Top 5 Canadian-listed ETFs Secretly Outperforming Your Portfolio

Ever feel like you're staring at a menu with too many options, unsure of what to order? That's how picking ETFs can feel. You've got hundreds of choices, all promising to make your money grow. But here's the thing: not all ETFs are created equal. Let’s break down five key players listed on the TSX—VCN, XEQT, XUU, ZNQ, and VFV—and figure out where they might fit into your financial game plan. Ready? Let’s dive in.

Diversification on a Shoestring: Why VCN Matters

Let’s start with VCN, Vanguard’s Canadian all-cap ETF. It’s like Canada’s financial buffet—164 companies across large, mid, and small caps, from RBC to Shopify.

The beauty of VCN lies in its simplicity: a 0.05% MER (that’s $50 per $100,000 invested) and a respectable 5-year average annual growth of 11.71%.

Sure, its yield is modest at 2.61%, but it gives you instant exposure to the entire Canadian market without putting all your eggs in one basket.

But here’s the kicker: VCN slightly tilts toward smaller companies, which means it might zig when the broader market zags. Is that good or bad? Depends on your appetite for risk.

If you’re betting on Canada’s long-term growth, this could be your steady Eddie. Just don’t expect fireworks.

Going Global Without a Passport: XEQT’s Appeal

Next up, XEQT by BlackRock. Think of it as the world traveler of ETFs, spanning the US, Japan, Europe, Australia, and even emerging markets like China.

How does it pull this off? By holding five underlying ETFs, giving you indirect access to a whopping 8,646 companies. Yes, you read that right—eight thousand.

With a low MER of 0.20% and a 5-year average return of 12.38%, XEQT offers broad diversification. But there’s a catch: only 15% of its international exposure is hedged against currency swings.

Translation? If the Canadian dollar strengthens, your returns could take a hit. Still, for those wanting a slice of global action, XEQT is hard to ignore.

The American Dream in One ETF: XUU

Now, let’s talk about XUU, another BlackRock gem. This ETF tracks the S&P Total Market Index, meaning it holds 2,528 US companies—from tech giants to tiny startups. Its 5-year average growth of 16.45% is eye-popping, and with an MER of just 0.07%, it’s dirt cheap to own.

But before you get starry-eyed, remember this: XUU is heavily concentrated in tech and mega-caps like Apple and Microsoft. In fact, its performance mirrors the S&P 500 almost perfectly. So if you’re looking for pure US market exposure, this is your ticket. Just know that you’re hitching your wagon to the American economy, warts and all.

Tech Titans Only: The ZNQ Story

If you believe tech stocks will keep dominating, meet ZNQ, BMO’s NASDAQ 100 ETF. This fund holds the who’s who of tech—Apple, Amazon, Nvidia, and more. Its 5-year average return of 22.2% is jaw-dropping, but so is its volatility. With a beta of 1.38, it moves faster than the broader market, both up and down.

At 0.39%, the MER is higher than some of its peers, but here’s the trade-off: you’re paying for concentrated exposure to innovation-heavy sectors. Just don’t forget—tech isn’t immune to downturns. Remember the dot-com crash? Yeah, exactly.

S&P 500 Powerhouse: VFV’s Case

Last but not least, we have VFV, Vanguard’s S&P 500 tracker. If the US economy were a poker table, VFV would be sitting with the big boys—Apple, Microsoft, Amazon, and friends. Its 17.88% annualized return since inception in 2012 speaks volumes, especially when compared to actively managed funds.

What makes VFV stand out? Its rock-bottom MER of 0.09% and tax efficiency. Hold it in a TFSA or RRSP, and you dodge those pesky withholding taxes on dividends. However, beware of concentration risk: the top 10 holdings make up over 32% of the portfolio. Diversified? Yes. Spread thin? Not quite.

Key Takeaways: Your ETF Toolkit

• Know Your Goals: Are you betting on Canada (VCN), the US (VFV, XUU), or global markets (XEQT)? Align your ETFs with your vision.
• Cost Matters: Low MERs compound over time. A 0.05% difference might seem small, but it adds up over decades.
• Risk vs. Reward: High returns often come with high volatility. Can you stomach the swings?
• Tax Efficiency: Use registered accounts like TFSAs and RRSPs to maximize after-tax returns.

Here’s the truth: no single ETF will solve all your investment needs. VCN gives you Canada, XEQT takes you global, XUU bets on America, ZNQ doubles down on tech, and VFV rides the S&P 500 wave. The question isn’t which one is best—it’s which combination works for you.

So, as you build your portfolio, think like a general planning a campaign. Diversify your troops, fortify your defenses, and always keep an eye on the horizon.

Because in the money game, the winners aren’t the ones who swing for the fences every time—they’re the ones who play the long game with discipline and strategy.

Now go ahead. Make your move.