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ETFs Explained
What they are, why Canadians love them, and how to pick your first one.
Last updated: February 2026•✓ Verified accurate
💡 Think of an ETF like a basket.
Instead of buying one stock, you buy a basket that holds dozens or hundreds of stocks at once. Instant diversification.
What is an ETF?
An Exchange-Traded Fund (ETF) is a collection of investments bundled together and traded on the stock market like a single stock. When you buy one share of an ETF, you own a tiny piece of every company inside it.
Why Canadians Love ETFs
- ⬥Low fees: Most ETFs charge 0.05%–0.25% vs. 2%+ for mutual funds
- ⬥Instant diversification: Own hundreds of companies with one purchase
- ⬥Easy to buy: Purchase through any brokerage like a regular stock
- ⬥Tax-efficient: Hold them in your TFSA or RRSP for maximum benefit
Popular Canadian All-in-One ETFs
These are perfect for beginners — one fund, fully diversified:
| ETF | Mix | MER | Best For |
|---|---|---|---|
| XEQT | 100% stocks | 0.20% | Long-term, high growth |
| XGRO | 80% stocks / 20% bonds | 0.20% | Growth with some stability |
| VGRO | 80% stocks / 20% bonds | 0.24% | Vanguard alternative |
| XBAL | 60% stocks / 40% bonds | 0.20% | Balanced, moderate risk |
ETFs vs. Mutual Funds
- ⬥Fees: ETFs average 0.20% MER vs. mutual funds at 2.0%+
- ⬥Performance: Over 80% of mutual funds underperform their benchmark ETF
- ⬥Flexibility: ETFs trade anytime during market hours; mutual funds once per day
How to Buy Your First ETF
- Open a brokerage account (Wealthsimple, Questrade, etc.)
- Choose your account type (TFSA recommended for beginners)
- Deposit money into your account
- Search for the ETF ticker (e.g., XEQT)
- Place a "buy" order for the number of shares you want
- Set up automatic contributions and repeat monthly!
🍁 Canadian Pro Tip
On a $10,000 investment over 25 years, a 2% MER mutual fund costs you ~$5,000 more in fees than a 0.20% ETF. That's real money — fees matter!