Best Canadian ETFs to Buy in 2021: Vanguard ETFs, iShares, +13 Others

Best Canadian ETFs - Vanguard ETFs, iShares, Horizons, + 13 Others

Need Help With Your Financial Planning or Debt Management?

Here at MoneyReverie, we do not only provide you with top-notch and relevant personal finance news and information, but we also provide consultation, including retirement planning, insurance, business debt management, investment, etc. Do you need help planning your finance or coming out of debt? Give us a shout at smile@moneyreverie.com or you simply click on the button below to begin

Congratulations on considering Canadian ETFs against other types of funds.

This is a cost-effective decision because other funds, like mutual funds, are vulnerable over the long term… from trading costs, tracking error and poor fund management.

However, ETFs, offer many advantages worth considering when making your investment plan for 2021.

Exchange-Traded Funds (ETFs) are popular due to their low costs, diversification, and tax efficiency.

So with the right ETFs, you can diversify your portfolio without buying hundreds of individual stocks.

Accordingly, there are more than 30 ETF providers with more than 700 ETF assets in Canada. As a result, selecting the best one to invest in can be challenging. But it doesn’t have to be.

Here I provide you with an unbiased listing of the best Canadian ETFs for 2021 to help you make a more informed investment decision.

From Vanguard Canada ETF to Horizons ETFs, this post got you covered.

My selection of the best Canadian ETFs is based on personal experience and from the experience of others.

So are you ready to join me on this journey? Great!

There we go!

Table of Contents

What is an ETF?

An exchange-traded fund (ETF) is a form of security that tracks a sector, commodity, index, or asset that can be traded on a stock exchange like a typical stock.

Also, an ETF can monitor anything from a single commodity’s price to a broad and diverse group of securities. ETFs may also be designed to monitor particular investment strategies.

Top examples of ETF include Vanguard Investments Canada, BMO Asset Management, BlackRock Canada, and Horizons ETFs Management.

Therefore, ETFs may hold various investments, such as commodities, stocks, shares, or a combination of them.

They are called exchange-traded funds because they are traded on an exchange like stocks.

Thus, as shares are traded on the market, the price of an ETF’s shares can fluctuate over the trading day.

Obviously, this makes ETFs different from mutual funds, which are not exchanged and only traded when the markets close on a trading day.

Furthermore, as opposed to mutual funds, ETFs are more cost-effective and liquid.

5 Common Types of Canadian ETFs

Investors can choose from a variety of top Canadian ETFs used to generate income, speculate on market fluctuations, and hedge… or partially offset risk in their portfolios.

So here are seven types of exchange-traded funds you can choose from:

  • Equity ETFs

An ETF that tracks an index of stocks is known as an equity ETF. You may invest in ETFs covering big companies, small companies, or stocks from a particular region.

Also, Equity ETFs allow you to target sectors that are doing well, such as technology or banking; this makes them a common option.

  • Bond/Fixed Income ETFs

Diversifying the portfolio is important. It’s just a smart idea to spread the investment risk.

As a result, most practitioners will invest in fixed-income and bond ETFs, which offer a consistent yield while posing a minimum risk than equity ETFs.

  • Commodity ETFs

Evidently, ETFs are better ways to invest in silver, gold, silver or oil.

Also, ETFs are profitable means to diversify your investments and reduce exposure if you don’t want to invest in stocks.

Although commodity ETFs may not be as transparent as an index or stock ETFs. They frequently use derivatives rather than holding the underlying asset, such as gold.

  • Currency ETFs

Currency exchange-traded funds (ETFs) may invest in a single currency. This includes the Canadian dollar or a basket of currencies.

So the ETF will either invest directly in the currency, or through derivatives, or a combination of both.

Using derivatives will possibly increase the risk of the ETF. This implies that you must know what you’re purchasing.

Thus, if you felt the underlying currency would strengthen… or if you wanted to hedge or secure your portfolio… you can buy a currency ETF.

  • Specialty ETFs

Leveraged funds and inverse funds are two fund forms that have recently emerged to address a wide range of needs.

Thus this type of Canadian ETF has a lot more growth potential. But they also have a lot more risk.

Accordingly, when the target index declines, inverse funds rise, the same way when buyers short-sell a stock when the price falls.

Therefore, Leveraged Funds seek to increase returns by investing more capital through borrowing.

