The Best TSX ETFs – Top ETFs Tracking the TSX in March 2025

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        Key takeaways

        Tax Efficiency Differences – Certain ETFs, like Horizons HXT, use swap structures that may offer tax advantages.

        Broad vs. Large-Cap Exposure – Some ETFs track the full TSX Composite, while others focus on the top 60 companies.

        Low-Cost Index Investing – Most of these ETFs have low expense ratios, making them cost-effective for passive investors.

        One ETF I like way better than the ones on this list.

        If you’re looking to invest in the Canadian stock market, exchange-traded funds (ETFs) are a great way to gain long-term exposure to a diversified portfolio of stocks. 

        The TSX (Toronto Stock Exchange) is the primary stock exchange in Canada. As a result, there are many ETFs available that track the TSX index.

        When selecting a TSX ETF, it’s important to consider factors such as the ETF’s expense ratio, diversification, liquidity, and historical performance.

        An ETF with a low expense ratio will minimize the amount of money that you pay in fees. This can have a significant impact on your returns over time. Diversification is also important, as it helps reduce your overall risk by spreading your investments across a variety of stocks. res so investors can pick what they want.

        In this article, I’ll examine some of the best TSX ETFs available for Canadian investors. Keep in mind I’ll focus on broad-based equity ETFs in this article, ignoring things like mutual funds, bonds, or specific Canadian dividend ETFs.

        Let’s dive right into it.

        What are the best ETFs to track the TSX today?

        Broad exposure to the full TSX

        iShares Core S&P/TSX Capped Composite Index ETF (TSE:XIC)

        XIC tracks the S&P/TSX Capped Composite Index, covering nearly all Canadian publicly traded companies. It provides diversified exposure across sectors and market caps.

        • Covers 95%+ of the Canadian market – This ETF includes large-, mid-, and small-cap stocks, making it one of the most comprehensive options.
        • Strong sector diversification – The fund provides exposure to financials, energy, and materials while balancing growth and stability.
        • Low cost for broad market access – With a competitive MER (Management Expense Ratio), it’s a cost-efficient way to own the Canadian market.
        • Passive investing for long-term growth – Ideal for investors seeking a broad, hands-off approach to Canadian equities.
        • Liquidity and stability – XIC has strong assets under management (AUM) and trading volume, ensuring easy entry and exit.
        • Banking sector strength – Canada’s financials dominate the TSX and remain resilient in economic downturns.
        • Commodities cycle impact – Energy and materials stocks drive TSX performance, so resource demand is key.
        • Interest rate shifts – Higher rates affect dividend-heavy sectors, impacting ETF performance.
        • Economic diversification efforts – More tech and green energy listings could reshape the TSX over time.
        • Commodity price dependence – Heavy exposure to energy and mining could lead to volatility.
        • Small-cap sensitivity – Broader exposure includes riskier, less liquid small-cap stocks.
        • Interest rate pressures – Rising rates impact dividend-paying financials and utilities.

        Tracks Canada’s largest 60 stocks

        iShares S&P/TSX 60 Index ETF (TSE:XIU)

        XIU follows the S&P/TSX 60 Index, covering the largest and most liquid companies in Canada. It’s a highly traded and cost-efficient way to invest in blue-chip Canadian stocks.

        • Exposure to Canada’s biggest companies – Provides instant access to the country’s leading firms, including banks, energy giants, and telecoms.
        • Highly liquid ETF – One of the most traded ETFs in Canada, ensuring tight spreads and easy transactions.
        • Dividend-focused stability – Large-cap stocks tend to have reliable dividend yields, making it attractive for income investors.
        • Lower volatility vs. broader market ETFs – Avoids smaller, more volatile stocks found in full-market ETFs like XIC.
        • Proven long-term performance – Canadian large-caps have historically provided strong returns with lower risk.
        • Dividend yield stability – XIU’s large-cap stocks often provide consistent dividends.
        • Energy sector shifts – Large weightings in oil and gas make it sensitive to commodity trends.
        • Banking sector regulations – Changes in financial policy can impact major holdings.
        • Potential tech sector growth – If Canada’s tech sector expands, XIU’s top-heavy structure may limit exposure.
        • Sector concentration – Heavy exposure to financials and energy may reduce diversification.
        • Limited mid- and small-cap exposure – Lacks the growth potential of smaller, emerging Canadian stocks.
        • Global economic dependency – Large-cap companies are affected by international markets and commodity demand.

