Best Canadian ETFs for 2022

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Overview
Canadian
U.S.
International
Fixed-Income
All-in-One
Desert-Island Picks

Those looking for a feisty debate among our panellists will not find it in the Canadian equity category. As has been the case for a while, all the Canadian funds on last year’s list have returned in the 2022 edition. There wasn’t much discussion about adding new funds to the list, but it’s worth pointing out that panellists Ben Felix, Cameron Passmore and Robb Engen voted not to include HXT and ZLB (full ETF names can be found in the chart below) because, as Engen says, “It’s a preference for broader diversification. HXT tracks the TSX 60 rather than an all-cap index, while ZLB has only 40-ish holdings.” VCN, XIC and ZCN were Felix’s preferred picks, all of which, he says, “are effectively interchangeable for exposure to the Canadian market. They are all low-cost, low-turnover and tax-efficient.”

While Canadian ETF investors will likely own at least one of these funds, if there’s any year for owning Canadian equities, it’s 2022, says panellist Yves Rebetez. “All of these funds are great considerations for long-term buy-and-hold investors; however, in a world of rising oil prices and a disquieting inflation backdrop, this could actually turn out to be the year when a bias toward energy, financials and low-vol funds could serve investors well,” he says. “Most broadly diversified funds and ETFs are great for longer term, yes. There are many which are interchangeable, if you will.”

If investors want to think outside of this list, so to speak, they could consider the iShares Canadian Value Index ETF (XCV), which, as its name suggests, is focused on domestic value stocks. While value and growth funds are not included in this ETF roundup, Felix points out that, at least anecdotally, value stocks tend to do better than growth stocks in times of high inflation and rising uncertainty. Indeed, XCV has outperformed the iShares Canadian Growth Index ETF (XCG) significantly this year, with the former up by 6.3% year-to-date and the latter down by about 12.2% at the time of writing. While these are the key Canadian equity ETFs, domestic stocks are also represented in the all-in-one asset allocation ETFs section, so make sure you’re aware of any duplication of securities.