Also, these ETFs are identified by the amount of collateral they have. For example, 2X can borrow an additional $1 for each $1 invested in the fund.

Comparably, both of these ETF forms have the potential for high returns. But they also have the potential for high risk.

So do your research and realize what you’re getting into.

  • Factor ETFs

Factor investing is a strategy for investing that focuses on basic factors of a return across asset groups.

For years, active managers and institutional investors have used this type of ETF to manage their investments.

Besides, rules-based ETFs are a popular way to gain access to factor ETFs. This is also known as “Smart Beta” in the industry.

  • Sustainable ETFs

Sustainable ETFs involve traditional investment methods with social, environmental, and governmental insights.

This type of ETF is becoming more common among a variety of investors. This is because of trends in governmental policies, population changes, and changing risk perceptions.

Thus these recent ETFs enable investors to diversify their portfolios… while buying companies that meet certain environmental, social, and governance requirements.

What Are the Pros of ETFs?

  • Diversification

Purchasing an ETF provides immediate diversification on your transaction. If you want to minimize risk while optimizing returns, you should consider diversification.

Moreover, ETFs provide more diversification than individual stocks.

  • Match Index Performance

While no investment is guaranteed, ETFs monitors indexes, helping you do away with guesswork on your investment.

So you should expect the right ETF to match the performance of your underlying investment index.

  • Transparency

Evidently, ETFs are often transparent since the underlying assets in the ETF are visible.

But this is not often the case with other funds. For example, a portfolio manager has the option of not disclosing the fund’s investments with a managed fund.

  • Easy Access

From a country-specific ETF to an asset class such as global bonds and gold… there is an ETF for whatever you want to invest in.

Therefore, investors who want to invest in emerging markets or other difficult-to-access markets… can do so easily by investing in an ETF.

  • Easy to Trade

Since ETFs are traded on a stock exchange, you can easily buy and sell them at a market price. That’s through your broker without limitation.

What Are the Cons of ETFs?

  • Limited Exposure

With fewer equities in the market index, investors may be restricted to large-cap stocks… in certain sectors or international stocks.

But because of a lack of exposure to mid-and small-cap stocks, ETF investors may miss out on future growth opportunities.

  • Intraday Fluctuations

Obviously, longer-term buyers with a 10 to 15-year time horizon cannot profit from intraday trading fluctuations.

However, because of the lag in hourly price fluctuations, other investors may trade more.

Moreover, a large swing in price over a few hours could trigger a trade. Pricing at the end of the day prevents unfounded fears from changing an investment goal.

  • High Costs

Most people equate selling ETFs to trading other funds. But the prices are greater when comparing ETFs to investing in a single stock.

Also, with more ETFs created, they will probably track a low-volume index. This could lead to asking spread/high bid. You may be able to get a decent deal by investing in real stocks.

  • Leveraged ETF Returns Skewed

A leveraged ETF is a fund that boosts the returns of an underlying index by using financial derivatives and debt.

Thus, Certain ETFs that are double or triple leveraged will lose more than double or triple the value of the underlying index.

So these risky ventures must be thoroughly evaluated. The real loss will quickly multiply if the ETF is kept for a long time.

Therefore, if you buy a double leverage natural gas ETF… a 1% change in natural gas prices could result in a 2% adjustment in the ETF daily.

However, if a leveraged ETF is held beyond one day, the ETF’s ultimate return will differ greatly from the underlying security’s overall return.

  • Lower Dividend Yields

Dividend-paying ETFs exist, but their yields may not be as high as buying a high-yielding stock or collection of stocks.

Obviously, the risk of buying ETFs is normally smaller. But stock dividend yields may be much higher if you are willing to take the gamble.

Furthermore, you may choose a high dividend yield stock. with the highest dividend yield. However,  ETFs monitor a wider market, resulting in a lower total yield.

What are the Best Canadian ETFs for 2021?

Choosing the best ETF is like choosing a new car. You want a safe option that is good value and reliable and something that suits your needs.

However, identifying the best ETF is not always easy. This is due to the multiple numbers of ETFs in Canada. But you don’t have to worry.

So here are the best Canadian ETFs for 2021:

1. Vanguard Canada ETF

When it comes to investing in Canada, Vanguard is a household name. The company manages over $6 trillion in assets and is one of the leading ETF providers globally.

