Discover the Best Canada ETFs for 2025: Top Picks for Smart Investors

As we look ahead to 2025, the landscape for investing in Canada is evolving, especially when it comes to Exchange-Traded Funds (ETFs). These investment vehicles are popular for their ability to offer diversification and lower costs. If you're on the hunt for the best Canada ETFs, this guide will help you uncover some top choices that can fit various investment strategies. Let’s explore ten standout ETFs that could be great additions to your portfolio.

Key Takeaways

• Consider diversification: ETFs can help spread risk across different sectors and asset classes.

• Look for low fees: Expense ratios can eat into your returns, so choose ETFs with lower management fees.

• Focus on performance: Analyze historical returns, but remember past performance is not always indicative of future results.

• Stay informed: Keep an eye on market trends and how they might affect your ETF choices.

• Align with your goals: Make sure the ETFs you choose fit your investment strategy and risk tolerance.

1. iShares Core Equity ETF Portfolio

The iShares Core Equity ETF Portfolio XEQT is a popular choice for investors wanting broad market exposure. It's like buying a little piece of almost every publicly traded company out there. This ETF aims to provide long-term capital growth by investing in a diversified portfolio of equity securities.

XEQT is designed to be a one-stop equity solution, holding a mix of Canadian, U.S., and international stocks.

Here's a quick look at what makes it tick:

• Diversification: Offers exposure to a wide range of companies across different sectors and geographies.

• Low Cost: It usually has a pretty low management fee, making it an affordable option for building a core portfolio.

• Simplicity: It simplifies investing by combining multiple equity asset classes into a single fund.

Think of it as a ready-made, diversified stock portfolio. It's a simple way to get exposure to the overall stock market without having to pick individual stocks. It's a good option if you don't want to spend a lot of time researching individual companies.

2. Invesco Nasdaq 100 Index ETF

This ETF is all about tracking the Nasdaq 100, which is basically a who's who of the biggest non-financial companies listed on the Nasdaq. Think tech giants, growth stocks, and large-cap players. It's a popular choice for investors who want exposure to the tech sector without going overboard on risk. The Invesco Nasdaq 100 Index ETF tracks the Nasdaq-100, offering a focused portfolio of technology and growth stocks.

It's worth noting that this ETF is more concentrated in its top holdings compared to broader market ETFs. This means its performance is heavily influenced by a smaller number of companies. It also tends to be more volatile, so it might not be the best fit if you're risk-averse.

Here's a quick rundown:

• Focus: Primarily technology and growth stocks.

• Volatility: Higher than broad market ETFs.

• Concentration: More concentrated in top holdings.

While it does ignore other sectors to some extent, it's a solid way to tap into the tech world without getting too narrow in your investment approach. It's like a curated selection of tech leaders, offering a balance between growth potential and relative stability.

It's a good option if you're looking to add some tech exposure to your portfolio, but remember to consider your risk tolerance and investment goals before diving in.

3. iShares ESG MSCI Canada Leaders Index ETF

This ETF is for investors who want to align their investments with their values. It focuses on Canadian companies that score well on environmental, social, and governance (ESG) factors. Basically, it's a way to invest in companies that are trying to do good, or at least, not do too much bad. The iShares ESG MSCI Canada Leaders Index ETF offers exposure to Canadian equities while considering ESG factors.

It's not just about feeling good, though. Many believe that companies with strong ESG practices are better positioned for long-term success. They might be more resilient to risks, better at attracting talent, and more innovative. So, this ETF could be a smart investment from both an ethical and financial perspective.

Here's a quick look at some potential benefits:

• Exposure to leading Canadian companies with strong ESG profiles.

• Diversification across various sectors of the Canadian economy.

• Potential for long-term growth and positive social impact.

Investing in ESG ETFs is not without risk. ESG ratings can be subjective, and there's no guarantee that ESG-focused companies will outperform the broader market. It's important to do your research and understand the ETF's methodology before investing.

While past performance isn't indicative of future results, it's still useful to look at how this ETF has performed compared to its peers. Keep an eye on its tracking error, expense ratio, and overall returns to make an informed decision. Remember to consider your own investment goals and risk tolerance before adding this ETF to your portfolio. You can also compare it to other thematic investing ETFs to see which one fits your needs best.

4. BMO S&P/TSX Capped Composite Index ETF

This ETF aims to replicate the performance of the S&P/TSX Capped Composite Index, offering broad exposure to the Canadian equity market. It's a popular choice for investors seeking diversified exposure to a wide range of Canadian companies. The ETF caps the weight of any single company to ensure diversification, preventing the fund's performance from being overly reliant on any one stock.

