1.iShares Core S&P U.S. Total Market Index ETF
XUU.TO (TSX)
The iShares Core S&P U.S. Total Market Index ETF (XUU) offers Canadian investors extensive exposure to the U.S. market, including small-cap stocks, with an impressively low management expense ratio of just 0.07%. With a solid 1-year return of 14.21% and an impressive 5-year return of 90.91%, this ETF stands out as an attractive option for those seeking broad market diversification. Additionally, it provides a dividend yield of 1.16%, with dividends paid quarterly, enhancing its appeal for income-focused investors.
Pros:
- Ultra-low management expense ratio of 0.07%
- Broad exposure to the U.S. market including small caps
Cons:
- Currency risk for Canadian investors
- Market volatility risk
2.iShares Core S&P/TSX Capped Composite Index ETF
XIC.TO (TSX)
The iShares Core S&P/TSX Capped Composite Index ETF (XIC) offers a low management expense ratio of just 0.06%, making it an attractive option for investors seeking diversified equity exposure in the Canadian market. With a solid 1-year return of 34.03% and a 5-year return of 83.62%, XIC stands out as a top-rated fund, particularly for RRSP investors who prefer a hands-off approach to sector and company selection. Additionally, it boasts a dividend yield of 2.22%, enhancing its appeal for those looking for reliable income.
Pros:
- Low management expense ratio of 0.06%
- Strong historical returns over 1 and 5 years
Cons:
- Market volatility risk
- Dependence on Canadian market performance
3.BMO S&P/TSX Capped Composite Index ETF
ZCN.TO (TSX)
With a low management expense ratio of just 0.06%, the BMO S&P/TSX Capped Composite Index ETF (ZCN) offers broad Canadian equity exposure similar to its peers. The fund has demonstrated impressive performance, boasting a 33.95% return over the past year and an 81.70% return over five years. Investors can also benefit from a dividend yield of 2.21%, making ZCN an attractive option for those seeking a combination of growth and income.
Pros:
- Low management expense ratio of 0.06%
- Strong historical performance over 1 and 5 years
Cons:
- Market volatility risk
- Dependence on Canadian market performance
4.Horizons S&P/TSX 60 ETF
HXT (TSX)
The Horizons S&P/TSX 60 ETF (HXT) stands out with its remarkably low fee of just 0.04%, making it an attractive choice for investors seeking exposure to top Canadian stocks while enjoying tax advantages in non-registered accounts. Over the past year, HXT has delivered an impressive return of 33.63%, and its five-year performance showcases a remarkable growth of 108.21%. This fund captures a balanced mix of growth and value stocks, effectively tracking the performance of the S&P/TSX 60 Index (Total Return).
Pros:
- Lowest fee at 0.04% after rebate
- Tracks top 60 Canadian stocks
Cons:
- Market volatility risk
- Dependence on Canadian market performance
5.Vanguard FTSE Canada All Cap Index ETF
VCN.TO (TSX)
The Vanguard FTSE Canada All Cap Index ETF (VCN) provides an excellent opportunity for investors seeking broad exposure to the Canadian market, including smaller companies, all at a remarkably low management expense ratio of just 0.06%. With a solid 1-year return of 33.16% and a 5-year return of 84.80%, this ETF is well-regarded as a core building block for long-term investment portfolios, particularly for RRSP and TFSA accounts. Additionally, its attractive dividend yield of 2.26% underscores its appeal for those looking for reliable income alongside capital growth.
Pros:
- Low management expense ratio of 0.06%
- Broad exposure to the Canadian market including small caps
Cons:
- Market volatility risk
- Dependence on Canadian market performance
Final Words
As you consider the best low-cost index funds in Canada this January, remember that options like the iShares Core S&P/TSX Capped Composite Index ETF offer diversified exposure with low management fees. Take time to compare these options and conduct your own research to make informed investment choices that align with your financial goals.
Frequently Asked Questions
The iShares Core S&P/TSX Capped Composite Index ETF (XIC) has a low management expense ratio (MER) of 0.06% and tracks a capped composite Canadian index, providing diversified equity exposure. It invests primarily in large- and midcap Canadian stocks selected by market capitalization and liquidity.
As of early January 2026, XIC has shown impressive returns with a 1-year return of 34.03% and a 5-year return of 83.62%. Its quarterly distribution yield is currently 2.22%, with dividends paid out every three months.
XIC is considered a strong option for investors seeking diversification without the need to focus on individual stocks. Its broad exposure to the Canadian market helps mitigate risk while allowing participation in market growth.
XIC stands out due to its low MER of 0.06% and its focus on large- and midcap stocks. When comparing with other Canadian index funds, consider factors such as expense ratios, performance history, and the breadth of market coverage.
Investing in index funds such as XIC does carry market risk, as they are subject to the fluctuations of the stock market. Additionally, while XIC offers diversification, it is still vulnerable to sector-specific downturns affecting its constituents.
When selecting a low-cost index fund, investors should evaluate the fund's expense ratio, historical performance, and the index it tracks. It's also important to consider the fund's risk profile and how it aligns with your investment goals.