Therefore, Vanguard has a variety of all-in-one ETF portfolios. These are:

  • VGRO (Vanguard Growth ETF Portfolio)
  • VEQT (Vanguard All-Equity ETF Portfolio0
  • VCNS (Vanguard Conservative ETF Portfolio)
  • VCIP (Vanguard Conservative Income ETF Portfolio)
  • VBAL (Vanguard Balanced ETF Portfolio)
a. Vanguard Growth ETF Portfolio (VGRO)
Average Annual Return 10.81%
Minimum Investment $30.5081
Asset Allocation 80% equity and 20% fixed income
Management Fee 0.22%
MER 0.25%

Note that these figures are subject to change.

VGRO is Vanguard’s growth fund, which invests in equity and fixed income instruments to provide long-term capital.

Therefore this portfolio comprises many other Vanguard Index ETFs… with a target distribution of around 20% fixed income (bonds) and 80% equity (stocks)… with a low to medium risk level.

b. Vanguard All-Equity ETF Portfolio (VEQT)
Average Annual Return 11.24%
Minimum Investment $33.7487
Asset Allocation 100% equity
Management Fee 0.22%
MER 0.25%

Note that these figures are subject to change.

Vanguard All-Equity ETF Portfolio invests primarily in equity securities to provide long-term capital growth.

Thus, based on the discretion of VEQT, the portfolio asset composition can be rebalanced and reconstituted from time to time.

So the underlying funds’ portfolios are supposed to be index funds with broad-based equity market exposure.

c. Vanguard Conservative ETF Portfolio (VCNS)
Average Annual Return 9.37%
Minimum Investment $28.3524
Asset Allocation 60% fixed income and 40% equity
Management Fee 0.22%
MER 0.25%

Note that these figures are subject to change.

By investing in fixed income securities and equity, the Vanguard Conservative ETF Portfolio aims to offer a mix of income and modest, long-term capital growth.

So VCNS aims to retain a long-term strategic asset mix of equity and fixed income securities to meet the investment objective.

d. Vanguard Conservative Income ETF Portfolio (VCIP)
Average Annual Return 8.35%
Minimum Investment $27.5433
Asset Allocation 80% fixed income and 20% equity
Management Fee 0.22%
MER 0.25%

Note that these figures are subject to change.

By investing in fixed-income securities and equity, the Vanguard Conservative Income ETF Portfolio aims to offer a mix of income and long-term capital growth.

Therefore, VCIP strives to sustain a long-term asset allocation of fixed income securities (around 80%) and equity (around 20%) and meet its investment objective.

e. Vanguard Balanced ETF Portfolio (VBAL)
Average Annual Return 10.20%
Minimum Investment $29.4453
Asset Allocation 60% equity and 40% fixed income
Management Fee 0.22%
MER 0.25%

Note that these figures are subject to change.

The aim of the Vanguard Balanced ETF Portfolio is to invest in equity and bonds. By so doing, it can offer investors a moderate level of income with long-term capital growth.

Accordingly, VBAL maintains a long-term strategic asset distribution of equity (around 60%) and fixed income securities (around 40%) to meet its investment objective.

What Other People Are Saying About Vanguard Canada ETFs

“I’ve used several ETFs in my career. Vanguard offers some of my favourite ETFs. The non-profit asset management firm uses its profits to lower the fees for its investors.” Christopher Liew, Wealthawesome Creator.

“With their VCIP, VCNS, VBAL, VGRO, and VEQT, Vanguard has created a one-stop-shop for people looking to create a diversified ETF portfolio in the easiest way possible.”  Frugal Trader, founder and editor of Million Dollar Journey.

2. BMO ETF Portfolios

The Bank of Montreal (BMO) ETF Portfolios are among the best Canadian EFTs for 2021.

Obviously, BMO Canadian ETF portfolios provide investors with a cost-effective way to invest their money and earn returns based on their financial goals and risk tolerance.