        Low-cost alternative to XIC

        BMO S&P/TSX Capped Composite Index ETF (TSE:ZCN)

        ZCN tracks the same index as XIC, offering similar exposure to the full TSX Composite. It has a low expense ratio and is an alternative to iShares’ XIC.

        • Comprehensive exposure to the TSX – Like XIC, it provides broad exposure across market caps.
        • One of the lowest-cost TSX ETFs – A slightly lower MER than XIC makes it a cost-efficient choice.
        • Strong AUM and liquidity – Ensures stability and ease of trading.
        • Similar performance to XIC – Tracks the same index, so returns closely mirror its competitor.
        • Long-term passive investment – A good choice for investors wanting a simple Canadian market tracker.
        • Financial sector strength – Like XIC, heavily weighted toward banks.
        • Commodity cycle impact – Oil and gold prices will affect ETF performance.
        • Economic recovery outlook – TSX performance ties closely to Canada’s overall growth.
        • Inflationary effects – Higher inflation could benefit resource-heavy markets like Canada.
        • Market-wide downturns – Like XIC, full TSX exposure means broader economic risks.
        • Sector biases – Overexposure to financials and energy.
        • Interest rate effects – Higher rates could impact dividend-paying stocks.

        Broad TSX exposure with FTSE indexing

        Vanguard FTSE Canada All Cap Index ETF (TSE:VCN)

        VCN provides exposure to the entire Canadian equity market, similar to XIC and ZCN, but follows the FTSE Canada All Cap Index. It includes large-, mid-, and small-cap stocks.

        • Full-market exposure – Tracks the full Canadian stock market, making it a strong core holding.
        • Vanguard’s indexing advantage – Follows a slightly different methodology than the S&P TSX Composite Index.
        • Low-cost ETF – Offers competitive fees in line with XIC and ZCN.
        • Small-cap exposure – Provides more growth potential than XIU’s large-cap focus.
        • Stable long-term investment – A good option for passive Canadian investors.
        • Broader economic performance – Mid- and small-caps offer a different risk-return profile than XIU.
        • Sector weighting differences – FTSE index methodology may create slight allocation variations.
        • Impact of global trends – Smaller companies may be more affected by local and international factors.
        • Canadian innovation growth – If Canada’s tech sector expands, VCN may capture more of that upside.
        • Higher small-cap volatility – More exposure to riskier companies than XIU.
        • Commodity-driven swings – Like other TSX trackers, sensitive to resource prices.
        • Economic sensitivity – Smaller firms can be more vulnerable to downturns.

        Tax-efficient exposure to TSX 60

        Global X S&P/TSX 60 Index ETF (TSE:HXT)

        HXT tracks the TSX 60 like XIU but uses a swap structure to provide tax advantages for certain investors. It has a very low MER.

        • Tax-efficient design – Swap-based structure minimizes taxable distributions.
        • Ultra-low cost ETF – One of the cheapest ways to track the TSX 60.
        • Same large-cap exposure as XIU – Provides blue-chip stability.
        • Good for taxable accounts – Ideal for investors seeking tax efficiency.
        • Strong long-term returns – Same underlying index as XIU but with tax deferral benefits.
        • Tax policy changes – Government regulation could impact swap ETF advantages.
        • Dividend reinvestment appeal – No taxable distributions mean better compounding.
        • Sector concentration risks – Similar large-cap exposure concerns as XIU.
        • Regulatory risk – Tax treatment of swaps could change.
        • Limited dividend access – Investors don’t receive direct dividend payouts.

