Top 10 Best Canadian ETFs to Invest in 2023

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Although mutual funds have long been favored, one market instrument that has gained significant attention and become a go-to choice for many investors is the Exchange-Traded Fund (ETF). ETFs have grown in popularity due to their high diversification, risk mitigation, and trading flexibility compared to other instruments. An ETF consists of a group of securities traded on a stock market. It can include stocks, commodities, currencies, bonds, and real estate. Regardless of the type of ETF, it remains a marketable investment with a price attributed to it at a given time. This allows for relatively easy buying and selling on the stock market throughout the day, unlike mutual funds that can only be traded at the end of the day based on their net asset value (NAV). ETFs are more affordable and simpler to trade than mutual funds, making them a favorable choice for achieving investment goals.

In light of the impending global recession, which Canada cannot escape, Canadian investors seek low-cost yet effective investment options that provide returns. ETFs are an excellent choice to fulfill this multi-dimensional need. Here, we present the 10 Best Canadian ETFs that every investor looking to diversify their portfolio with low-cost, high-return securities should consider.

Top 10 Best Canadian ETFs to Invest in 2023

TD Q Canadian Dividend ETF 

For investors seeking stable income, the TD Q Canadian Dividend ETF emerges as an outstanding option. This ETF concentrates on organizations and companies with a strong track record of earnings and dividend distributions while displaying potential for long-term profitability and increased dividend growth. Its primary investments are focused on the Canadian market, spanning various sectors with a particular emphasis on major players in industries like financial services, the industrial sector, and the consumer market. With a current dividend yield of approximately 3.81%, this ETF is a safe investment choice.

BMO Low Volatility Canadian Equity ETF 

During economic downturns, investors seek ETFs less affected by market volatility. The BMO Low Volatility Canadian Equity ETF is a notable performer in this category. Managed by BMO, this fund is designed to offer favorable returns to Canadian investors even amidst high market volatility. It is ideal for those looking for a dependable option that adds an extra layer of protection to their portfolio. While it may not rank at the top, this ETF also is suitable. It maintains a steady performance, granting easy access to reputable companies known for their consistent results regardless of market conditions.

Vanguard FTSE Developed All Cap ex North America Index ETF

With approximately 99.8% of its holdings consisting of stocks from global companies, the Vanguard FTSE Developed All Cap ETF presents a superb investment option. By encompassing stocks from various regions worldwide, it becomes an effective tool for mitigating the impact of high market volatility in one country through the superior performance of companies in other countries. With extensive global exposure spanning Europe, the Middle East, and the Pacific, this ETF holds the potential to deliver remarkable returns at a low cost to its investors.

iShares Core S&P US Total Market Index ETF 

This ETF tracks the CRSP US Total Market Index, representing stocks ranging from small-cap, mid-cap, and large-cap companies. The asset class is mainly US equities and individual stocks of companies. This BlackRock ETF has a hold over the US stock market and is meant for long-term holding. With a management expense ratio of around 0.08% and an average annual return of approx. 10.40%, this ETF offers a defensive income for the ones who want to earn money out of the stock market passively.

Vanguard Canadian Aggregate Bond Index ETF 

Bonds are always a great option when any investor is considering fixed income, and what better than a Bond ETF that covers the best and almost 40% AAA bonds from all over Canada? With a stable holding in the market for the last ten years and providing consistent returns to its customers, this ETF is also great in terms of its MER, which is as low as 0.09%, which makes it one of the best Canadian Bond ETFs.

iShares Core MSCI All Country World ex Canada Index ETF 

By selecting an All-World ex-Canada ETF, a Canadian investor can simplify the process of holding individual ETFs for the US, other countries, and emerging markets. And one such ETF is the iShares Core MSCI All Country World ex Canada Index ETF that comprises more than 9,000 stock holding globally. It has an MER of 0.22% and is also very tax-efficient. Since its holding includes mainly equities, it is preferred by risk-takers over risk-averse market investors.

Vanguard FTSE Canada All Cap Index ETF 

Vanguard FTSE Canada All Cap Index ETF is a distinctive ETF with a Canadian focus. Although it may not be the largest all-Canada ETF available, it performs as it were. This 2013-founded ETF now includes over 180 stocks, primarily in the financial, basic materials, and energy sectors. It has generated a respectable 7.57% average yearly return since inception. The ETF’s passive management methodology generates meager management fees, with an MER of just 0.05%. With Royal Bank of Canada, Toronto Dominion Bank, and Enbridge Inc. as its top three holdings, this ETF undoubtedly demonstrates its potential to be one of the best in the Canadian market.

Vanguard S&P 500 Index ETF

With an average annual return since inception of 15.51%, a low MER of around 0.09%, and an asset class comprising major US equities and real-estate companies, the Vanguard S&P 500 Index ETF is undoubtedly one of the best ETFs in Canada for US equities. With S&P 500 index growing at an active rate, this ETF can be considered by those who are in to take a medium risk and want good returns. With its top holdings of Apple, Amazon, and Microsoft, it provides the path to earning sweet returns in the long run. If someone is considering investing in this ETF, this is the right time to make a buy-and-hold decision.

iShares Core MSCI EAFE IMI Index ETF 

An ETF with a higher financial sector weighting that might be more appealing to investors is the iShares Core MSCI EAFE IMI Index ETF. This ETF can provide the diversification required to weather market changes, owning over 2,600 holdings throughout Europe, Asia, and Australia. This ETF can be one of the better options for international investment prospects, with an average annual return of 7.2% over the past ten years and its global exposure.

BMO Aggregate Bond Index ETF 

The BMO Aggregate Bond Index ETF stands out as one of the finest bond ETFs accessible to Canadian investors due to its extensive selection of investment-grade corporate and government bond holdings. Its asset class predominantly consists of bonds, offering investors a reliable source of consistent income and a haven amidst the array of ETF options in the market. ETFs have become a staple in every investor’s portfolio when formulating their investment strategy. These market instruments excel in the market and offer avenues for consistent returns to investors. By incorporating ETFs into their portfolio, Canadian investors gain a valuable tool for hedging the risks associated with volatile investments. Additionally, ETFs provide opportunities for diversifying their investment decision-making capabilities due to the wide range of options available. This strategic approach positions investors to make informed choices and adapt to changing market dynamics, solidifying their position as strategic investors in the future.

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