For investors looking for core Canadian stock market holdings, exchange-traded funds that track S&P/TSX indexes are an efficient, low-cost approach. Morningstar’s Medalist Ratings can help investors find the best options.
Funds in the Canadian equity 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. To find the best S&P/TSX ETFs, we screened for those earning a
The 4 Best Canadian Equity ETFs to Buy in 2026
The results include both ETFs tracking the broad S&P/TSX Composite Index and the narrower S&P/TSX 60 Index.
- BMO S&P/TSX 60 Index ETF ZIU
- BMO S&P/TSX Capped Composite Index ETF ZCN
- iShares Core S&P/TSX Capped Composite Index ETF XIC
- iShares S&P/TSX 60 Index ETF XIU
Morningstar expects the highly rated Canadian equity funds on this list to outperform their peers over a full market cycle. But even though all the funds on our list fall into the same category, they may practice different strategies and behave differently. Investors need to do some homework to understand exactly what a particular fund invests in before buying.
Here’s a quick look at each of the best TSX-tracking ETFs. Review a fund’s complete report for more details.
BMO S&P/TSX 60 Index ETF
- MER: 0.14
- : GoldMorningstar Medalist Rating
- : N/AMorningstar Rating
Over the past 12 months, the BMO fund rose 26.07%, while the average fund in its category rose 21.00%. The fund launched in October 2023.
This fund fully replicates the S&P/TSX 60 Index. S&P builds the index to represent the Canadian large-cap market as accurately as it can. A committee starts with a pool of stocks that meet basic liquidity requirements, and it selects 60 stocks that collectively mirror the large-cap market. That doesn’t always mean the largest 60 stocks, though the committee doesn’t leave too many fingerprints on the index.
This strategy weights stocks by market capitalization, a cost-efficient and proven approach. Market-cap weighting channels the market’s collective view on each holding’s relative value, allowing the fund to coast on the research of the crowd without running up its own expenses. Buffers make it more difficult for a stock to exit this portfolio once it has been added, promoting low turnover. The index rebalances quarterly, but the committee has discretion to add or subtract constituents between rebalance dates.
This fund’s relatively large market-cap orientation is its defining trait. Filtering out small-cap stocks and weighting stocks by market cap jointly place more emphasis on the largest stocks in the market. Investors should expect this fund to measure up best when mega-cap stocks like Royal Bank of Canada, Shopify, and Toronto-Dominion Bank—the fund’s top three holdings as of August 2025—pace the overall market.
Otherwise, the shape of this portfolio approximates the average Canada-equity fund. The portfolios trade at similar valuations. This fund’s end-August 2025 stake in financials exceeded the category norm by 5 percentage points, but it sported a similar sector allocation elsewhere. Targeting the largest 90% of the market gives this fund access to most of the opportunity set available to its peers. That should enhance the impact of its low fee over the long term.
At roughly 60 holdings, this fund is leaner than most of its category rivals. It’s also top-heavy owing to its limited holdings list and market-cap weighting. That said, the stocks that sit atop this portfolio tend to be worthy of their rich valuations. Nine of the top 10 holdings sported wide or narrow Morningstar Economic Moat Ratings at the end of August 2025 that reflect their financial health and competitive advantages.
Note: This share class’ Process Pillar rating and analysis are inherited from an analyst-covered passive share class which tracks the same index: iShares S&P/TSX 60 ETF (SecID: FOUSA06AYW).
Brendan McCann, associate analyst
Read Morningstar’s full report on the BMO S&P/TSX 60 Index ETF.
BMO S&P/TSX Capped Composite Index ETF
- MER: 0.06
- : GoldMorningstar Medalist Rating
- : ★★★★Morningstar Rating
The C$18.4 billion fund has climbed 27.21% over the past 12 months, outperforming the average fund in its category, which rose 21.00%. The BMO fund, launched in May 2009, has climbed 24.94% over the past three years and gained 14.93% over the past five years.
BMO 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 Canadian equity Morningstar Category average, but is 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 opinions 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 its 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 June 2026) and energy (18%) 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 1.90 percentage points annualized over the past 10 years through June 2026. 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, senior associate analyst
Read Morningstar’s full report on the BMO S&P/TSX Capped Composite Index ETF.
iShares Core S&P/TSX Capped Composite Index ETF
- MER: 0.06
- : GoldMorningstar Medalist Rating
- : ★★★★Morningstar Rating
The C$34.2 billion fund has climbed 27.22% over the past 12 months, outperforming the average fund in its category, which rose 21.00%. The BlackRock fund, launched in February 2001, has climbed 24.94% over the past three years and gained 14.93% over the past five years.
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 usually slightly higher than the category average’s 35%. Sweeping in mid- and small-cap helps diversify the portfolio further, especially 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 opinions 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 (36% of assets as of July 2026) and energy (18%) 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 1.90 percentage points annualized over the past 10 years through June 2026. 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, senior associate analyst
Read Morningstar’s full report on the iShares Core S&P/TSX Capped Composite Index ETF.
iShares S&P/TSX 60 Index ETF
- MER: 0.17
- : GoldMorningstar Medalist Rating
- : ★★★★★Morningstar Rating
The C$22.4 billion fund has gained 26.06% over the past 12 months, while the average fund in its category is up 21.00%. The BlackRock fund, launched in September 1999, has climbed 24.11% over the past three years and gained 14.50% over the past five years.
IShares TSX/S&P 60 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.
S&P builds the index that this exchange-traded fund tracks by targeting the 60 stocks that best represent the Canadian large- and mid-cap market. That normally covers nearly 90% of the market but still makes for a top-heavy portfolio. The 10 largest holdings represented between 43% and 52% of the portfolio over the past 10 years. That’s higher than the category average, but the pedigree of the franchises atop the portfolio dials back firm-specific risk.
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 opinions 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.
Save for its larger market-cap orientation, this index fund looks a lot like the average portfolio in the Canadian equity Morningstar Category. The portfolios sport similar sector compositions and value-growth bents. Mimicking the category norm indicates that this fund captures most of the opportunity set available to its active peers. That amplifies the impact of its cost advantage, a reliable engine for category-relative performance.
Sector-level concentration creeps into this portfolio. Heavy stakes in financials (42% of assets as of June 2026) and energy (18%) 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 2.04 percentage points annualized over the past 10 years through June 2026. 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, senior associate analyst
Read Morningstar’s full report on the iShares S&P/TSX 60 Index ETF.
