3 Canadian Equity ETFs I Like Better Than The iShares S&P/TSX 60 Index ETF (XIU)

No discussion of the Canadian ETF industry is complete without mentioning the iShares S&P/TSX 60 Index ETF (XIU). Technically, it traces its roots back to 1990, when it debuted as the Toronto Index Participation (TIPS) 35 Shares.

It later evolved into the ETF we know today, tracking the S&P/TSX 60 Index and growing into one of Canada's largest ETFs with approximately $23.7 billion in assets under management.

If you're looking for core Canadian equity exposure, particularly to large-cap companies, XIU is far from a bad choice. It remains one of the most liquid ETFs on the Toronto Stock Exchange, has a long track record, and is generally tax efficient.

The fund also likely has a significant amount of embedded capital gains, which helps explain why many long-term investors have been reluctant to sell despite newer competitors entering the market. Although other Canadian ETFs have surpassed it in assets, XIU still ranks among the industry's heavyweights.

My issue with XIU isn't the index methodology. The S&P/TSX 60 is a perfectly sensible benchmark for large-cap Canadian equities, and the ETF does exactly what it sets out to do. The problem is the price. XIU currently charges a 0.18% management expense ratio.

While that was certainly competitive decades ago, the Canadian ETF industry has evolved dramatically since then. Today, 0.18% feels expensive for a straightforward, passively managed large-cap index fund.

If you're looking for affordable exposure to Canada's largest companies, there are several ETFs that deliver a very similar outcome while charging considerably lower fees. Here are three options I think deserve a closer look.

BMO S&P/TSX 60 Index ETF (ZIU)

If you want to stick with the S&P/TSX 60 Index but pay lower fees, ZIU is probably your best option. While it isn't the cheapest Canadian equity ETF overall, it undercuts XIU by four basis points with a management expense ratio of just 0.14%.

There's no secret sauce here. ZIU simply fully replicates the S&P/TSX 60 Index, holding every constituent in essentially the same proportions as the benchmark. If your goal is low-cost exposure to Canada's largest publicly traded companies, it does exactly what it's supposed to do.

That also means accepting the characteristics of the underlying index. Financials currently account for roughly 43% of the portfolio, an unavoidable consequence of market-cap weighting in a market where the big banks and life insurance companies dominate the equity landscape. Energy is the second-largest sector at approximately 17%, highlighting just how concentrated the Canadian market remains.

Fortunately, those concentrations have worked in investors' favour recently. Strong performance from the financial sector has helped propel ZIU to a 31.3% total return over the trailing one-year period ended June 30, 2026.

The ETF also provides a respectable income stream. Based on annualizing its most recent quarterly distribution and dividing by net asset value, ZIU currently offers an annualized distribution yield of approximately 2.05%.

Vanguard FTSE Canada Index ETF (VCE)

If you're not particularly attached to the S&P/TSX 60, you can reduce your fees even further by opting for VCE. At a management expense ratio of just 0.06%, it costs less than half as much as ZIU while still providing broad exposure to Canada's largest publicly traded companies.

VCE tracks the FTSE Canada Domestic Index using full replication, meaning it owns every constituent in the benchmark in its respective market-cap weight. The ETF is also well established, with approximately $3.5 billion in assets under management.

The portfolio is slightly broader than the S&P/TSX 60, though not dramatically so. VCE currently holds 85 stocks, all weighted by market capitalization. Financials remain the dominant sector at roughly 38% of assets, reflecting the composition of the Canadian equity market, although the concentration is somewhat lower than that of the S&P/TSX 60.

Income generation is also competitive. VCE currently offers a trailing 12-month distribution yield of approximately 2.15%, making it a solid low-cost option for investors seeking broad Canadian equity exposure with a modest dividend stream.

Scotia Canadian Large Cap Equity Index Tracker ETF (SITC)

I also think it's worthwhile keeping multiple Canadian large-cap ETFs on your watch list because of tax loss harvesting. Tax loss harvesting allows investors in non-registered accounts to sell an investment that's declined in value, realize the capital loss, and use that loss to offset capital gains elsewhere.

Normally, however, you must wait 30 days before and after the sale before repurchasing the same or a substantially identical security. Otherwise, the CRA's superficial loss rule applies, the capital loss is denied, and instead added back to your adjusted cost base.

One way around this is to purchase a similar ETF that provides comparable market exposure but tracks a different benchmark. Because the two funds are not substantially identical, you can generally remain invested while preserving your ability to claim the capital loss.

One ETF that fits this role is SITC, which tracks the Selective Canada Large Cap Index. The portfolio consists of 61 companies that closely resemble those found in the S&P/TSX 60, albeit with somewhat different weightings. For example, as of February 2026, financials accounted for roughly 37% of the portfolio, noticeably lower than the weighting found in the S&P/TSX 60.

Despite those differences, investors should still expect performance that broadly resembles other Canadian large-cap ETFs over the long run. Like VCE, SITC is very competitively priced with a management expense ratio of just 0.06%.