9 Best S&P 500 ETFs in Canada For 2022

One major drawback of Canadian ETFs is their limited exposure which directly impacts their level of diversification.

Alternatively, you can invest in the S&P 500 ETF to get broader exposure to the top publicly traded companies in the US.

That way, you can limit your investment risk and costs by diversifying your investment across different companies in one index ETF instead of investing in individual stocks.

However, the S&P 500 ETFs perform differently. They vary by fees, returns, and dividend yields. This makes it critical to choose from the best S&P 500 ETFs out there.

This article discusses the best S&P 500 ETFs in Canada that are traded in Canadian and US dollars.

Before we explore them, let’s first understand what the S&P 500 ETFs entail. 

Overview of S&P 500 ETFs

Standard & Poor’s 500 ETF (S&P 500 ETF) refers to an index ETF that tracks the performance of the S&P 500 index which comprises 500 leading publicly traded companies in the US.

Although the S&P 500 index has slightly over 500 companies that cut across small-large cap sizes. Some of the top companies include:

• Apple Inc
• Microsoft Corp
• Amazon.com Inc
• Tesla Inc
• Alphabet Inc
• Berkshire Hathaway Inc
• UnitedHealth Group Inc
• Johnson & Johnson
• Exxon Mobil Corp

While the market capitalization of a company is a major criterion for being included in the S&P 500 index, other requirements include:

• Be a US company
• Be highly liquid
• Publicly trade a minimum of 50% of outstanding shares
• Report positive earnings in the recent previous quarter

With such rigorous selection criteria, the S&P 500 index turns out to be one of the best index funds in the world with impressive returns and solid diversification.

As a result, the S&P 500 index usually serves as the benchmark of the over returns of the US stock market as they constituted over 70% of the market.

Instead of investing in each of the S&P 500 index companies individually, an S&P 500 ETF gives you exposure to all the companies in one portfolio, saving you time and costs.

In what follows, we’re going to look at the best S&P 500 ETFs in Canada that are traded in Canadian dollars and US dollars.

Best S&P 500 ETFs in Canada: Canadian-Listed

A foreign currency conversion fee is one of the fees you should eliminate if you’re looking to reduce your investment costs in Canada.

With Canadian-listed S&P 500 ETFs, you can get exposure to the top US companies using Canadian dollars. 

The following are the best Canadian-listed S&P 500 ETFs to consider.

1. Vanguard S&P 500 Index ETF CAD Hedged (VSP) 

• Inception date: November 2, 2012
• Management fee: 0.08%
• MER: 0.09%
• Average return since inception: +10.86%
• Dividend yield: 1.56%
• Distribution frequency: Quarterly

The Vanguard S&P 500 Index ETF is traded on the Toronto Stock Exchange with the ticker symbol “VSP”. The ETF seeks to track the performance of large-cap US stocks by hedging to the Canadian dollar.

With $2.326 billion in assets under management, VSP uses a passively managed index strategy to achieve its objective. 

As of September 30, 2022, the Vanguard S&P 500 Index ETF had the following returns:

• 1-year:  -16.93%
• 3-year: +6.42%
• 5-year: +7.51%
• Since inception: +10.86%

One major drawback of this ETF is that it’s not eligible for registered accounts.

2. Vanguard S&P 500 Index ETF (VFV) 

• Inception date: November 2, 2012
• Management fee: 0.08%
• MER: 0.09%
• Average return since inception: +15.33%
• Dividend yield: 1.45%
• Distribution frequency: Quarterly

The Vanguard S&P 500 Index ETF is also traded on the Toronto Stock Exchange with the ticker symbol “VFV”. The ETF seeks to track the performance of large-cap US companies without hedging to any currency. 

Like VSP, VFV also uses a passively managed index strategy to achieve its objective. However, it has higher assets under management of $6.286 billion as of the time of writing.

As of September 30, 2022, the Vanguard S&P 500 Index ETF had the following returns: 

• 1-year: −8.21%
• 3-year: + 9.30%
• 5-year: + 11.10%
• Since inception: +15.33%

That said, VFV doesn’t also support investment through registered accounts. This is a major drawback if you’re looking to save on taxes. 

3. BMO S&P 500 Index ETF (ZSP) 

• Inception date: November 14, 2012
• Management fee: 0.08%
• MER: 0.09%
• Average return since inception: 15.72%
• Dividend yield: 1.47%
• Distribution frequency: Quarterly

The BMO S&P 500 Index ETF (ZSP) is traded on the Toronto Stock Exchange with the ticker symbol “ZSP”. The ETF seeks to track the performance of the S&P 500 Index without currency hedging.