        Low-volatility Canadian equity strategy

        BMO Low Volatility Canadian Equity Fund Srs ETF (TSE: ZLB)

        BMO Low Volatility Canadian Equity ETF (ZLB) tracks an index of Canadian stocks with lower historical volatility. It invests in a selection of companies that exhibit steady earnings, strong balance sheets, and lower price fluctuations than the broader market. By focusing on defensive sectors such as consumer staples and utilities, ZLB aims to provide smoother returns, making it a great choice for risk-averse investors.

        • Defensive Positioning for Market Stability – ZLB’s strategy emphasizes stocks with lower volatility, reducing exposure to highly cyclical industries like energy and materials. This defensive approach makes it particularly resilient during market downturns, helping to preserve capital while still capturing long-term market gains.
        • Strong Focus on Dividend-Paying Stocks – Many holdings in ZLB offer solid dividend yields, providing investors with a steady income stream. Since dividend-paying companies are often more financially stable, they contribute to the ETF’s lower volatility and long-term return potential.
        • Outperformance During Bear Markets – Historically, low-volatility strategies like ZLB have outperformed broader market indices during periods of economic stress. While it may lag in strong bull markets, its ability to mitigate losses makes it a valuable core holding for conservative investors.
        • Lower Energy and Financials Exposure – Unlike many TSX-tracking ETFs that are heavily weighted toward financials and energy, ZLB tilts toward defensive sectors like utilities, consumer staples, and industrials. This diversification helps balance sector risks in the Canadian market.
        • Long-Term Growth with Reduced Drawdowns – ZLB provides investors with exposure to quality Canadian companies while limiting extreme price swings. This is especially appealing for retirees, conservative investors, or those who prioritize capital preservation over aggressive growth.
        • Interest Rate Fluctuations – Low-volatility stocks, particularly those in defensive sectors, tend to perform well in uncertain rate environments. As central bank policy shifts, investors should monitor how interest rate changes impact ZLB’s key holdings, particularly utilities and REITs.
        • Sector Rotation and Market Cycles – During economic downturns, defensive ETFs like ZLB tend to outperform, while in strong bull markets, they may lag behind growth-oriented funds. Understanding market cycles can help investors determine when ZLB is most beneficial.
        • Dividend Growth Potential – With many of ZLB’s holdings paying dividends, investors should watch for trends in corporate earnings and dividend sustainability. If economic conditions weaken, dividend cuts could impact returns.
        • Reduced Volatility Strategies Gaining Popularity – As investors seek more stable returns, low-volatility ETFs like ZLB are becoming a preferred choice, particularly in an uncertain economic climate. This trend could increase demand and liquidity for the ETF.
        • Canadian Market Performance vs. Global Markets – Since ZLB is exclusively focused on Canada, investors should monitor how the TSX performs relative to global markets. If Canadian equities underperform compared to U.S. or international stocks, a more diversified approach may be necessary.
        • Underperformance in Strong Bull Markets – While ZLB excels in volatile or bearish conditions, it may lag when markets experience rapid growth. Investors looking for high-growth exposure may find it less attractive during strong economic expansions.
        • Sector Concentration Risks – While ZLB reduces exposure to energy and financials, it increases weighting in defensive sectors like consumer staples and utilities. If these sectors underperform, the ETF’s returns may be impacted.
        • Dividend Cuts in Economic Downturns – Although many of ZLB’s holdings provide steady dividends, economic downturns can lead to dividend reductions, affecting income potential for investors relying on payouts.
        • Limited International Diversification – ZLB focuses solely on Canadian stocks, meaning investors are exposed to country-specific risks. Broader global market downturns or domestic economic slowdowns could weigh on the ETF’s performance.

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