Index funds are the simplest, lowest-cost way to invest in the stock market. Instead of picking individual stocks, you buy one fund that holds hundreds or thousands of stocks, automatically diversified and rebalanced for you. For the broader category overview, start with our ETFs and index funds hub.
Best Canadian Index Funds & ETFs
S&P/TSX Composite (Canadian Market)
| ETF | Ticker | MER | Index | Holdings | Dividend Yield |
|---|---|---|---|---|---|
| iShares Core S&P/TSX Capped Composite | XIC | 0.06% | S&P/TSX Composite | 230+ | ~3.0% |
| BMO S&P/TSX Capped Composite | ZCN | 0.06% | S&P/TSX Composite | 230+ | ~3.0% |
| Vanguard FTSE Canada All Cap | VCN | 0.05% | FTSE Canada All Cap | 180+ | ~2.8% |
S&P 500 (US Market)
| ETF | Ticker | MER | Currency | Hedged? | Dividend Yield |
|---|---|---|---|---|---|
| Vanguard S&P 500 Index | VFV | 0.09% | CAD | No | ~1.3% |
| iShares Core S&P 500 | XUS | 0.10% | CAD | No | ~1.3% |
| BMO S&P 500 Index | ZSP | 0.09% | CAD | No | ~1.3% |
| Vanguard S&P 500 (hedged) | VSP | 0.09% | CAD | Yes | ~1.3% |
| TD S&P 500 Index (mutual fund) | TDB902 | 0.28% | CAD | No | ~1.2% |
All-in-One Index ETFs
If you want the shortlist first, see best all-in-one ETFs in Canada.
| ETF | Ticker | MER | Stocks/Bonds | Holdings | Best For |
|---|---|---|---|---|---|
| Vanguard All-Equity | VEQT | 0.24% | 100/0 | 13,000+ stocks | Long-term growth |
| iShares Core Equity | XEQT | 0.20% | 100/0 | 9,000+ stocks | Lowest-cost all-equity |
| Vanguard Growth | VGRO | 0.24% | 80/20 | Stocks + bonds | Growth with some stability |
| iShares Core Growth | XGRO | 0.20% | 80/20 | Stocks + bonds | Growth with some stability |
| Vanguard Balanced | VBAL | 0.24% | 60/40 | Stocks + bonds | Moderate risk |
| iShares Core Balanced | XBAL | 0.20% | 60/40 | Stocks + bonds | Moderate risk |
International Index ETFs
| ETF | Ticker | MER | Region | Holdings |
|---|---|---|---|---|
| Vanguard FTSE Developed All Cap ex NA | VIU | 0.22% | Europe, Japan, Australia | 3,800+ |
| iShares Core MSCI EAFE | XEF | 0.22% | Europe, Japan, Australia | 2,800+ |
| Vanguard FTSE Emerging Markets | VEE | 0.24% | China, India, Brazil, etc. | 5,600+ |
| iShares Core MSCI Emerging Markets | XEC | 0.27% | China, India, Brazil, etc. | 3,000+ |
Index Fund vs Index ETF
We break this distinction down in more detail in index funds vs ETFs.
| Feature | Index Mutual Fund | Index ETF |
|---|---|---|
| Trading | End-of-day NAV | Real-time on exchange |
| Minimum investment | $100–$500 | Price of 1 share (or fractional) |
| Typical MER (Canada) | 0.28–1.00% | 0.05–0.25% |
| Commission | Usually $0 | $0 at most brokerages |
| Auto-contributions | Easy to set up | Requires manual purchase (some brokerages automate) |
| Best platform | TD e-Series, bank mutual funds | Wealthsimple, Questrade, any brokerage |
How to Build a Simple Index Portfolio
| Approach | What to Buy | MER | Effort |
|---|---|---|---|
| One-fund solution | VEQT or XEQT | 0.20–0.24% | Lowest — buy one ETF |
| Two-fund solution | VFV + XIC | 0.06–0.09% | Low — rebalance annually |
| Three-fund solution | XIC + VFV + VIU | 0.05–0.22% | Moderate — rebalance annually |
| Robo-advisor | Wealthsimple Invest | 0.40–0.50% all-in | Lowest — fully automated |
If you are deciding between hands-off automation and a one-fund DIY setup, compare robo-advisor vs ETF portfolio.
How to Buy Index Funds in Canada
- Open a brokerage account (Wealthsimple, Questrade, or bank brokerage)
- Choose your account type (TFSA, RRSP, FHSA, or non-registered)
- Deposit funds via EFT or bill payment
- Search for the ETF ticker (e.g., VEQT, VFV, XIC)
- Place a limit order for the number of shares you want
- Set up regular contributions (monthly or bi-weekly)
Common Index Investing Mistakes
| Mistake | Better Approach |
|---|---|
| Buying only Canadian stocks | Diversify globally (VEQT/XEQT do this automatically) |
| Trying to time the market | Invest consistently regardless of market conditions |
| Checking returns daily | Review quarterly or annually |
| Switching funds after a bad year | Stay the course — markets recover |
| Paying high MERs for same index | Compare MERs — even 0.5% adds up over decades |
Use the MER calculator if you want to quantify that fee drag.
Frequently asked questions
What is the difference between an index fund and an ETF in Canada? An index fund is any fund that tracks an index; an ETF is a type of fund that trades on a stock exchange. Most Canadian index funds are now offered as ETFs (e.g., XEQT, VBAL, ZSP). The older “traditional index fund” structure (mutual fund format) still exists through some providers (e.g., TD e-Series), but ETFs dominate because of lower MERs and intraday trading flexibility.
Are Canadian index funds safe? Index funds are subject to market risk — their value rises and falls with the underlying index. They are not “safe” in the sense of principal protection, but they are diversified: a global index fund holds thousands of companies, so no single company failure can wipe out the fund. Regulatory protection: index ETFs at Canadian brokerages are covered by CIPF for custodial risk (broker insolvency).
Which index fund is best for a TFSA in Canada? A single all-in-one ETF like XEQT (100% equity) or VGRO (80/20 equity/bond) is a practical choice for a long-term TFSA. The asset allocation should match your time horizon and risk tolerance, not just MER.