Here's a quick look at some key features:

• Broad market exposure

• Capped weighting to limit concentration risk

• Relatively low management fee

Investing in a broad market index like this can be a cornerstone of a well-diversified portfolio. It provides exposure to the overall Canadian economy and can serve as a solid foundation for long-term growth.

As of March 31, 2025, the ETF performance shows a year-to-date return of 1.46% and a one-year return of 15.67%. This ETF is a great way to get exposure to the top TSX ETFs in Canada.

5. Horizons S&P/TSX 60 Index ETF

The Horizons S&P/TSX 60 Index ETF is designed to mirror the performance of the S&P/TSX 60 Index, which represents the 60 largest companies in Canada by market capitalization. It's a popular choice for investors seeking broad exposure to the Canadian equity market through a single investment vehicle. This ETF offers a cost-effective way to participate in the growth of Canada's leading businesses. The Horizons S&P/TSX 60 Index ETF (HRZSF) can be a cornerstone in a diversified portfolio, providing exposure to key sectors of the Canadian economy.

• Diversification: Access to 60 of Canada's largest companies across various sectors.

• Liquidity: High trading volume, making it easy to buy and sell shares.

• Cost-Effective: Generally lower management fees compared to actively managed funds.

This ETF is a solid option for investors who want a simple, low-cost way to track the performance of the Canadian stock market's biggest players. It's not about picking winners; it's about owning a piece of the entire game.

6. Vanguard FTSE Canada All Cap Index ETF

This ETF aims to track the performance of the FTSE Canada All Cap Index. It's designed to give investors broad exposure to the Canadian equity market. This means it includes a wide range of companies, from the very largest down to smaller, less well-known ones. It's a simple way to get a diversified portfolio of Canadian stocks.

Think of it like buying a little piece of almost every publicly traded company in Canada. It's a pretty hands-off way to invest, which can be appealing if you don't want to spend a ton of time picking individual stocks. Plus, because it's an ETF, it's generally pretty liquid, meaning you can buy and sell shares relatively easily.

Investing in a broad market index like this can be a good starting point for many investors. It provides diversification and can serve as a core holding in a portfolio. However, it's important to remember that past performance isn't indicative of future results, and all investments carry risk.

Here's a quick look at some potential benefits:

• Broad diversification across the Canadian market

• Relatively low cost compared to actively managed funds. The best-performing Vanguard ETF boasts a low annual expense.

• Simple and easy to understand investment strategy

7. BMO Aggregate Bond Index ETF

Looking for stability in your fixed-income investments? The BMO Aggregate Bond Index ETF (ZAG) might be a good choice. It's designed to track the performance of the broad Canadian investment-grade bond market. This includes government, provincial, and corporate bonds, giving you pretty wide exposure.

ZAG is a popular option for investors seeking a diversified bond portfolio with a relatively low management fee.

Here's a quick look at some key details:

• Holdings: Investment-grade Canadian bonds

• MER: 0.09%

• Issuer: Bank of Montreal

Investing in bonds can help balance out a portfolio, especially when stocks are volatile. Bond ETFs like ZAG offer an easy way to access this asset class without having to buy individual bonds.

ZAG's index tracks bonds with a BBB rating or higher and a maturity of over one year. This focus on investment-grade bonds aims to reduce credit risk. For those looking to increase duration while maintaining stability, this ETF could be a solid pick.

8. iShares S&P/TSX Capped REIT Index ETF

This ETF is all about real estate investment trusts (REITs) listed on the Toronto Stock Exchange. If you're looking to add some real estate exposure to your portfolio without actually buying property, this could be an option. It's a pretty straightforward way to invest in a basket of Canadian REITs.

REITs can be a good source of income, as they are required to distribute a significant portion of their taxable income to shareholders. This ETF provides a convenient way to access this income stream, but remember that REITs can be sensitive to interest rate changes.

It's worth noting that iShares S&P/TSX Capped REIT Index ETF has received a Morningstar Medalist Rating of Negative. This is due to some concerns about the investment process, even though the management team is considered strong. So, do your homework before jumping in.

Here are a few things to consider:

• Diversification: The ETF holds a variety of REITs, spreading your investment across different properties and sectors.

• Income Potential: REITs tend to offer decent dividend yields, making this ETF attractive for income-seeking investors.

• Interest Rate Sensitivity: REITs can be affected by changes in interest rates, so keep an eye on the economic climate.

