fund or a self-built mix does the job — not both.
- Holding US-listed ETFs (VOO, VTI, SPY) in a TFSA. US withholding tax of up to 15% on dividends is unrecoverable there. Canadian-listed versions (VFV, VUN) are the usual TFSA alternative.
- Trading frequently in a TFSA. The CRA can treat active TFSA trading as carrying on a business, which makes gains fully taxable. Buy-and-hold keeps the TFSA tax-free.
- Defaulting to the bank’s house-brand ETFs. TD, RBC, BMO and CIBC have launched their own ETF lineups. Most are fine but rarely cheaper than the Vanguard and iShares equivalents, and even small MER gaps compound over decades. Comparing MERs before buying takes a minute.
Sample Canadian ETF portfolio (TFSA)
Here is a simple three-ETF TFSA allocation built from the picks above. It shows how the funds fit together; it is not a recommendation for your situation.
- 70% XEQT (core global equity)
- 20% VFV (S&P 500 overweight)
- 10% VDY (Canadian dividend tilt for some passive income)
It’s intentionally simple. Three ETFs. One annual rebalance. The picks barely matter past a certain point — the discipline does.
Where to go next
If you’re new to investing, start here: How to invest in Canada.
If you want a deeper comparison of the two big one-ticker funds: XEQT vs VEQT.
For the broker side: Wealthsimple vs Questrade.