The Top Canadian ETFs by AUM in 2023
These ETFs rank among the largest in the Canadian industry.
2022 was an interesting year when it came to the habits of Canadian ETF investors. Throughout the year, ETF investors fled fixed income ETFs en masse amid rising interest rates, piling money into money-market ETFs and even actively managed liquid alternative ETFs.
Still, when the dust settled and 2023 rolled around, the ETF giants of 2022 were still standing strong. Despite the market turbulence, the bulk of investor capital continues to be concentrated in low-cost, broad-market equity ETFs tracking popular indexes like the S&P 500 and S&P/TSX 60.
Previously, I wrote an article profiling some underrated ETFs in the Canadian industry that had under $300 million in assets under management, or AUM. In this case, I took the opposite angle and used the NEO ETF screener to identify the top ETFs of 2023 in terms of highest AUM.
iShares Core S&P/TSX Capped Composite Index ETF (XIC)
Coming in third place is XIC, which currently has just over $9 billion in AUM. This ETF made its debut on February 26th 2001, as part of iShares "Core" ETF lineup, which was designed to provide investors with low-cost, passively managed building blocks for their portfolio.
As its name suggests, this ETF tracks the S&P/TSX Capped Composite Index, which holds around 235 Canadian stocks in a market-cap weighted manner. The "capped" moniker imposes a maximum 10% weight on any single holding to reduce concentration risk.
The ETF is highly popular as a way for investors to index the investable Canadian market at a low cost. Currently, it sports a 0.06% expense ratio, which ranks among the lowest in the Canadian equity class. Many investors hold XIC alongside an all-world ex-Canada fund for a home country bias.
BMO S&P 500 Index ETF (ZSP)
S&P 500 ETFs like ZSP remain a very popular choice among Canadian investors as a low-cost way to capture the returns of the most prominent stock market index. Thanks to the recent outperformance of U.S. stocks and a rising U.S. dollar, ETFs like ZSP have enjoyed strong performance.
Like all S&P 500 ETFs, ZSP tracks a market-cap weighted index of 500 large-cap U.S. stocks selected by the S&P Committee to represent the returns of the overall U.S. market. Unlike some of its competitors, ZSP is not currency-hedged, so be aware that fluctuations in the USD-CAD rate can affect returns.
Currently, ZSP sports around $9.6 billion in assets under management, making it the second largest Canadian listed ETF by AUM. The ETF also charges a very low expense ratio of 0.09%, which is as low as Canadian S&P 500 ETFs currently get.
iShares S&P/TSX 60 Index ETF (XIU)
Last, but certainly not least, is XIU, the largest and oldest ETF in Canada. This ETF originally started trading in 1990, making it the first ETF in the world. It tracks the eponymous S&P/TSX 60 index, which unlike the Capped Composite does not hold small caps and is largely dominated by large-cap stocks.
This ETF is highly popular with institutional and retail investors alike thanks to its strong liquidity, high trading volume, and ubiquity. While XIC is arguably more diversified, XIU has historically outperformed thanks to its higher concentration of large-cap stocks like the "Big 6" banks.
XIU doesn't come cheap however. The ETF sports an expense ratio of 0.18%, which is three times that of XIC. Don't expect BlackRock to lower fees anytime soon though – with over $10 billion in AUM, XIU is one of their most profitable ETFs in the Canadian industry.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
