Best Canadian equity ETFs 2026 + MORE Apr 18th

For Canadians creating a globally diversified investment portfolio, international equity covers stocks domiciled anywhere outside Canada and the U.S. But, practically speaking, most investors stick to the developed economies of Europe, Australasia, and the Far East (EAFE) for their core international exposure, which represents most of the market capitalization within this enormous region. 

You can, if you choose, include an emerging market (EM) fund in your portfolio to obtain exposure to countries like China, India, and Brazil. But remember that multinational corporations from Europe, Japan, and North America have operations in the developing world, too. Growth in these regions will not pass you by simply because you didn’t specifically invest in companies based there.

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When choosing a fund to cover the U.S. market—which represents more than half of global equity market capitalization—the Canadian investor is faced with some either/or choices that will depend on their circumstances and investment philosophy.

First, you can opt for a U.S. equity fund that trades in Canada or one trading in the U.S. Many Canadian investors prefer the simplicity of Canadian listings that minimize transaction costs (low brokerage commissions and no currency exchange fees) and make tax reporting easy. But know that these ETFs are automatically withholding a 15% tax on your dividends on behalf of the U.S. Internal Revenue Service. You can dodge that withholding tax in your RRSP, RRIF, or LIRA (which are recognized as tax shelters by the IRS) by holding a U.S.-listed ETF. Funds that trade stateside also tend to have lower MERs.

Should you decide to buy Canadian, you then have the choice of going hedged into Canadian dollars or unhedged—fees tend to be the same. Some investors would prefer to avoid the extra volatility of currency fluctuations, while others consider that a form of portfolio diversification and therefore desirable…

Making space in your portfolio for Canadian equity ETFs used to come with rationalizations: that they tended to pay higher dividends than their global peers and that those dividends received preferential tax treatment in non-registered accounts, for example. 

But Canadian investors these days need no excuses to justify their home-market bias. Domestic index ETFs have performed better than virtually all the other major investable regions for more than a year now.

A big part of that outperformance has come from the heavy financial and commodity skew to the Canadian stock market, which has benefited from rotation away from giant technology stocks and into energy, materials, and industrials. Investors today are seeking exposure to companies with real earnings, not just hoped-for ones.

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