Best Canadian ETFs According to Reddit: 2024 Edition

Why Reddit for ETF Advice?

Reddit offers a unique lens into the world of ETFs because it pulls opinions from thousands of users, many of whom have first-hand experience with investing in different funds. Whether you're a seasoned investor or just starting, Reddit’s investment communities, like r/CanadianInvestor and r/PersonalFinanceCanada, are filled with discussions on what ETFs are performing well, offering good diversification, and providing robust returns. It’s a great place for learning, comparing notes, and finding hidden gems.

This 2024 list is derived from Reddit's ongoing discussions, recommendations, and debates, so you get the essence of what the crowd thinks is the best strategy for Canadian ETFs this year.

Top Canadian ETFs as Recommended by Reddit in 2024

1. Vanguard FTSE Canada All Cap Index ETF (VCN)

One of the most highly recommended Canadian ETFs on Reddit, VCN is a great choice for those looking to gain exposure to a broad range of Canadian companies. VCN holds hundreds of Canadian stocks across different sectors, including energy, finance, and real estate. The fund is low-cost, and well-diversified. Redditors frequently praise it for its simplicity and reliability, making it a favorite for long-term holders.

• Expense Ratio: 0.05%
• 2023 Performance: 9.8%
• Why Reddit Likes It: Redditors appreciate VCN for its low fee structure and broad exposure to the Canadian market. It provides a "set it and forget it" strategy that suits many investors who don’t want to worry about active management.

2. iShares S&P/TSX 60 Index ETF (XIU)

If you're after blue-chip stocks in Canada, XIU is a frequent recommendation on Reddit. It tracks the S&P/TSX 60, which consists of 60 of the largest companies on the Toronto Stock Exchange. Reddit users are particularly fond of XIU for its stability and exposure to some of the country's biggest names, such as RBC, Shopify, and Enbridge.

• Expense Ratio: 0.18%
• 2023 Performance: 7.3%
• Why Reddit Likes It: Stability and large-cap exposure are what draw investors to XIU. Users often talk about holding it in tax-advantaged accounts like the TFSA (Tax-Free Savings Account) for long-term growth and dividends.

3. BMO Low Volatility Canadian Equity ETF (ZLB)

ZLB is an ETF that focuses on low volatility stocks within Canada, meaning it’s designed to experience less fluctuation in its share price than the broader market. For investors seeking lower risk without sacrificing growth potential, ZLB is a solid choice. On Reddit, many users mention it as a core holding in their portfolios due to its defensive characteristics.

• Expense Ratio: 0.39%
• 2023 Performance: 8.2%
• Why Reddit Likes It: Many Redditors are drawn to ZLB’s strategy of minimizing volatility, especially in uncertain markets. It's often recommended for more conservative investors or those close to retirement.

4. iShares Core MSCI All Country World ex Canada Index ETF (XAW)

For those looking to diversify internationally, XAW is a top pick. This ETF gives exposure to global markets, excluding Canada, with holdings in the US, Europe, and emerging markets. Reddit discussions often highlight the importance of geographical diversification to mitigate the risk of being overexposed to the Canadian market, especially given the high concentration in energy and financials within the Canadian economy.

• Expense Ratio: 0.22%
• 2023 Performance: 11.4%
• Why Reddit Likes It: XAW is frequently mentioned as a complement to Canadian-focused ETFs like VCN. Redditors enjoy the low-cost exposure to international markets, which adds diversity to their portfolios without overlapping too heavily with domestic stocks.

5. Horizons S&P/TSX Capped Composite Index ETF (HXCN)

HXCN is another highly recommended fund that mirrors the performance of the S&P/TSX Capped Composite Index, which includes the largest companies on the Toronto Stock Exchange. What sets Horizons apart is its tax efficiency due to its use of a total return swap structure. Redditors often cite this ETF as a good option for non-registered accounts where minimizing taxable distributions is important.

• Expense Ratio: 0.10%
• 2023 Performance: 9.2%
• Why Reddit Likes It: Tax-conscious investors flock to HXCN for its ability to avoid paying dividends, allowing for deferred tax on gains. This is especially useful for those holding this ETF in non-registered accounts.

6. Purpose Bitcoin ETF (BTCC.B)

Reddit is full of cryptocurrency enthusiasts, and many Canadian investors are looking for ways to add Bitcoin exposure to their portfolios without directly buying the cryptocurrency. BTCC.B offers a convenient and safe way to invest in Bitcoin. The fund’s structure allows you to avoid the complexities of managing your own digital wallet.

• Expense Ratio: 1.00%

• 2023 Performance: Bitcoin experienced significant volatility, but Redditors who are bullish on the long-term value of cryptocurrency continue to recommend BTCC.B as a potential high-growth speculative investment.

• Why Reddit Likes It: While Bitcoin remains a highly speculative investment, BTCC.B offers a regulated, easy-to-access method for Canadian investors to gain exposure to the world’s leading cryptocurrency.

7. BMO Equal Weight Banks Index ETF (ZEB)

Canadian banks are known for their stability and strong dividend yields, making them a staple in many investors’ portfolios. ZEB gives exposure to an equal-weighted index of Canadian banks, so you're not overly reliant on the performance of any single institution. Redditors often cite the high dividend yields and long-term growth potential of Canadian banks as reasons to hold this ETF.

• Expense Ratio: 0.55%
• 2023 Performance: 6.4%
• Why Reddit Likes It: Dividends! Reddit users love ZEB for the consistent, reliable income it generates through dividends. For income-focused investors, this ETF is a popular choice.

What Should You Consider When Picking an ETF?

The ETFs listed above are widely recommended on Reddit, but choosing the best one for your portfolio requires some personal consideration. Here are some factors Redditors frequently discuss when picking the right ETF:

1. Fees (Expense Ratios): Lower fees are generally better, but consider what you’re getting for the cost. Is the ETF passive or actively managed? A well-managed ETF can justify slightly higher fees.

2. Diversification: How diversified is the ETF? You’ll often see users on Reddit recommending that you mix both Canadian and international ETFs to avoid putting all your eggs in one basket.

3. Dividends: If you're investing for income, consider the ETF’s dividend yield. Reddit users love discussing the pros and cons of dividend-focused ETFs, especially in the context of tax-advantaged accounts like the TFSA or RRSP.

4. Growth Potential: What’s your investment horizon? Many Redditors point out that ETFs like ZEB (bank-heavy) might be slower in growth but reliable, while ETFs like BTCC.B (Bitcoin) could yield high returns but come with increased risk.

Tax Efficiency: A Major Reddit Topic

Tax efficiency is a recurring theme in Canadian ETF discussions on Reddit. Investors frequently debate whether it’s better to hold dividend-paying ETFs in tax-advantaged accounts or to lean towards growth-oriented, low-dividend ETFs that allow gains to grow untaxed. One often-recommended strategy is pairing a Canadian equity ETF like VCN with an international one like XAW to balance out tax efficiency with growth potential.

Conclusion

Reddit users have proven themselves as a powerful collective voice when it comes to ETF recommendations. The ETFs listed above reflect not just historical performance but the strategic insights of thousands of individual investors. Whether you're interested in core Canadian equities, global diversification, or high-risk, high-reward assets like Bitcoin, the wisdom of Reddit can guide you towards building a robust and diversified ETF portfolio. Just remember to consider your own financial goals and risk tolerance when investing!