Best ETFs for Canadian Investors
Canadian investors face currency costs and withholding tax. Here are the best ETF options and account strategies for your TFSA and RRSP.
Don't have time? Here's what you need to know:
- 1Hold U.S.-listed ETFs (VOO, VTI) in your RRSP to avoid 15% U.S. withholding tax on dividends
- 2Use Norbert's Gambit to convert CAD to USD at near-spot rates (saves 1-2% vs bank rates)
- 3Canadian-listed equivalents (VFV, XIC, XAW, ZAG) trade in CAD and work well in TFSA accounts
- 4VEQT or XEQT are excellent one-fund global solutions for Canadian investors at 0.20-0.24%
Canadian Investors: Three Ways to Buy ETFs
Canadians can buy: (1) Canadian-listed ETFs that hold underlying U.S. ETFs (e.g., VFV = S&P 500 in CAD), (2) Canadian-listed ETFs that hold stocks directly (e.g., XIC = TSX Composite), or (3) U.S.-listed ETFs directly in USD (VOO, VTI) through a USD account. Each has different cost, tax, and currency implications.
For most Canadians, Canadian-listed ETFs from Vanguard Canada or iShares Canada are the simplest option. They trade in CAD, avoid currency conversion fees, and are eligible for TFSA, RRSP, and non-registered accounts.
Best ETFs for Canadian Investors
| ETF | Category | Expense Ratio | Currency | Withholding Tax in RRSP |
|---|---|---|---|---|
| VFV | S&P 500 (CAD) | 0.09% | CAD | 15% on U.S. dividends (non-recoverable) |
| VOO (direct) | S&P 500 (USD) | 0.03% | USD | 0% (U.S.-Canada tax treaty) |
| XIC | TSX Composite (Canadian stocks) | 0.06% | CAD | No foreign withholding |
| XAW | All-World ex-Canada | 0.22% | CAD | 15% on U.S. dividends |
| ZAG | Canadian Aggregate Bonds | 0.09% | CAD | No foreign withholding |
| VEQT | All-Equity (global) | 0.24% | CAD | 15% on U.S. dividends |
TFSA vs RRSP: Where to Hold What
RRSP: Hold U.S.-listed ETFs (VOO, VTI) to avoid the 15% U.S. withholding tax on dividends — the Canada-U.S. tax treaty exempts RRSP holdings. Use Norbert's Gambit (buy a dual-listed stock in CAD, journal it to USD side, sell in USD) to convert currency at near-spot rates instead of paying the 1-2% bank spread.
TFSA: Hold Canadian-listed ETFs (VFV, XIC, XAW) for simplicity. The 15% U.S. withholding tax applies regardless of account type for Canadian-listed funds, so there is no tax advantage to holding U.S.-listed ETFs in a TFSA (they are also not withholding-tax-exempt in a TFSA).
Tip: Norbert's Gambit saves 1-2% on currency conversion. Buy DLR (Horizons US Dollar ETF) in CAD, journal to DLR.U (USD side), sell in USD. The round-trip costs about $10-20 in commissions vs hundreds in bank conversion fees on large amounts.
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Frequently Asked Questions
Should I buy VFV or VOO for my RRSP?
VOO in your RRSP if you are willing to do Norbert's Gambit for currency conversion. VOO charges 0.03% vs VFV's 0.09%, and U.S. dividends are not withheld in an RRSP. The savings are significant on larger portfolios ($50,000+). For smaller amounts or if you prefer simplicity, VFV in CAD is fine.
What about VEQT or XEQT as a one-fund solution?
Excellent choices. VEQT (Vanguard All-Equity, 0.24%) and XEQT (iShares All-Equity, 0.20%) hold a global stock portfolio in a single fund — Canadian, U.S., international, and emerging markets. They auto-rebalance and trade in CAD. The higher fee is the cost of maximum simplicity.
Which Canadian broker is best for ETF investing?
Questrade (free ETF purchases, good for passive investors), Wealthsimple Trade (free trades on Canadian-listed ETFs, no Norbert's Gambit), and Interactive Brokers (lowest currency conversion costs, best for U.S. ETF purchases). National Bank Direct Brokerage also offers free ETF trades.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.