Best Canadian Equity ETFs in 2026
A deep dive into XIU, VCN, ZCN, HXT, and how to choose the right one for your portfolio.
Core Canadian Exposure
A Canadian equity ETF forms the foundation of a domestic investor's portfolio. These funds provide instant diversification across the country's largest and most successful companies, dominated by major banks, energy producers, and telecommunications giants.
1. VCN - Vanguard FTSE Canada All Cap Index ETF
VCN is widely considered one of the best core holdings for Canadian investors. Unlike funds that only track large-cap stocks, VCN tracks the entire Canadian market, including mid and small-cap companies.
- MER: ~0.05%
- Holdings: ~175
- Best for: Investors looking for total market exposure at the lowest possible cost.
2. XIU - iShares S&P/TSX 60 Index ETF
XIU is the oldest ETF in the world, having launched in 1990. It tracks the S&P/TSX 60 Index, which consists of the 60 largest companies in Canada. It does not include small or mid-cap stocks.
- MER: ~0.18%
- Holdings: 60
- Best for: Highly active traders who need massive liquidity and options trading volume, or those who strictly want blue-chip exposure.
3. ZCN - BMO S&P/TSX Capped Composite Index ETF
ZCN is BMO's answer to core Canadian equity. It tracks the broader TSX Composite Index but caps the maximum weight of any single company. This prevents a situation where one massive company (like Nortel in the past, or Shopify more recently) completely dominates the fund's performance.
- MER: ~0.06%
- Holdings: ~230
- Best for: Broad market exposure with built-in risk mitigation against single-stock concentration.
4. HXT - Horizons S&P/TSX 60 Index ETF
HXT is unique because of its structure. It uses a Total Return Swap (TRS) rather than physically holding the underlying stocks. This means it doesn't pay out dividends; instead, the value of the dividends is automatically reflected in the ETF's price.
- MER: ~0.08%
- Holdings: Derivative contracts tracking the TSX 60
- Best for: Investors in high tax brackets holding the ETF in a non-registered (taxable) account, as it defers taxes until the ETF is sold.
Home Country Bias: How Much is Too Much?
While investing in Canadian equities is important for currency stability and favorable dividend taxation, Canada only represents about 3% of the global economy. A common mistake among Canadian investors is "home country bias"—putting 80% or 90% of their money into Canadian stocks. Most experts recommend keeping Canadian equity allocation between 20% and 30% of your total portfolio.
Explore More
Building a diversified portfolio requires more than just Canadian stocks. Learn how these fit into a broader strategy:
- Back to the Best Canadian ETFs in 2026 Master Guide
- Explore Best US Equity ETFs for Canadians
- Discover Best Dividend ETFs in Canada
Frequently Asked Questions
What is the best Canadian equity ETF?
For broad exposure, VCN or XIC are top choices due to their low fees and total market coverage. For the top 60 companies, XIU is highly liquid.
What is the difference between VCN and XIU?
VCN covers the entire Canadian stock market (large, mid, and small cap), while XIU only tracks the top 60 largest companies on the TSX.
Why are Canadian equity ETFs heavily weighted in financials?
The Canadian economy is structurally dominated by large banks and financial institutions, which naturally represent a large portion of market-cap-weighted indices.