I(caps)nvesting in stocks and ETFs has become a popular way
to grow your wealth in Canada. While Stocks require significant time and
knowledge to invest in, ETFs are the go-to option for people who don't want to
invest a lot of time. With so many options to invest in ETFs, choosing the
right one for your portfolio can be challenging. Today, we are going to
discuss the best ETFs to invest in Canada, highlighting their growth over the
years. These are the top ETFs to buy now and hold.
What is ETF?
ETF, or Exchange-Traded Funds, is a type of investment fund that trades in stock markets. They are similar to stocks but considered a bit safer than stocks due to their diversification and broader market exposure. In simpler terms, when you buy an ETF, you invest in a fund that pools money from multiple investors and invests in a wide variety of companies.
Why ETFs are a smarter way to Invest?
ETFs are known for their flexibility, cost-effectiveness and convenience. Here are a few key reasons why you should consider investing in ETFs:
- Diversification: Diverseness of the ETFs spreads the risk across multiple assets, hence reducing the risk of loss, making them a more balanced and safe alternative to shares.
- Liquidity: Similarly to stocks, ETFs can be bought and sold at any time during the trading day.
- Transparency: Most ETFs disclose their holdings daily to the public which provides a clear transparency where your money is being invested.
- Tax Efficiency: The structure of ETFs usually results in lower capital gain distributions, which can reduce your tax liability.
Top 4 Best ETFs to Invest in Canada
There are a lot of ETFs and their providers in the market but here are the best ETFs to buy now in Canada. These ETFs have been selected based on popularity, performance, and broad market exposure and, our in-depth research through various trusted sources. The main focus of these ETFs is "GROWTH" over time. Here is the list:
- Vanguard Growth ETF Portfolio (VGRO)
- Vanguard S&P 500 Index ETF (VFV)
- iShares Core MSCI Canada Index ETF (XIC)
- BMO Low Volatility Canadian Equity ETF (ZLB)
1. Vanguard Growth ETF Portfolio (VGRO)
VGRO is a popular exchange-traded fund in the Toronto Stock Exchange, managed by one of the top investment management firms in the world. As the name suggests, it is structured for growth by offering exposure to diversified stocks and bonds of Canadian and International companies. VGRO is best suited for long-term investment as it can withstand market fluctuations while maintaining a moderate level of risk and potential for higher growth.
| Market Cap | Yeild | Last 5-Year Growth |
|---|---|---|
| 6.31B | 2.13% | 44.90% |
| as of 3 Dec 2024 | ||
2. Vanguard S&P 500 Index ETF (VFV)
Another Vanguard ETF with exposure to global markets (excluding Canada), providing high performance over time. The ETF invests in large and medium-sized companies across different sectors. It is a low-cost, passive exchange-traded fund that tracks the performance of the FTSE All-World ex Canada Index. It is a good option for achieving international diversification.
| Market Cap | Yeild | Last 5-Year Growth |
|---|---|---|
| 21.05B | 0.95% | 99% |
| as of 3 Dec 2024 | ||
3. iShares Core MSCI Canada Index ETF (XIC)
The iShares Core MSCI Canada Index ETF or XIC is an ETF managed by one of the world's leading investment firms, BlackRock. This ETF is designed to track the S&P/TSX Composite Index which serves as the benchmark index for the Canadian Economy. XIC offers exposure to various industries including financials, energy and technology. By investing it gives you access to all large, mid and small-cap Canadian stocks.
| Market Cap | Yeild | Last 5-Year Growth |
|---|---|---|
| 15.16B | 2.41% | 51.56% |
| as of 3 Dec 2024 | ||
4. BMO Low Volatility Canadian Equity ETF (ZLB)
ZLB is a low volatility Canadian Equity ETF managed by BMO Global Asset Management. This exchange-traded fund is specifically designed with a focus on low volatility aiming to minimize risk and to provide a stable growth than other equity ETFs. Like XIC, it also focuses on the same big, large and small Canadian companies across various sectors. With its low-volatility nature, it is a great option for the Risk-Averse investors looking for a stable return.
| Market Cap | Yeild | Last 5-Year Growth |
|---|---|---|
| 4.07B | 2.29% | 38.9% |
| as of 3 Dec 2024 | ||
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Why these are the Best ETFs to Invest in Canada?
What makes these ETFs the best choice - Diverse Strategies. VGRO has a well-balanced long-term growth focused whereas XIC is suitable for the group of investors wanting to be exposed to the Canadian market in cost-effective way. ZLB uses a conservative approach making it stand out for someone looking for stability and low volatility. Moreover, VFV provides international diversification, making it a high-potential investment. Besides this, All these ETFs are focused on Canadian Economy. Each of these ETFs can be a valuable inclusion to your portfolio.
Potential Risks
Similar to any investment, ETFs do possess some risk. Even though these risks are generally lower than stocks still it is a good idea to be aware of them. Here is a list of some possible risks associated with ETFs:
- Market Risk: The market downturn is the primary risk in exchange-traded funds but it can be reduced by diversifying your portfolio across different sectors
- Interest Rate Risk: Some ETFs that include bonds may decrease in value if interest rates rise.
- Sector/Industry Risk Sometimes collapse in some major sector can impact the performance of these ETFs.
This post is intended for informational purposes only. Investing in ETFs carries risks, so it’s important to do your research or consult with a financial advisor before making any decisions. (alert-warning)
Conclusion
In summary, ETFs can be an excellent choice to grow your money while diversifying your portfolio whether you are a beginner or experienced investor. VGRO, VFV, XIC and ZLB are the best ETFs to invest in Canada right now as discussed above. If you are looking for the top ETFs to buy now go for these. However, like any other investment keep in check with the latest information to avoid any unprecedented results.