Thus, the ETF portfolios are made up of various combinations of BMO’s Canadian ETFs. These include:

  • ZGRO (BMO Growth ETF)
  • ZBAL (BMO Balanced ETF)
  • ZCON (BMO Conservative ETF)
a. BMO Growth ETF (ZGRO)
Average Annual Return 2.44%
Minimum Investment $36.9755
Asset Allocation 80% equity and 20% fixed income
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

The BMO Growth ETF (ZGRO) invests in fixed income and global equity ETFs to provide long-term capital appreciation.

b. BMO Balanced ETF (ZBAL)
Average Annual Return 2.53%
Minimum Investment $35.4362
Asset Allocation 60% equity and 40% fixed income
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

BMO Balanced ETF (ZBAL) aims to invest in global equity and fixed income ETFs. This is through the provision of modest income and long-term capital appreciation.

c. BMO Conservative ETF (ZCON)
Average Annual Return 2.63%
Minimum Investment $33.9036
Asset Allocation 60% fixed income and 40% equity
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

Also, the objective of BMO Conservative ETF (ZCON) is to invest in global equity and fixed income ETFs. That’s, by providing modest income and long-term capital appreciation.

What Other People Are Saying About BMO ETFs

“BMO has over 130 ETFs available for you to invest in, which is significantly more than even some of the other big banks in Canada. In this way, BMO gives you a huge amount of flexibility and lets you really focus your portfolio however you like.” How to Save Money Team.

3. iShares ETF Portfolios

iShares’ all-in-one ETFs assets are used to help investors create a strong investment portfolio.

Accordingly, iShares’ ETFs are available in a variety of combinations to assist investors in achieving different financial objectives. This includes:

  • XEQT (iShares All-Equity ETF Portfolio)
  • XGRO (iShares Core Growth ETF Portfolio)
  • XBAL (iShares Core Balanced ETF Portfolio)
a. iShares All-Equity ETF Portfolio (XEQT)
Average Annual Return 11.70%
Minimum Investment CAD 25.38
Asset Allocation 100% equity
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

iShares All-Equity ETF Portfolio (XEQT)  primarily invests in one or more exchange-traded funds managed by BlackRock Canada or an affiliate.

Therefore, with low to medium risk characteristics, XEQT provides exposure to equity securities to provide long-term capital growth.

Because your portfolio is entirely made up of stocks, you should expect to be comfortable with significant swings in its value.

b. iShares Core Growth ETF Portfolio (XGRO)
Average Annual Return 5.80%
Minimum Investment CAD 24.53
Asset Allocation 80% equity and 20% fixed income
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

iShares Core Growth ETF Portfolio (XGRO) also invests in one or more exchange-traded funds operated by BlackRock Canada or an affiliate.

Thus, XGRO is an 8-fund basket of an estimated 20% bond and 80& stock exposure. It is suitable for investors with higher-than-average risk profiles who are also comfortable with volatility.

c. iShares Core Balanced ETF Portfolio (XBAL)
Average Annual Return 3.58%
Minimum Investment CAD 26.38
Asset Allocation 60% equity and 40% fixed income
Management Fee 0.18%
MER 0.20%

Note that these figures are subject to change.

The iShares Core Balanced ETF Portfolio (XBAL) invests mainly in one or more exchange-traded funds operated by BlackRock Canada or an affiliate.

Therefore, when stock market instability arises, the iShares Core Balanced ETF portfolio (XBAL) offers capital protection and lower volatility.

What Other People Are Saying About iShares ETFs

“In many categories, iShares offer among the cheapest Exchange Traded Funds (ETFs) out there, and if your brokerage account is at Fidelity or Schwab, then iShares ETFs may trade commission-free as well.” Simon Moore, Forbes Senior Contributor.

“Without question, iShares exchange-traded funds (ETFs) offer investors a wide variety of low-cost index funds, making iShares a good one-stop-shop for building a diversified portfolio with the best ETFs to buy and hold for the long term.” Kent Thune, InvestorPlace Contributor

4. Horizons ETF Portfolios

Horizons’ ETF portfolios have a unique swap-based structure that allows them to maintain a lower MER than the above ETF providers.

Therefore, Horizon provides three ETF portfolios that blend multiple underlying ETFs to meet investors’ risk profile and financial objectives.

Also, Horizons is unique in that it does not charge a management fee. The underlying ETFs’ MER determines the cost. Here are the three Horizons ETF Portfolios:

  • HGRO (Horizons Growth Tri ETF Portfolio)
  • HCON (Horizons Conservative Tri ETF Portfolio)
  • HBAL (Horizons Balanced Tri ETF Portfolio)
a. Horizons Growth Tri ETF Portfolio (HGRO)
Average Annual Return 1.33%
Minimum Investment $13.45
Asset Allocation 100% equity
Management Fee 0%
MER 0.16%

Note that these figures are subject to change.

