The Finest S&P 500 ETFs in Canada in June 2025

Though Canada has a substantial quantity of ETFs, there’s a vital drawback to Canadian ETFs. The index composition leads to a heavily-weighted publicity to 3 particular sectors.

• Financials
• Oil and Gasoline
• Supplies

The answer? Publicity to the S&P 500

Many Canadians probably have a house nation bias concerning their investments, which means they’ve an excessive amount of of their portfolios allotted to Canada.

Our nation doesn’t have a big sufficient economic system. It depends an excessive amount of on fossil gas and commodity manufacturing to be completely invested in, and in consequence goes to be extraordinarily cyclical.

However as a result of we spend and earn our cash in Canadian dollars, many traders could discover swapping their CAD for USD inconvenient to purchase US shares or ETFs.

So, many fund managers have developed Canadian-traded S&P 500 ETFs, permitting for publicity south of the border with out exchanging forex. These ETFs commerce on the Toronto Inventory Alternate, which provides to their comfort for Canadian traders.

What’s the S&P 500?

The S&P 500 is the Customary & Poor’s 500 Index. This inventory market index contains the five hundred largest corporations in the USA.

Now, this isn’t a concrete definition. The index incorporates over 500 corporations and doesn’t essentially should be the five hundred largest. That’s as a result of there are strict indexing necessities that corporations should undergo to get included.

Due to the variety of corporations within the index, the efficiency of the S&P 500 is sometimes called the barometer of the US economic system. Many US-based portfolios use the S&P benchmark index to match their funding returns.

You’ll see lots of the world’s high corporations contained in the S&P 500, reminiscent of Apple, Microsoft, Amazon, Alphabet (Google), Tesla, Berkshire Hathaway, Nvidia, Johnson & Johnson, Meta Platforms, Visa, and a lot extra.

Probably the most outstanding S&P 500 ETF could be SPY, which is the SPDR S&P 500 ETF Belief. Nonetheless, this fund trades in USD, so that you’d should convert earlier than shopping for.

Is there an identical index in Canada?

As a result of we aren’t almost as giant as the USA, it wouldn’t make sense for us to have an index of our 500 largest corporations right here in Canada.

Alternatively, nonetheless, we do have the TSX 60. This Canadian ETF tracks the 60 largest corporations in Canada and is the oldest ETF in existence, originating in 1990. The ticker for this index fund is XIU.

A extra broad-based Canadian index is the TSX Composite Index, which tracks a extra numerous index than the TSX 60. The variety of holdings can differ based mostly on what number of shares meet the index standards, with roughly 220 completely different shares making up the TSX Composite Index at the moment.

With all that stated, lets dive into a few of the high TSX listed S&P 500 ETFs you should purchase at the moment.

Low-cost, unhedged U.S. market publicity

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

VFV is a low-cost ETF that tracks the S&P 500 with out forex hedging. It gives direct publicity to the biggest U.S. corporations and advantages from Vanguard’s popularity for environment friendly index monitoring.

Forex-hedged S&P 500 publicity

Vanguard S&P 500 Index ETF (CAD-hedged) (TSE:VSP)

VSP is just like VFV however with forex hedging, decreasing publicity to CAD/USD trade charge fluctuations. This makes it preferred for traders preferring stability in Canadian-dollar phrases.

Low-cost, unhedged S&P 500 ETF with BlackRock administration

iShares Core S&P 500 Index ETF (TSE:XUS)

XUS gives broad-based publicity to the S&P 500 with out forex hedging. It’s a direct competitor to VFV, managed by BlackRock, the world’s largest asset supervisor.

Aggressive low-fee various to VFV/XUS

BMO S&P 500 Index ETF (TSE:ZSP)

ZSP is one other unhedged S&P 500 ETF with an identical technique to VFV and XUS. Managed by BMO, it affords an economical strategy to put money into the U.S. market.

Tax-efficient swap-based ETF construction

International X S&P 500 Index ETF (TSE:HXS) & (TSE:HXS.U)

HXS (CAD model) and HXS.U (USD model) are distinctive swap-based ETFs that present publicity to the S&P 500 with out straight holding the underlying shares. As an alternative, they use a complete return swap, which will be extra tax-efficient in non-registered accounts.

Total, this record of the very best S&P 500 ETFs in Canada is extra of a model battle than something

In addition to HXS, which does present a novel proposition for individuals who don’t care a lot concerning the small distribution coming from the opposite funds, the choice on which S&P 500 ETF in Canada comes all the way down to model.

By way of administration charges, they differ by ten cents a 12 months per $1,000 invested, a negligible quantity. Vanguard, Blackrock, BMO, and Horizons are all wonderful fund corporations, and you may’t go fallacious with proudly owning any of those S&P 500 ETFs in Canada.

Nonetheless, it’s important to grasp and take a look at your brokerage commissions. A few of these ETFs could also be free to buy on common Canadian brokerages like Questrade and Qtrade.

By way of hedging vs unhedged, that’s a narrative for one more article. The previous isn’t a assure of future outcomes. Nonetheless, on a historic foundation, you’d be a lot better off going with an unhedged model.

Now that the Canadian greenback is traditionally weak, nonetheless, some traders could select to hedge their bets after which go unhedged when it recovers. Guessing forex actions is an especially exhausting factor to do, nonetheless.

Additionally, an essential observe to grasp. As a result of these commerce in Canadian {dollars} however maintain underlying US shares or ETFs, the distributions could possibly be topic to withholding tax even inside a registered account like an RRSP. It’s essential to determine your private tax scenario earlier than making investments.

What’s an ETF?

Alternate-traded funds, or ETFs for brief, are one of many trendy investor’s finest funding instruments. Many newbie traders attempt to study how to buy stocks and don’t take a look at a extra passive investing model like ETFs.

An ETF is an funding fund that tracks a specific sector, index, commodity, or basket of shares and will be traded on an index similar to every other inventory. Traders should buy ETFs on their very own or via a monetary advisor, though that possibility normally comes with increased charges, which in the end hurts long-term returns.

The great thing about ETFs is that traders can construct a diversified portfolio with low funding capital. It’s excellent for traders with restricted capital or new traders (younger and outdated) who need to diversify their dangers and maximize good points.

Does the S&P 500 pay a dividend?

The S&P 500 index tracks the biggest corporations in the USA. Nonetheless, once we take a look at some US S&P 500 ETFs and the Canadian S&P 500 ETFs under, there are distributions within the funds.

Nonetheless, it’s important to notice that these funds pay distributions, not dividends. And though this will seem to be a trivial subject, it isn’t. A distribution will be made up of many issues, reminiscent of a dividend, capital achieve, curiosity revenue, or return of capital.

This distinction is particularly essential when paying revenue taxes, as various kinds of revenue are taxed otherwise.

For traders who simply need to reinvest their dividends, it’s comparatively straightforward to set an S&P 500 ETF to have automated reinvestment of all dividends.