Best Canadian ETFs for 2021



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While some categories generated heated debate among our panelists, that was decidedly not the case with Canadian equities. All five Canadian equity ETFs from 2020 return: VCN, XIC, HXT, ZCN and ZLB (see the chart below for full ETF names).

However, no new funds were added. We considered adding five new names, but none attracted the five-vote majority necessary. 

One of the more tempting additions championed by Yves Rebetez is Mackenzie Canadian Large Cap Equity Index ETF (QCE/TSX), which has a rock-bottom MER of 0.05%. Launched early in 2018, QCE tracks the Solactive Canada Large Cap Index. Rebetez says the crash/correction in March 2020 revealed that, in Canadian-dollar terms, Canadian investors’ returns were improved if they had significant foreign exposure, “as our loonie took on some serious water.” As such, he urges investors to review their exposure to domestic energy and financials stocks. 

Some panelists, like Dale Roberts, argued for the inclusion of Canadian dividend funds like the iShares Core S&P/TSX Composite High Dividend Index ETF (XEI/TSX) or the Vanguard Canadian High Dividend Yield Index ETF (VDY/TSX). As new panelist Mark Seed argued, retirees may have more reason to consider dividend ETFs, given the paltry returns of fixed-income. 

Remember that Canadian stocks are also amply represented in the All-in-One asset allocation ETFs section so be aware of possible duplication of securities.  

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<tbody

ETF Name Ticker Management Fee MER # of Holdings Description
Vanguard FTSE Canada All Cap Index ETF VCN 0.05 0.06 180 Exposure to Canadian small-, medium- and large-caps; ultra-low fee
iShares Core S&P/TSX Capped Composite Index ETF XIC 0.05 0.06 219 Tracks Canada’s best-known index with a very low fee
Horizons S&P/TSX 60 ETF HXT 0.07 0.03 60 Tax-efficient; rock-bottom 0.03% fee after rebate, until at least Dec. 31, 2021
BMO S&P TSX Capped Composite Index ETF ZCN 0.05 0.06 222 Fee as low as VCN and XIC; more assets than VCN
BMO Low Volatility Canadian Equity ETF ZLB 0.35 0.39 46 Invests in low-beta Canadian stocks that have lower volatility than the market


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