Even with the uncertainty brought on by the Iran war, investors in Canadian stock exchange-traded funds have enjoyed solid returns.
To screen for the top-performing ETFs in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. Three made it through the screen:
- BMO S&P/TSX Capped Composite Index ETF ZCN
- iShares Core S&P/TSX Capped Composite Index ETF XIC
- Vanguard FTSE Canada All Cap Index ETF VCN
Canadian Equity ETF Performance
ETFs in this category must invest at least 90% of their equity holdings in securities domiciled in Canada, and their average market capitalization must be greater than the Canadian small/mid cap threshold, according to the Canadian Investment Funds Standards Committee.
Over the past 12 months, the average fund in the Canadian equity Morningstar Category returned 37.83%. On an annualized basis, Canadian equity funds have climbed 17.98% over the past three years and 13.27% over the past five. Meanwhile, the Morningstar Canada Index has risen 47.45% over the past 12 months, 22.47% per year over the past three years, and 15.81% per year over the past five.
We looked at returns from the past one, three, and five years in Morningstar Direct. We screened for Canada-domiciled ETFs in the top 33% of the category using their lowest-cost primary share classes for those periods. We also filtered for ETFs with a Morningstar Medalist Rating of Bronze, Silver, or Gold. We excluded ETFs with assets under C$100 million and analyst coverage that was not 100%. This left three investments, two of which track the same index.
BMO S&P/TSX Capped Composite Index ETF
- : SilverMorningstar Medalist Rating
- : ★★★★Morningstar Rating
The C$15.7 billion fund has gained 47.07% over the past year, while the average fund in its category is up 37.83%. The BMO fund, launched in May 2009, has climbed 21.50% over the past three years and 15.27% over the past five.
Tracking nearly the entire Canadian stock market makes this a well-diversified portfolio. It normally tallies around 230 holdings, the top 10 of which represented between 35% and 39% of the portfolio over the past 10 years. That’s a higher share than the category average but on par with its Morningstar Canada Index category benchmark. Sweeping in mid- and small-cap stocks can present an edge when large caps fall out of favor.
This strategy weights stocks by market capitalization, a cost-efficient and proven approach. Market-cap weighting channels the market’s collective view on the relative value of each holding, allowing the fund to coast on the research of the crowd without incurring a lot of expenses. It also requires little turnover, a benefit that’s enhanced further by index buffers that are designed to cut back on trading and the costs that come with it.
The shape of this index fund looks a lot like the average portfolio in the Canadian equity Morningstar Category. Its average holding is a bit larger than the category average, but the portfolios sport nearly identical sector compositions and value-growth orientations. Mirroring the category norm indicates that this fund captures the full opportunity set available to its active peers. It also means that the fund maximizes the impact of its cost advantage, a reliable engine for sound category-relative performance.
Sector-level concentration creeps into this portfolio. Heavy stakes in financials (33% of assets as of July 2025) and energy (16%) tend to soak up about half the portfolio. These biases reflect the composition of the Canadian market rather than a flaw in its target index. Still, the fund can suffer when those sectors, or certain industries within them, face challenges.
The fund outperformed its average peer by 1.51 percentage points annualized over the past 10 years through August 2025. The fund’s return fluctuated more than its average peer during that period, but its risk-adjusted performance was still higher. Low fees, low turnover, and little cash allow the fund to capture the Canadian stock market’s performance with minimal drag.
Brendan McCann, associate analyst
iShares Core S&P/TSX Capped Composite Index ETF
- : SilverMorningstar Medalist Rating
- : ★★★★Morningstar Rating
Over the past year, the iShares fund rose 47.09%, while the average fund in its category rose 37.83%. The fund, launched in February 2001, has climbed 21.50% over the past three years and 15.27% over the past five.
IShares Core S&P/TSX Capped Composite ETF offers broad exposure to the Canadian stock market at a low price, a simple formula that few of its peers have been able to beat in the long run.
