On July 15th, 2024, the Canadian stock market reached a record high, with the S&P/TSX Composite Index closing at 22,751.68, up 0.34% for the day. This milestone represents an 8.56% gain year-to-date.

For many Canadian investors, it's a smart choice to invest in passive broad market equity ETFs, as these funds seek to mirror the performance of broad market indices.

For new investors looking to hold investments for the long term, what are the best broad-market equity ETFs in Canada? This article will explore their key benefits and provide a list of top equity ETFs suitable for a long-term investment horizon.

Key benefits of Canadian Equity ETFs

An Equity ETF primarily invests in a portfolio of stocks (equities) and is traded on a stock exchange, similar to individual stocks.

Key features and benefits

· Diversification: Equity ETFs typically hold a basket of stocks, which provides investors with diversification across many companies and sectors. Unlike individual stocks, they help you avoid putting all your eggs in one basket.

· Ease of Access: Since Equity ETFs are traded on stock exchanges, they can be bought and sold throughout the trading day at market prices, providing investors with liquidity and flexibility.

· Low Cost: The cost charged to investors when investing in ETFs is usually measured by the management expense ratio (MER). ETFs usually have lower MERs compared to mutual funds because they are often passively managed.

Most popular Canadian Equity ETFs 2024

When choosing an equity ETF, it's crucial to know what it holds, its fees, and how easily you can buy and sell shares, aka its liquidity. For Canadian investors seeking to build a robust, diversified portfolio, here are some of the most popular equity ETFs to consider:

List of Canadian Equity ETFs 2024

1. $ISHARES CORE S&P/TSX COMPOSITE ETF UNIT(XIC.CA)$

Description: XIC aims to mirror the performance of the S&P/TSX Capped Composite Index, with a cap on the maximum weight of any single stock.

Key Benefits: The fund offers exposure to a wide range of Canadian companies across various sectors, such as financials, energy and industrials.

MER: 0.06%

AUM: 12.95B

Number of Holdings: 227

Largest Holding: RY - Royal Bank of Canada (6.67%)

Largest Sector: Financials (30.77%)

Performance: +12.34% 1 Year, +37.88% 5 Year

Last Dividend: $0.98 (2.71%)

2.$ISHARES S&P/TSX 60 INDEX ETF UNIT(XIU.CA)$

Description: XIU aims to track the performance of the S&P/TSX 60 Index.

Key Benefits: It concentrates on the top 60 Canadian companies, providing exposure to the country's largest and most established companies.

MER: 0.18%

AUM: 12.53B

Number of Holdings: 61

Largest Holding: RY - Royal Bank of Canada (8.29%)

Largest Sector: Financials (34.49%)

Performance: +11.27% 1 Year, +38.51% 5 Year

Last Dividend: $1.01 (2.94%)

3. $BMO S&P/TSX CAPPED COMP IDX ETF S&P/TSX CAPPED COMPOSITE IDX ETF CAD DIS(ZCN.CA)$

Description: ZCN aims to replicate the performance of the S&P/TSX Capped Composite Index, with a cap on the maximum weight of any single stock.

Key Benefits: It includes a range of Canadian companies across various sectors such as financials, energy, and industrials.

MER: 0.06%

AUM: 8.35B

Number of Holdings: 228

Largest Holding: RY - Royal Bank of Canada (6.48%)

Largest Sector: Financials (30.49%)

Performance: +12.00% 1 Year, +36.05% 5 Year

Last Dividend: $0.92 (3.03%)

4. $VANGUARD FTSE CAN ALL CAP IDX ETF TRUST UNIT(VCN.CA)$

Description: VCN aims to track the performance of the FTSE Canada All Cap Index, which measures the investment return of the broad Canadian equity market. It includes large, mid, and small-cap companies.

Key Benefits: It provides exposure to the Canadian stock market across all market capitalizations. It has one of the lowest MERs among Canadian equity ETFs, making the fund cost-efficient for long-term investors.

MER: 0.05%

AUM: 7.06B

Number of Holdings: 172

Largest Holding: RY - Royal Bank of Canada (6.82%)

Largest Sector: Financials (33.25%)

Performance: +12.45% 1 Year, +38.74% 5 Year

Last Dividend: $1.32 (2.86%)

Wrapping up Canadian Equity ETFs

The ETFs above are some of the largest available in Canada by assets under management. However, there are key differences you may consider when choosing which ETF is right for you.

• Broad Market Exposure: XIC, ZCN, and VCN all offer broad market exposure with 171 to 228 holdings, making them suitable for investors looking to diversify across the entire Canadian equity market.

• Large-Cap Focus: XIU focuses on the largest 60 Canadian companies, which might be appealing to investors seeking exposure to only blue-chip stocks.

• Cost Efficiency: VCN offers the lowest MERs among the four, preferred by investors seeking to maximize cost-efficiency.

Each of these ETFs has its own strengths, and the best choice depends on your specific investment goals, risk tolerance, and preference for market exposure.

For broad market exposure with minimal cost, XIC, ZCN, and VCN are excellent choices. If you prefer a focus on large-cap companies, XIU is a strong contender.