Canada’s best Index ETFs in 2021 review and comparison

In this post, we review the market index ETFs that have performed best in the last 52 weeks. At the very beginning, we will define what an index ETF is. Then we will explain why these type of funds are very popular in Canada. The most popular indices on the market and their characteristics will be reviewed. Merits of this type of investment strategy versus an actively managed mutual fund. Finally, a comparison will be made between these funds based on performance, management fees and returns.

What is an index fund?

There are several types of ETFs. And index ETFs are the most popular in the financial markets. In fact, the first ETF to be launched on the North American stock exchange was an index ETF. Index ETFs offer exposure to a large number of securities and sometimes to a whole stock market at a very low cost. Their main objective is to acquire, on your behalf, all securities that constitute a specific index in order to obtain the same return of the index minus management fees.

Why do investors like index ETFs?

Index ETFs are in direct competition with growth mutual funds. The latter charge a management fee of more than 2% and can even reach 4%. When banks marketed mutual funds, they insisted on active and professional management. The goal of the managers was to beat the benchmark (which is usually the index). Over time, it became clear that the overwhelming majority of fund managers fail to beat the benchmark.

As Warren Buffet has said many times, “Beating the index in the long run is very difficult even for professionals.” A manager can beat the index in the short term, but to beat it in the long run, he must be able to anticipate the market for 10 years!

Frequently tracked indexes

S.P. 500 Index

The S&P 500 Index, or the Standard & Poor’s 500 Index, is a market-capitalization-weighted index of the 500 largest publicly-traded companies in the U.S. 

The S&P 500 is an excellent index because most of its constituents are large established US corporations. It’s well diversified across various sectors of the US economy. The index is widely regarded as the best gauge of large-cap U.S. equities. It can be easily used to express an opinion on the US economy in general. In other words, if you are bullish on the performance of the American economy in the long term, it’s probably the best index for you.

All ETFs that replicate the performance of the S.P. 500 index will have the same securities in their assets and at about the same proportions as the index itself.

The Nasdaq 100

The Nasdaq-100 is one of the world’s preeminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.

This index is dominated by companies in the Information Technology sector.

S&P/TSX 60

An index of the 60 largest companies on the Toronto Stock Exchange.   This index is dominated by the energy and finance sectors.


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Currency risk coverage

When the manager has to replicate a U.S. index such as the S.P. 500 or the Nasdaq 100. It must acquire these assets in U.S. dollars. So, on a fairly regular basis, the fund has to convert the funds available in Canadian dollars into U.S. dollars. These conversions may be beneficial or have a negative impact depending if the Canadian dollar has appreciated or depreciated.

Many investors want to reduce this risk. To meet their needs, the majority of ETFs that reproduce a U.S. index offer a “hedged” version of their funds and sometimes another version that is traded only in U.S. dollars. Coverage acts as a kind of insurance. See the scenarios presented below:

 Scenario 1: Value of Canadian
$ appreciated
Scenario 2: Value of Canadian
$ depreciated
Non hedged ETFIndex return
Minus foreign exchange loss
Index return
Plus foreign exchange gains
Hedged ETF

Index returnIndex return
US $ ETFIndex Return
The investor chooses when to convert

Index Return
The investor chooses when to convert

Comparison table: Assets under management and management fees

Fees  %
HXQ-U Horizons Nasdaq 100 Index  USD2750.25
XQQ Ishares Nasdaq 100 Index1,4760.35
QQC-F Invesco QQQ Index4060.32
ZQQ BMO Nasdaq 100 Hedged To CAD Index1,4190.35
HXT-U Horizons S&P TSX 60 Index  USD1,9430.03
THU TD S&P 500 CAD Hedge Index290.08
HXS-U Horizons S&P 500 Index  USD1,8670.10
HSH Horizons Sp500 CAD Hedged Index2130.10
ZSP-U BMO S&P 500 Index  USD1,8890.08
VSP Vanguard S&P 500 Index  CAD Hdg1,6530.08
ZUE BMO S&P 500 Hedged CAD1,4150.08%
XSP Ishares Core S&P 500  CAD Hdg7,3570.10%
Source:, AUM is asset under management

  • XSP Ishares Core S-P 500 CAD Hdg is by far the most popular index ETF in Canada with over 7 billion assets under management;
  • ETFs that replicate the Nasdaq 100 cost more than ETFs that replicate the S.P. 500;

Comparative table: Currencies, indices and hedges

The nameCurrencyIndexHedged
HXQ-UUSDNadaq 100 
XQQ CANNadaq 100 Yes
QQC-F CANNadaq 100 
ZQQCANNadaq 100 

Comparative table: Performance

52 W
XQQ 7.6557.85
QQC-F 7.6657.65
HXT-U 14.1252.34
THU 11.1948.51
HXS-U 12.5947.66
HSH 12.3946.00
ZSP-U 11.5545.21
VSP 11.1844.36
ZUE 11.3544.29

Source:, it’s important to note that performance can change significantly from one day to the next, so it’s best to check the courses in real time for the latest information. All figures were collected on April 28, 2021.


The data on this website is for your information only. It does not constitute investment advice, or advice on tax or legal matters. Any information provided on this website does not constitute investment advice or investment recommendation nor does it constitute an offer to buy or sell or a solicitation of an offer to buy or sell shares or units in any of the investment funds or other financial instruments described on this website. Should you have any doubts about the meaning of the information provided herein, please contact your financial advisor or any other independent professional advisor.