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9 Best Canadian ETFs 2024

In the ever-evolving landscape of Canadian investments, the looming economic uncertainties have sparked a renewed interest in Exchange-Traded Funds (ETFs).

As the prospect of a mild recession hovers on the horizon, Canadian investors are turning to the stability and diversification offered by ETFs.

In this comprehensive guide, we will discuss the top-performing & best Canadian ETFs that can serve as pillars of strength in your investment portfolio.

Best Canadian ETFs for 2024

1. BMO Monthly Income ETF (ZMI)

  • Investment Philosophy: Amidst the sea of uncertainty, Erin Allen, VP for ETF Online Distribution at BMO Global Asset Management, advocates for fixed-income ETFs like ZMI. This ETF encompasses bonds, dividend ETFs, covered call ETFs, and corporate bonds, offering a robust fixed-income solution.
  • Strategic Insight: In a volatile market, ZMI stands as a stalwart, providing stability through a diversified income stream.

2. TD Q Canadian Dividend ETF (TQCD)

  • Investment Focus: For those seeking an alternative to fixed income, TQCD with its 3.87% distribution yield emphasizes dividend growth and long-term profitability. Jonathan Needham, VP of ETF Distribution for TD Asset Management, foresees its outperformance in 2023.
  • Market Outlook: TQCD positions itself as an excellent option for investors navigating the intricacies of the Canadian market.

3. iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV)

  • Addressing Inflation Woes: In the wake of the challenges posed by inflation in 2023, XDIV provides a defensive stance and consistent income, offering refuge to investors navigating uncertain economic climates.
  • Expert Opinion: Helen Hayes, Head of iShares Canada at BlackRock, highlights the shift towards defensive investments, solidifying XDIV’s relevance.

4. Vanguard Global Aggregate Bond Index ETF (VGAB)

  • Long-Term Investment Strategy: In the face of a potentially prolonged recession, VGAB emerges as a beacon. Covering a vast array of global bonds with an average maturity of 10 years, it aligns with Sal D’Angelo’s, Head of Product for Vanguard Canada, long-term investment philosophy.
  • Insights: D’Angelo’s strategic outlook emphasizes the importance of sustained, tactical investment over a 10-year horizon.
best canadian etfs

5. iShares Core Canadian Universe Bond ETF (XBB)

  • Silver Rating for Diversification: Recognizing the heightened risk in a potential recession, XBB stands out with its Silver rating for diversified exposure to Canadian bonds. Bryan Armour, Director of Passive Strategies Research at Morningstar, recommends it for balancing equity-heavy portfolios.
  • Investment Approach: XBB proves instrumental for investors seeking a balanced portfolio in the face of economic uncertainties.

6. TD Canadian Aggregate Bond Index ETF (TDB)

  • Defensive Investment Strategy: With unknowns looming on the horizon, the defensive stance of TDB shines through. Needham suggests TD ETF as a prudent choice with 70% investment in government bonds and 30% in corporate bonds.
  • Market Overview: TDB aligns with the conservative investor’s approach, offering stability and a reliable yield.

7. Vanguard FTSE Developed All Cap ex North America Index ETF (VIU)

  • Global Market Resurgence: Experts anticipate a global market rebound post-recession, making VIU an appealing option. With 58% exposure in Europe and 40% in the Pacific, VIU positions itself as a global powerhouse.
  • Strategic Positioning: D’Angelo and Armour underscore the significance of broadening portfolios beyond North America, advocating for VIU as a valuable addition.

8. TD International Equity Index ETF (TPE)

best canadian etf
  • Overcoming Home Bias: Recognizing the inherent home bias in Canadian investors, TPE offers an affordable option with 97% international equity. It aligns with the strategy of diversifying portfolios beyond North American markets.
  • Market Insight: D’Angelo and Armour emphasize the broader market as a prime destination post-recession, positioning TPE as a strategic investment.

9. BMO Low Volatility Canadian Equity ETF (ZLB)

  • Conservative Protection: In uncertain markets, ZLB emerges as a stable option, providing conservative protection through blue-chip companies with steady performance.
  • Market Dynamics: Needham highlights the relevance of low volatility in the market uncertainty of 2023, solidifying ZLB’s standing.

10. iShares MSCI Minimum Volatility USA Index ETF (XMU)

  • Navigating Challenging Environments: As investors brace for a challenging environment, XMU offers a low-volatility option, focusing on steady sectors such as utilities.
  • Safety in Uncertainty: Helen Hayes underscores the importance of safety, especially in the face of interest rate fluctuations, positioning XMU as a safety net for investors.

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Key Considerations When Evaluating Canadian ETFs

Expense Ratio and Fees

  • Critical Assessment: The cost, expressed as the expense ratio, significantly impacts returns. Lower expense ratios, coupled with minimal additional fees, are pivotal for long-term gains.

Portfolio Composition and Diversification

  • Strategic Analysis: Understanding the sectors, industries, and regions an ETF invests in is crucial. Diversification, achieved through a wide variety of assets, mitigates risk and aligns with individual investment goals.

Performance Track Record and Fund Size

  • Historical Performance: While past performance is not indicative of future results, analyzing historical data provides insights into an ETF’s resilience across diverse market conditions.
  • Fund Size Impact: Larger funds often offer better liquidity, facilitating seamless buying and selling. However, smaller ETFs may present unique opportunities with associated risks.

Conclusion

As economic uncertainties loom, the strategic selection of ETFs becomes paramount. This guide serves as a compass, navigating you through the intricacies of the best Canadian ETFs for 2024.

With a focus on stability, diversification, and strategic positioning, these ETFs stand as beacons of resilience in the face of an ever-changing financial landscape.

In your journey through the market intricacies, consider this guide a strategic ally, guiding you towards prudent investment decisions.