The Best Canadian Vanguard ETFs To Own in March 2025

ByDan Kent Published On:

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        Key takeaways

        All-in-One Portfolio Solution – Vanguard offers a simple, diversified approaches for investors who want a hands-off investment strategy with built-in asset allocation.

        Broad Diversification with U.S. and Canadian Markets – These ETFs provide exposure to both the U.S. and Canadian stock markets, covering large-, mid-, and small-cap stocks.

        Balanced Options for Growth and Stability – Investors can choose from equity-focused ETFs for long-term growth or a bond ETF for income and risk reduction.

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

        Vanguard ranks as one of the world’s most dominant and respected fund managers, and it definitely earned this status. John C Bogle, a strong proponent for the everyday investor, established the company in 1975. Bogle aimed to design funds that were not only low-cost but also straightforward to possess.

        He introduced the first index mutual fund for individual investors, which was designed to replicate the performance of a particular market index. 

        This was revolutionary at the time, as it offered a low-cost, diversified option for investors, contrasting sharply with the actively managed funds that were common then, which often came with high costs and inconsistent performance.

        Now, Canadian exchange-traded funds have exploded in popularity, and there are so many hitting the market it can make your head spin.

        In this article, I’m going to go over 5 of the top Vanguard ETFs here in Canada. These will be a variety of funds, including exchange-traded funds that focus on dividends, Canadian stocks, US stocks, bonds, and so much more.

        Let’s get right into it.

        What are the best Vanguard ETFs in Canada?

        Cost-effective U.S. large-cap exposure

        Vanguard S&P 500 Index ETF (TSE:VFV)

        VFV tracks the S&P 500, giving Canadian investors access to the 500 largest U.S. companies. It provides exposure to top-performing sectors, including technology, healthcare, and consumer discretionary, without currency hedging.

        • Exposure to Top U.S. Companies – This ETF includes industry leaders like Apple, Microsoft, and Amazon, benefiting from strong earnings and market dominance.
        • Simple and Low-Cost Approach – With a low expense ratio (0.09%), VFV provides a cost-effective way to gain U.S. equity exposure.
        • Outperformance of U.S. Markets – Historically, the S&P 500 has delivered strong returns compared to Canadian markets, making it a core long-term holding.
        • No Currency Hedging – While this exposes investors to exchange rate fluctuations, it allows them to benefit when the U.S. dollar strengthens against the Canadian dollar.
        • Ideal for Long-Term Growth – The S&P 500’s broad sector exposure and innovation-driven companies position VFV for sustained appreciation.
        • U.S. Tech Sector Growth – Tech stocks dominate the S&P 500, driving index performance.
        • Interest Rate Policy – Fed decisions on rates impact market sentiment and valuations.
        • Earnings Growth of U.S. Giants – Companies like Apple and Microsoft shape overall index returns.
        • AI and Innovation Impact – Emerging tech trends could sustain long-term gains.
        • Valuation Concerns – High P/E ratios in tech-heavy indices could pose correction risks.
        • Currency Risk – A weaker U.S. dollar may reduce returns for Canadian investors.
        • Market Cyclicality – Economic slowdowns may lead to S&P 500 underperformance.

        Broad U.S. market exposure beyond the S&P 500

        Vanguard US Total Market ETF (TSE:VUN)

        VUN tracks the CRSP US Total Market Index, covering large-, mid-, small-, and micro-cap U.S. stocks. It provides a more diversified approach than VFV, capturing the full breadth of the U.S. economy.

        • More Diversified than VFV – Includes smaller companies with high-growth potential, not just S&P 500 giants.
        • Exposure to the World’s Largest Market – The U.S. stock market offers innovation-driven growth and global economic leadership.
        • Balanced Across Market Caps – Small- and mid-cap stocks can provide long-term outperformance during bull markets.
        • Strong Historical Returns – The total U.S. market has delivered robust gains over decades, with consistent wealth creation.
        • Lower Concentration Risk – Unlike VFV, which is heavily weighted in mega-cap stocks, VUN spreads exposure across thousands of companies.
        • Small-Cap Recovery Trends – If economic conditions improve, smaller companies could outperform.
        • Innovation in Healthcare and Tech – Disruptive technologies drive long-term U.S. market growth.
        • U.S. Consumer Spending Strength – Economic resilience benefits a broad market ETF like VUN.
        • Higher Volatility – Exposure to smaller companies increases risk.
        • Currency Fluctuations – Exchange rate movements can impact returns.
        • Potential Underperformance vs. S&P 500 – Large-cap dominance could limit small-cap upside.

