Exchange-traded funds can offer an easy, inexpensive way to gain stock market exposure, but there’s a dizzying array to choose from. To help investors find ETFs focused on Canadian stocks, we’ve screened Morningstar’s Canadian equity category for those with Gold, Silver, or Bronze Medalist Ratings, meaning our analysts expect them to outperform their categories’ index or the median over the long term.
Here are the seven best Canadian stock ETFs for investors in January 2025, as evaluated by Morningstar analysts:
- Vanguard FTSE Canada All Cap ETF VCN
- Vanguard FTSE Canada ETF VCE
- BMO Low Volatility Canadian Equity ETF ZLB
- iShares MSCI Minimum Volatility Canada ETF XMV
- BMO S&P/TSX Capped Composite ETF ZCN
- iShares Core S&P/TSX Capped Composite ETF XIC
- iShares S&P/TSX 60 ETF XIU
Screening for the Best Canadian Stock ETFs
We screened Canadian equity funds for ETFs with Gold, Silver, or Bronze Medalist Ratings that are 100% assigned by Morningstar analysts (rather than indirectly or quantitatively assigned). All but one of the seven names that made it through the screen are index funds. Two of these track versions of the FTSE Canada Index, two track the S&P/TSX Composite Index, and two track other indexes. The one actively managed fund is the C$5.8 billion BMO Low Volatility Canadian Equity ETF.
Here’s a closer look at these ETFs. A table with their recent performance is at the end of this article.
Vanguard FTSE Canada All Cap ETF
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★
The C$13.3 billion Vanguard FTSE Canada All-Cap ETF tracks a market-cap-weighted index of Canadian stocks across company sizes. It holds 205 stocks, with an average size of C$61.2 billion for its holdings.
“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,” writes Morningstar associate analyst Brendan McCann. “Tracking nearly the entire Canadian stock market makes this a well-diversified portfolio.”
Vanguard FTSE Canada ETF
- Morningstar Medalist Rating: Gold
- Morningstar Rating: ★★★★★
The C$3.1 billion Vanguard FTSE Canada ETF holds a market-cap-weighted index focusing on large- and mid-cap stocks.
“The index tracked by this exchange-traded fund represents the Canadian stock market, avoids undue turnover, and taps the market’s collective wisdom with market-cap weighting,” writes McCann. “The benchmark absorbs the stocks that represent the top 86% of the Canadian stock market’s capitalization after removing those that fail to meet basic liquidity and size requirements.”
BMO Low Volatility Canadian Equity ETF
- Morningstar Medalist Rating: Bronze
- Morningstar Rating: ★★★★
This C$5.8 billion fund is the only actively managed fund on the list, and it aims to invest in a less-risky portfolio of Canadian stocks. While the fund is actively managed, its portfolio is created according to a specific set of rules, rather than left to the discretion of individual managers.
“This exchange-traded fund selects 45 stocks from the largest Canadian companies based on their sensitivity to market movements,” writes McCann. “The fund calculates a stock’s sensitivity over the prior five years and gives more weight to recent years.”
The stocks are picked from the S&P/TSX Composite Index. The fund has a 10% weighting cap for any individual stock and a 35% cap on sector weightings.
iShares MSCI Minimum Volatility Canada
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
This C$351 million strategic beta fund follows an index based on a mathematical model that creates the lowest-volatility portfolio it can using stocks from the MSCI Canada Index while remaining within certain restrictions.
“These restrictions hold sector weightings within 5 percentage points of their parent index allocation. Stocks cannot exceed their parent index weighting by 1.5 percentage points or 20 times, whichever is lower,” writes Morningstar senior analyst Ryan Jackson. “The index also limits one-way turnover to 10% at each semiannual rebalance and controls exposure to nontargeted risk factors to prevent an incidental value or growth bias or meaningful factor tilt.” He says the fund’s “ability to weather drawdowns should continue to drive a stellar risk/reward profile.”
BMO S&P/TSX Capped Composite ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
iShares Core S&P/TSX Capped Composite ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★
These ETFs track the S&P/TSX Capped Composite Index, which follows the benchmark S&P/TSX Composite Index while trying to increase diversification by limiting any individual stock to a 10% weighting. McCann describes both as offering “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.”
iShares S&P/TSX 60 ETF
- Morningstar Medalist Rating: Silver
- Morningstar Rating: ★★★★★
This C$20.7 billion fund tracks the S&P/TSX 60 Index, which focuses on large-cap Canadian stocks. “S&P builds the index that this ETF tracks by targeting the 60 stocks that best represent the Canadian large- and mid-cap market,” writes McCann. “That normally covers nearly 90% of the market but still makes for a top-heavy portfolio.”
