Best Etfs this January 2026 in Canada

The Vanguard S&P 500 Index ETF (VFV) is an appealing choice for investors looking for a low-cost option to gain exposure to the U.S. market, boasting an impressive 1-year return of 15.25%. With a modest management expense ratio of just 0.09%, VFV has demonstrated resilience, rebounding strongly after market fluctuations and achieving a remarkable 100.27% return over the past five years. Additionally, it offers a dividend yield of approximately 0.91%, making it a well-rounded investment for both growth and income seekers.

VFV has risen by 0.84% over the last month and shows a yearly performance increase of 12.82%.

VFV has demonstrated strong long-term performance, rebounding from market downturns with 23% returns in 2023 and 35% in 2024, making it a solid choice for buy-and-hold investors.

The Hamilton Enhanced Canadian Covered Call ETF (HDIV) is an attractive option for income-focused investors, boasting a monthly dividend yield of over 10%. Its strategy of employing covered calls on various Canadian sectors has resulted in impressive performance, including a remarkable 23.45% return over the past year and a solid 30.18% over the last five years. With total returns in the low 30% range year to date, HDIV continues to demonstrate its reliability as a monthly income generator.

The Hamilton Enhanced Canadian Covered Call ETF (TSX:HDIV) has performed well in 2025, achieving total returns of approximately 30% year-to-date and around 20% over the previous year.

Support levels for HDIV are at $21.03 and $20.76; a drop below these levels could trigger sell signals. A recent buy signal was issued on November 20, 2025, and the stock has since risen by 6.18%.

HDIV pays monthly cash distributions, which can also be reinvested in additional ETF units through a dividend reinvestment plan (DRIP).

HDIV uses a modest 25% leverage to enhance returns, providing average monthly dividends of 9-10%.

The BMO Low Volatility Canadian Equity ETF (ZLB) is designed for risk-averse investors, offering a solid annualized return of 11.33% over the past decade. With a dividend yield of 1.93% and impressive one-year and five-year returns of 26.53% and 71.61% respectively, it remains a popular choice among investors seeking stability and growth potential. As it approaches TSX highs, ZLB is well-positioned to provide consistent income while minimizing risk.

ZLB, with $5.3 billion in assets and a 2% yield, is a popular choice for investors seeking stability and income while maintaining long-term growth potential.

The average 12-month price target for ZLB is C$64.00, with a high of C$71.88 and a low of C$56.65, indicating a potential 9.87% increase from its last price of C$58.25.

ZLB has a dividend yield of 1.92%, paying 1.12 CAD per share annually, with dividends distributed quarterly.

Currently, ZLB shows mixed signals; it has a buy signal from the short-term moving average but a sell signal from the long-term average.

The BMO Aggregate Bond Index ETF (ZAG) stands out with an ultra-low management expense ratio of just 0.08%, making it an appealing choice for investors seeking stability through broad diversification in Canadian government and corporate bonds. With a dividend yield of approximately 3.48%, it provides reliable income, although it has faced challenges with a one-year return of only 1.10% and a five-year return of -16.03%. This ETF is particularly suitable for retirees looking to buffer their portfolios against market volatility while supporting withdrawals.

Over the past 30 years, the BMO Aggregate Bond Index (ZAG.TO) ETF has achieved a 4.15% compound annual return with a standard deviation of 4.43%, experiencing a maximum drawdown of -16.11% that has lasted for 65 months.

ZAG ETF can be a suitable option for retirees seeking to reduce portfolio volatility while providing income, offering flexibility and liquidity compared to traditional fixed-income investments.

ZAG ETF is sensitive to interest rate hikes due to its high allocation to government bonds, which can lead to depreciation in the value of existing bonds when new bonds offer higher yields.

ZAG ETF tracks the FTSE Canada Universe Bond Index, providing exposure to a broad range of Canadian bonds.

The BMO Equal Weight Banks Index ETF (ZEB) offers investors an impressive one-year return of 41.28%, reflecting its strategy of providing equal-weighted exposure to Canadian banks. With a solid dividend yield of 2.94%, ZEB presents a compelling choice for those looking to balance growth and value in their portfolios. Analysts have a favorable outlook, with a 12-month price target averaging C$58.85, indicating continued potential for appreciation.

The average 12-month price target for ZEB is C$58.85, with a high of C$62.98 and a low of C$54.41, indicating a slight decrease of 0.39% from its current price of C$59.08.

ZEB invests in both growth and value stocks across various market capitalizations.

Over the past 12 months, ZEB's price has increased by 41.27%, with a year-to-date return of 2.23%.

Investing in ZEB ETF carries the risk of loss if the price declines, but it also offers potential for significant returns if the price rises.

The iShares S&P/TSX Capped Energy Index ETF (XEG) stands out as a top performer in the Canadian energy sector, boasting a 7.85% return over the past year and an impressive 193.59% over five years. With a dividend yield of 3.62%, this fund is an attractive option for investors looking for exposure to energy while benefiting from consistent income. Currently rated as a buy, XEG's concentrated strategy may offer substantial gains during market upswings, although it also carries risks during downturns.

XEG currently has a technical rating of 'buy,' with positive trends noted over the past week and month.

Investing in XEG can lead to significant gains in bull markets, but it also carries considerable risk during downturns. Active management strategies may improve risk-adjusted returns in volatile conditions.

XEG refers to the iShares S&P/TSX Capped Energy Index ETF.