HGRO invests in a portfolio of largely equity-focused total return index exchange-traded funds to achieve long-term capital growth.

So at the point of rebalancing, the fund aims to have a long-term asset distribution of at least 99% equity securities. This is to maintain a persistent degree of risk.

b. Horizons Conservative Tri ETF Portfolio (HCON)
Average Annual Return 0.78%
Minimum Investment $12.83
Asset Allocation 50% equity and 50% fixed income
Management Fee 0%
MER 0.15%

Note that these figures are subject to change.

HCON invests in a stable portfolio of exchange-traded funds to achieve modest, long-term capital growth.

So at the time of any rebalance, the fund aims for a long-term asset distribution of at least 50% fixed income securities and 50% equity securities.

c. Horizons Balanced Tri ETF Portfolio (HBAL)
Average Annual Return 0.04%
Minimum Investment $13.48
Asset Allocation 70% equity and 30% fixed income
Management Fee 0%
MER 0.15%

Note that these figures are subject to change.

HBAL invests in a balanced portfolio of exchange-traded funds for achieving long-term capital accumulation.

So the portfolio aims for a long-term asset distribution of about 30% fixed income securities and 70% equity securities.

What Other People Are Saying About Horizons ETFs

“While many asset allocation or one-ticket ETFs are quite similar, Horizons asset allocation ETFs stand out. As you may know, the ETFs used within these portfolios are held within a corporate structure that does not pay out taxable distributions.

They primarily use swap-based ETFs to create portfolios. That will enable greater tax efficiency concerning withholding taxes on foreign dividends.” Dale Roberts, Cut The Crap Investing Contributor.

“Horizons has created index ETFs that pay 0% in distributions or dividends. Instead, you will only be taxed with capital gains tax when you sell down the road. The dividends are still there but used to compound instead of being paid out.

This is attractive in that the ETFs can grow tax-free while you are accumulating and earning a salary.

Then, when it comes time for retirement and theoretically lower income, you can sell off small portions of your portfolio and only pay capital gains tax.” Frugal Trader, founder and editor of Million Dollar Journey.

Best Canadian Bank ETFs

The high dividend yield on ETFs has earned Canadian banks a good reputation for years.

So here are the top five Canadian bank exchange-traded funds (ETFs) you should consider:

1. BMO Equal Weight Banks Index ETF

Average Annual Return 3.62%
Minimum Investment $33.52
Management Fee 0.55%
MER 0.61%
Dividend Yield 4.77%
AUM $1.25 billion

Note that these figures are subject to change.

As closely as it can, the BMO Equal Weight Banks Index ETF (ZEB) aims to replicate the Solactive Equal Weight Canada Banks Index’s performance.

So the Index Constituent Securities are invested in and held by the Fund in the same proportion as expressed in the Index.

2. BMO Covered Call Canadian Banks ETF

Average Annual Return 5.43%
Minimum Investment $19.57
Management Fee 0.65%
MER 0.71%
Dividend Yield 6.41%
AUM $1.675 billion

Note that these figures are subject to change.

The BMO Covered Call Canadian Banks ETF (ZWB) aims to give investors exposure to Canadian banks’ portfolios… while also earning through call options premium.

Thus, the Fund invests in Canadian bank securities and writes protected call options on a dynamic basis.

3. iShares Equal Weight Banc & Lifeco ETF

Average Annual Return 3.45%
Minimum Investment $14.99
Management Fee 0.55%
MER 0.60%
Dividend Yield 4.49%
AUM $139.2 million

Note that these figures are subject to change.

The iShares Equal Weight Banc & Lifeco ETF aims to provide an equally weighted and diversified portfolio of common shares.

That’s, of Canada’s leading banks and life insurance firms.

Accordingly, this fund can be used to express a sector view and earn regular monthly dividend income.

4. CI First Asset CanBanc Income Class ETF (CIC.TO)

Average Annual Return 8.65%
Minimum Investment $11.69
Management Fee 0.65%
MER 0.80%
Dividend Yield 5.5%
AUM $150.9 million

Note that these figures are subject to change.

The objective of CIC is to offer quarterly distributions to shareholders as well as capital appreciation.

Therefore, this investment also aims to reduce the volatility of portfolios. That’s, compared to holding a portfolio of common shares of the National Bank of Canada and other banks.