        Comprehensive Canadian equity market exposure

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

        VCN tracks the FTSE Canada All Cap Index, offering exposure to large-, mid-, and small-cap Canadian companies. It provides a well-rounded approach to investing in Canada’s economy.

        • Diversified Across Canadian Market Caps – Captures the full Canadian market, unlike TSX 60-focused ETFs.
        • Heavy Allocation to Financials and Energy – Canadian banks and resource stocks drive performance.
        • Dividend Income Potential – Canada’s top stocks offer strong and stable dividend yields.
        • Lower Correlation to U.S. Stocks – Provides some diversification for U.S.-heavy portfolios.
        • Core Holding for Canadian Investors – Offers long-term growth with a home-country bias advantage.
        • Commodity Price Cycles – Oil and resource prices directly impact Canadian equities.
        • Banking Sector Performance – Interest rate changes affect Canadian financial stocks.
        • Economic Growth in Canada – GDP and inflation trends shape stock market performance.
        • Sector Concentration – Financials and energy dominate the index.
        • Limited Exposure to Tech – Canada lacks major global tech leaders.
        • Interest Rate Sensitivity – Higher rates may impact economic growth and bank stocks.

        Broad Canadian bond market exposure

        Vanguard Canadian Aggregate Bond ETF (TSE:VAB)

        VAB invests in a mix of government and corporate bonds, offering income and stability for Canadian investors. It’s designed for those seeking diversification and downside protection.

        • Low-Cost Fixed Income Exposure – A cheap way to access Canadian bonds with a 0.09% expense ratio.
        • Mitigates Stock Market Volatility – Bonds provide stability during market downturns.
        • Diversified Bond Holdings – Includes government, corporate, and provincial bonds.
        • Interest Rate Sensitivity – Higher duration means price fluctuations when rates change.
        • Bank of Canada Rate Policy – Interest rate decisions affect bond yields and prices.
        • Inflation Trends – Higher inflation erodes real bond returns.
        • Corporate Bond Spreads – Credit conditions impact corporate bond performance.
        • Rising Interest Rates – Higher rates reduce bond prices.
        • Low Yield Environment – Bond returns may lag inflation.

        All-in-one aggressive growth portfolio

        Vanguard Growth ETF Portfolio (TSE:VGRO)

        VGRO is an asset allocation ETF with 80% equities and 20% bonds, offering a globally diversified, hands-off investment strategy. It’s designed for long-term growth with some risk management.

        • One ETF for a Balanced Portfolio – Eliminates the need for multiple ETFs with automatic rebalancing.
        • Global Diversification – Exposure to Canada, the U.S., and international markets.
        • Growth-Oriented Allocation – Heavier in equities for higher return potential.
        • Ideal for Long-Term Investors – Designed for those who want a simple, diversified solution.
        • Includes Fixed Income for Stability – Bonds provide a cushion against volatility.
        • Global Market Performance – VGRO benefits from broad equity market trends.
        • ETF Popularity in Canada – Asset allocation ETFs are gaining traction.
        • Higher Equity Exposure = More Volatility – Not ideal for risk-averse investors.
        • Fixed Bond Allocation Limits Customization – Less flexibility in adjusting bond exposure.

        Overall, your investment preferences and financial goals will determine which Vanguard ETF is best for you

        I’ve attempted to include a variety of different funds on this list to make it relevant for every investor. Whether you’re looking for funds for your TFSA, RRSP, or even an unregistered account, all of these should be solid options.

        Don’t forget that Vanguard has hundreds of different options though, and these are just five.

        Alternatively, you could consider exchanging your CAD for USD and buying US-based Vanguard funds for exposure outside of Canada.

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