Tracking nearly the entire Canadian stock market makes this a well-diversified portfolio. It normally tallies around 230 holdings, the top 10 of which represented between 35% and 39% of the portfolio over the past 10 years. That’s a higher share than the category average but on par with its Morningstar Canada Index category benchmark. Sweeping in mid- and small-cap stocks can present an edge when large caps fall out of favor.
This strategy weights stocks by market capitalization, a cost-efficient and proven approach. Market-cap weighting channels the market’s collective view on the relative value of each holding, allowing the fund to coast on the research of the crowd without incurring a lot of expenses. It also requires little turnover, a benefit that’s enhanced further by index buffers that are designed to cut back on trading and the costs that come with it.
The shape of this index fund looks a lot like the average portfolio in the Canadian equity Morningstar Category. Its average holding is a bit larger than the category average, but the portfolios sport nearly identical sector compositions and value-growth orientations. Mirroring the category norm indicates that this fund captures the full opportunity set available to its active peers. It also means that the fund maximizes the impact of its cost advantage, a reliable engine for sound category-relative performance.
Sector-level concentration creeps into this portfolio. Heavy stakes in financials (32% of assets as of August 2025) and energy (16%) tend to soak up about half the portfolio. These biases reflect the composition of the Canadian market rather than a flaw in its target index. Still, the fund can suffer when those sectors, or certain industries within them, face challenges.
The fund outperformed its average peer by 1.51 percentage points annualized over the past 10 years through August 2025. The fund’s return fluctuated more than its average peer during that period, but its risk-adjusted performance was still higher. Low fees, low turnover, and little cash allow the fund to capture the Canadian stock market’s performance with minimal drag.
Brendan McCann, associate analyst
Vanguard FTSE Canada All Cap Index ETF
- : GoldMorningstar Medalist Rating
- : ★★★★Morningstar Rating
Over the past year, the Vanguard fund rose 45.98%, while the average fund in its category rose 37.83%. The fund, launched in August 2013, has climbed 21.61% over the past three years and 15.42% over the past five.
Vanguard FTSE Canada All Cap ETF offers broad exposure to the Canadian stock market at a low price, a simple formula that few of its peers have been able to beat in the long run.
Tracking nearly the entire Canadian stock market makes this a well-diversified portfolio. It normally tallies around 200 holdings, the top 10 of which represented between 35% and 41% of the portfolio over the past 10 years. That’s a higher share than the category average but on par with its Morningstar Canada Index category benchmark. Sweeping in mid- and small-cap stocks can present an edge when large caps fall out of favor.
This strategy weights stocks by market capitalization, a cost-efficient and proven approach. Its market-cap weighting channels the market’s collective view on the relative value of each holding, allowing the fund to coast on the research of the crowd without incurring a lot of expenses. It also requires little turnover, a benefit that’s enhanced further by index buffers that are designed to cut back on trading and the costs that come with it.
The shape of this index fund looks a lot like the average portfolio in the Canadian equity Morningstar Category. Its average holding is a bit larger than the category average, but the portfolios sport nearly identical sector compositions and value-growth orientations. Mirroring the category norm indicates that this fund captures the full opportunity set available to its active peers. It also means that the fund maximizes the impact of its cost advantage, a reliable engine for sound category-relative performance.
Sector-level concentration creeps into this portfolio. Heavy stakes in financials (34% of assets as of August 2025) and energy (16%) tend to soak up about half the portfolio. These biases reflect the composition of the Canadian market rather than a flaw in its target index. Still, the fund can suffer when those sectors, or certain industries within them, face challenges.
The fund outperformed its average peer by 1.43 percentage points annualized over the past 10 years through August 2025. The fund’s return fluctuated more than its average peer during that period, but its risk-adjusted performance was still higher. Low fees, low turnover, and little cash allow the fund to capture the Canadian stock market’s performance with minimal drag.
Brendan McCann, associate analyst