5. RBC Canadian Bank Yield Index ETF

Average Annual Return 3.28%
Minimum Investment $23.25
Management Fee 0.29%
MER 0.32%
Dividend Yield 5.5%
AUM $84 million

Note that these figures are subject to change.

The RBC Canadian Bank Yield Index ETF aims to replicate the performance of Canadian bank stocks so close.

Additionally, the RBC Canadian Bank Yield Index ETF currently attempts to replicate the Solactive Canada Bank Yield Index.

Therefore, RBC ETF’s investment policy is to invest and hold the Solactive Canada Bank Yield Index’s constituent securities. That’s,  similar to how they are expressed in the Solactive Canada Bank Yield Index.

Best Canadian Gold ETFs

When the stock market declines, investors rush to gold. This is because it is a good buffer against potential stock market downturns.

However, no matter your investment experience, you need to minimize your exposure… because gold can be extremely volatile.

Furthermore, Gold is a volatile investment because it has no diversification. Even in the form of an ETF.

So let me expose you to the best gold ETFs in Canada for 2021:

1. iShares S&P/TSX Global Gold Index ETF

Average Annual Return 0.51%
Minimum Investment $18.87
MER 0.61%
AUM $1.6 billion

Note that these figures are subject to change.

With more than 1.6 billion in assets under management (AUM), iShares S&P/TS… Global Gold Index ETF is by far the most valuable of the gold ETFs on this list.

Besides its size, other things make this fund one of the best Canadian Gold ETFs.

Furthermore, iShares S&P/TS Global Gold Index ETF has a very low MER of 0.61%, and it’s well-diversified on a global scale.

Although Canadian companies account for more than 60% of the portfolio, there is also exposure to the United States, Peru, and South Africa.

Moreover, this fund has consistent capital growth. Although past success is no guarantee of future results. But the total annual returns for the last five years have been 19.81%.

2. Horizons Gold Yield ETF

Average Annual Return 6.78%
Minimum Investment $5.21
MER 1.07%
AUM $1.6 billion

Note that these figures are subject to change.

The Horizons Gold Yield ETF differs from iShares S&P/TS Global Gold Index ETF in several areas.

So for beginners, this fund is much smaller, with an AUM of just over $53 million. Additionally, it’s an actively trading ETF that avoids gold stocks entirely.

However, Horizons Gold Yield ETF holds SPDR and Graniteshares Gold Trust. The former monitors gold price, while the latter is a gold-backed ETF.

3. BMO Equal Weight Global Gold Index ETF

Average Annual Return 0.19%
Minimum Investment $73.00
MER 0.62%
AUM $212 million

Note that these figures are subject to change.

The BMO Equal Weight Global Gold Index ETF is a global fund with more than 25 underlying assets.

Accordingly, these are spread across Canada, the United States, South America, and Africa.

Furthermore, the BMO Equal Weight Global Gold Index ETF does not pay dividends… unlike the Horizons Gold Yield ETF. It tracks. The Solactive Equal Weight Global Gold Index

However, the fact that each security in the index is weighted equally is appealing. As a result, the amount of security-specific risk is low.

4. Horizons Enhanced Income Gold Producers ETF

Average Annual Return 7.39%
Minimum Investment $30.61
MER 0.84%
AUM $131 million

Note that these figures are subject to change.

The Enhanced Income Gold Producers ETF is Horizons ETF’s second entry on this list of the best Canadian gold ETF.

Accordingly, this fund boots a monthly distributed high dividend yield of 6.448% as the current 12-month trailing yield.

But the fund isn’t entirely a gold fund. It also invests in silver-based securities. The high MER of 0.84% is one of the drawbacks of the fund.

Consequently, this may discourage the average investors. This is because they are often conscious of price.

Although the fund has global diversification, it can’t be compared with S&P/TS Global Gold Index ETF.

5. Royal Canadian Mint – Canadian Gold Reserves ETF

Average Annual Return N/A
Minimum Investment $22.43
MER 0.35%
AUM $470 million

Note that these figures are subject to change.

So last but not least Canadian ETF on my list is often known as an exchange-traded receipt (ETR)… rather than an ETF.

The Royal Canadian Mint supports this fund with actual gold, and your ‘ receipt represents your share.’