9. Invesco S&P 500 Equal Weight ETF

This ETF, ticker symbol RSP, offers a different approach to investing in the S&P 500. Instead of weighting companies by market capitalization, it gives each company in the index an equal weighting. This can lead to different performance compared to the traditional S&P 500 index.

While the Invesco S&P 500 Equal Weight ETF performance has slightly lagged the market-cap-weighted S&P 500 so far in 2025, some investors might find its diversification benefits appealing. It's worth considering if you're looking for a different way to access the S&P 500.

Here are a few things to keep in mind about equal-weight ETFs:

• They tend to be less concentrated in the largest companies.

• They may offer exposure to a broader range of companies within the index.

• They are rebalanced regularly, which can lead to higher turnover.

It's important to remember that past performance is not indicative of future results. Always do your own research and consider your own investment goals and risk tolerance before making any investment decisions.

10. iShares Global Clean Energy ETF and more

Okay, so the iShares Global Clean Energy ETF (ICLN, but we're talking the Canadian version, ICLN.CA) is all about investing in companies that are part of the clean energy revolution. Think solar, wind, and other renewable energy sources. It's a way to put your money where your mouth is if you care about the environment. But, like any investment, it's got its ups and downs. It's not just sunshine and rainbows, you know?

One thing to keep in mind is that this ETF can be pretty volatile. Clean energy is a growing sector, but it's also sensitive to things like government regulations and technological advancements. So, the price can jump around a lot more than, say, a broad market ETF. Also, keep an eye on the iShares Core Equity ETF Portfolio for a broader investment approach.

Here's a quick rundown:

• Pros: Exposure to a growing sector, aligns with ESG (Environmental, Social, and Governance) investing principles.

• Cons: Higher volatility, sector-specific risk.

• Considerations: Expense ratio, diversification within the clean energy sector.

Beyond ICLN, there are other thematic ETFs worth a look. These focus on specific trends or sectors, like cybersecurity, automation, or even specific countries. They can add some spice to your portfolio, but remember that they also come with more risk. It's all about finding the right balance for your investment goals.

Investing in thematic ETFs can be exciting, but it's important to do your homework. Make sure you understand the sector or trend the ETF is targeting, and be aware of the potential risks. Don't put all your eggs in one basket, as they say.

Here's a quick comparison of a few other thematic ETFs:

ETF Name	Focus
ARK Innovation ETF (ARKK)	Disruptive Innovation
Global X Robotics & AI ETF (BOTZ)	Robotics and Artificial Intelligence
HACK	Cybersecurity

Remember, past performance is no guarantee of future results. Do your research, talk to a financial advisor, and invest responsibly!

Final Thoughts on Canada ETFs for 2025

As we wrap up our look at the best Canada ETFs for 2025, it’s clear there are plenty of options out there for investors. Whether you're into tech, real estate, or just want to keep things simple with broad market ETFs, there's something for everyone. Remember, the key is to pick ETFs that fit your financial goals and risk level. Keep an eye on performance and fees, and don’t hesitate to adjust your portfolio as needed. Investing can be tricky, but with the right tools and knowledge, you can make smart choices. So, take your time, do your homework, and get ready to dive into the Canadian ETF market!

Frequently Asked Questions

What are ETFs and why are they popular in Canada?

ETFs, or Exchange-Traded Funds, are investment tools that combine many different stocks or bonds into one fund. They are popular in Canada because they are easy to trade, often cost less than mutual funds, and allow investors to diversify their investments.

How do I choose the best ETF for my investment goals?

To find the best ETF for you, think about what you want to achieve. Look at things like how the ETF has performed in the past, its fees, and what types of investments it holds. Make sure it matches your financial goals.

Can I invest in ETFs if I have a small amount of money?

Yes, you can start investing in ETFs with a small amount of money. Many brokers allow you to buy fractional shares, which means you don’t need to buy a whole share. This makes it easier for anyone to start investing.

What is the difference between an ETF and a mutual fund?

The main difference is how they are traded. ETFs are bought and sold on the stock exchange like stocks, while mutual funds are only traded at the end of the trading day. ETFs also usually have lower fees than mutual funds.

Are ETFs safe investments?

While ETFs can be a good way to invest, they still carry risks like any other investment. The value of an ETF can go up and down, so it's important to do your research and understand what you are investing in.

How often should I check my ETF investments?

It's a good idea to review your ETF investments regularly, but you don't need to check them every day. Many investors look at their investments quarterly or semi-annually to see how they are performing and if they need to make any changes.