Best Low Cost Index Funds this March 2026 in Canada

BMO S&P/TSX Capped Composite Index ETF (ZCN) stands out with its ultra-low management expense ratio of just 0.06%, making it an attractive option for investors seeking diversified exposure to the Canadian market. Delivering a solid 1-year return of 35.24% and a 5-year return of 83.19%, ZCN also offers a dividend yield of 2.21%, enhancing its appeal for income-focused investors. With an average price target of C$50.07 from Wall Street analysts, there’s potential for further upside in the coming year.

Wall Street analysts project a 12-month price target for ZCN at an average of C$50.07, with estimates ranging from a low of C$42.89 to a high of C$58.58.

The iShares S&P/TSX Small Cap Index ETF is the best performing small cap ETF in Canada, returning 8.64%, which is significantly higher than the average gain of 3.96% for Canadian small/mid cap equity funds.

For investors seeking broad exposure to Canadian equities, the Vanguard FTSE Canada All Cap Index ETF (VCN) stands out with its low management expense ratio of 0.06%. Delivering a dividend yield of 2.26% and a remarkable 33.56% return over the past year, this ETF includes small-cap stocks, making it a strong choice for RRSP or TFSA accounts. Historically, it has achieved an 8.51% compound annual return over the last 30 years, solidifying its reputation for long-term growth.

The Vanguard FTSE Canada All Cap Index (VCN.TO) ETF has achieved an 8.51% compound annual return over the past 30 years, with a maximum drawdown of -45.40%, which took 61 months to recover.

The Vanguard High Dividend Yield Index Fund ETF Shares (VYM) offers a yield of approximately 12%.

The iShares Core S&P/TSX Capped Composite Index ETF (XIC) is a well-rounded option for investors, tracking a comprehensive Canadian index that includes small-cap stocks. With a robust 1-year return of 35.18% and a 5-year return of 85.01%, this ETF also offers a dividend yield of 2.22%, making it an attractive choice for those looking for solid long-term growth and reliable income.

XIC has delivered average annual returns of 12.6% over the past decade, closely matching its benchmark, making it a reliable low-cost investment option for long-term growth.

Goeasy, a specialty finance company in the alternative lending space, is currently considered one of the most undervalued stocks on the TSX.

Analysts have set an average price target of C$59.80 for XIC, with a forecast range between C$51.71 and C$69.18, indicating an expected 8.38% increase from its current price of C$55.17.

The Horizons S&P/TSX 60 ETF (HXT) is an attractive option for investors seeking exposure to the top 60 Canadian stocks while benefiting from the lowest fee in its category at just 0.04% after rebate. With impressive returns of 32.48% over the past year and a remarkable 107.87% over five years, this ETF stands out for those looking to maximize tax advantages in non-registered accounts. Its strong performance and cost-effectiveness make it a compelling choice for both seasoned and novice investors.

Two of the best Canadian stocks to buy and hold forever in your TFSA are goeasy (TSX:GSY) and Alimentation Couche-Tard (TSX:ATD) due to their strong growth potential.

The TSX Composite Index has averaged an annualized return of approximately 10.33% since 1957, with a 7.94% average annualized return over the 50-year period from 1971 to 2021.