Therefore, with a little redemption, you can exchange the ETR shares for gold in hundreds of thousands of dollars.

How I Rate the Best Canadian ETFs for 2021?

The following are the factors that I consider when rating the best Canadian ETFs for 2021:

1. Management Expense Ratio (MER)

Evidently, the best Canadian ETFs have a remarkable MER between 0 to 0.20%. Management Expense Ratio (MER) involves the total management fee of your investment.

Also, it includes the operating costs and fund taxes. These are calculated as a percentage of the fund’s average net assets for that year.

2. Underlying Market Index

A market index represents a portion of the capital market. The prices of the underlying holdings of the market index are used to calculate the index value.

Thus, the best Canadian ETFs have profitable index values ranging from market-cap weighting, revenue-weighting, fundamental-weighting and float-weighting.

3. Level of Assets

Evidently, the best Canadian ETFs have a minimum amount of at least $10 million. This makes them suitable for any investor.

Accordingly, an ETF with assets below this level will attract only a small number of investors. This may result in poor liquidity and large spreads because of low investor interest.

4. Tracking Error

Although most ETFs closely track their underlying index, others do not do so as closely as they can.

Therefore, the best Canadian ETFs for 2021 have minimal tracking errors. This makes them superior to those with a higher level of error.

5. Market Position

Evidently, the best Canadian ETFs for 2021 take the first-mover advantage. This makes them popular.

In the ETF universe, “first-mover advantage” is significant because the first ETF issuer for a given sector has a good chance of capturing the lion’s share of assets.

Consequently, it is wise to avoid ETFs that are not unique. This is because they may fail to distinguish themselves from their competitors. Hence, fail to attract many investors.

How to Buy Vanguard ETF Canada and other ETFs?

Now that you know about the best Canadian ETs in 2021… it is important to know how to invest in them. You have three options when it comes to buying Vanguard ETF Canada and other ETFs. These are:

1. Do-it-Yourself

You can completely do it yourself by purchasing individual securities, low-cost ETFs, and other investments through a discount brokerage account.

But to succeed in doing it yourself, you must be comfortable allocating assets to your portfolio. That’s, according to your investment goals and risk tolerance.

Also, you must also be able to rebalance your portfolio regularly.

Obviously, Wealthsimple Trade and Questrade are the major Canadian low-cost to zero brokerage platforms.

2. Use a Robo-Advisor

Robo-advisors are online asset managers that use low-cost ETFs to handle your investment. Thus,  you don’t have to worry about diversification or rebalancing your portfolio.

Evidently, A Robo-advisor’s management fee is relatively cheaper compared to a bank’s management fee for mutual funds.

But before investing in an ETF, a Robo-advisor will ask you a series of questions. This is to assess your risk tolerance investment goals and time frame.

Also, you can change your information at any time and set up automated contributions to your account with ease.

Moreover, Robo-advisors in Canada can help you make a cost-effective decision.

3. Consult a Financial Advisor

Obviously, Vanguard Canada ETF or any other best Canadian ETF can be easily purchased through a financial advisor. He or she will be responsible for managing your investment.

Also, working with a financial advisor is beneficial when your wealth grows and your financial situation becomes more complicated.

Besides managing your investment, a financial advisor will also assist you with your personal finance. This includes retirement, taxation, and insurance planning, among other things.

So if you decide to use a financial advisor, you can ask friends or colleagues for a recommendation or use Canada’s Investment Industry Regulatory Organization to find one.

Executive Summary

A broad range of investors uses ETFs to create portfolios or gain exposure to particular industries.

Thus, ETFs offer several benefits over other managed funds, such as mutual funds. However, there are several drawbacks to be aware of when investing in an ETF.

However, when it comes to dividends and diversification, the opportunities can be more limited. But with the right best ETF, you can minimize risk and maximize profit with ease.

So I use a combination of factors to determine the best Canadian exchange-traded funds for this year. This includes the underlying market index and management expense ratio (MER),

Furthermore, Vanguard Canada ETF, iShares ETF, BMO ETF, and other ETFs make investing much cheaper. They also make it easy for Canadian seasoned and novice investors.

Therefore, you can now make a better decision in deciding which ETF to invest in and how to invest.

Finally, if you need further clarification or contribute to making the best Canadian ETFs for 2021, please let me know in the comment section.

Share on facebook
Share on twitter
Share on linkedin