With ZSP, you can invest through registered accounts such as TFSA, RRSP, RRIF, DPSP, and RESP. This guarantees a tax-efficient investment.

The following are the annualized returns of the ETF as of September 30, 2022:

• 1-year: -8.09%
• 2-year: 6.45%
• 3-year: 9.34%
• 5-year:  11.09%
• Since inception: 15.72%

4. iShares Core S&P 500 Index ETF (XSP)

• Inception date: May 24, 2001
• Management fee: 0.09%
• MER: 0.10%
• Average return since inception: 4.28%
• Dividend yield: 1.15%
• Distribution frequency: Semi-annual

The iShares Core S&P 500 Index ETF is also traded on the Toronto Stock Exchange with the ticker “XSP”. The ETF seeks to offer long-term capital growth by replicating the performance of the S&P 500 index.

Hedged to the Canadian dollar, XSP offered the following returns as of September 30, 2022:

• 1-year: -16.84%
• 3-year: 6.37%
• 5-year: 7.43%
• 10-year: 10.53%
• Since inception: 4.28%

5. Horizons S&P 500 Index ETF (HXS) 

• Inception date: November 30, 2010
• Management fee: 0.10%
• MER: 0.10%
• Average return since inception: 14.47%
• Dividend yield: –
• Distribution frequency: –

Horizons S&P 500 Index ETF is traded on the Toronto Stock Exchange with the ticker symbol “HXS”. The ETF seeks to track the returns of US large-cap companies. 

Unlike the above S&P 500 Index ETFs, HSX doesn’t hold any of the S&P 500 Index. Instead, the index is merged with the share price of the ETF. 

While the Horizons S&P 500 Index ETF doesn’t provide dividends, it provides returns through a Canadian bank. It also provides tax-efficient capital gains. 

As of September 30, 2022, the HSX ETF had the following returns: 

• 1-year: -8.19%
• 3-year: 9.23%
• 5-year: 11.02%
• 10-year: 14.73%
• Since inception: 14.47%

Best S&P 500 ETFs in Canada: US-Listed

If you wish to invest in an S&P 500 ETF in US dollars, you can do so through a US-listed S&P 500 ETF.

The following are the best S&P 500 ETFs you can invest in US dollars in Canada.

6. iShares Core S&P 500 ETF (IVV)

• Inception date: May 15, 2000
• Management fee: 0.03%
• MER: 0.03%
• Average return since inception: 6.07%
• Dividend yield: –
• Distribution frequency: Quarterly

The iShares Core S&P 500 ETF is traded on the NYSE Arca exchange with the ticker symbol “IVV”.

With a 0.03% management fee and MER, this ETF provides a low-cost means of investing in US large-cap companies.

What I also like about this ETF lies in its tax efficiency in providing long-term capital growth through the S&P 500 Index.

The following were the returns of the ETF as of September 30, 2022:

• 1-year: -15.50%
• 3-year: 8.13%
• 5-year: 9.20%
• 10-year: 11.66%
• Since inception: 6.07%

7. SPDR S&P 500 ETF (SPY)

• Inception date: January 22, 1993
• Management fee: 0.09%
• MER: 0.09%
• Average return since inception: 9.48%
• Dividend yield: 1.63%
• Distribution frequency: Quarterly

The SPDR S&P 500 ETF is traded on the NYSE Arca exchange with the ticker symbol “SPY”. This ETF is regarded as the first ETF to be listed in the US market. 

The objective of the SPY ETF is to replicate the performance of the S&P 500 Index by investing in large-cap US companies.

With $364+ million assets under management, SPY ETF provided the following returns as of September 30, 2022:

• 1-year: -15.47%
• 3-year: 8.16%
• 5-year: 9.24%
• 10-year: 11.70%
• Since inception: 9.48%

8. Vanguard S&P 500 ETF (VOO)

• Inception date: September 7, 2010
• Management fee: –
• MER: 0.03%
• Average return since inception: 12.54%
• Dividend yield: –
• Distribution frequency: Quarterly

The Vanguard S&P 500 ETF is also traded in US dollars on the NYSE Arca exchange with the ticker symbol “VOO”. 

The ETF also seeks to provide long-term capital growth by tracking the performance of large-cap US companies. 

What I like about this ETF is that it has a low management expense ratio (MER) of 0.03% which competes significantly with the MERs of most ETFs on this compilation. 

As of September 30, 2022, the Vanguard S&P 500 ETF provided the following returns: 

• 1-year: -15.39%
• 3-year: 8.16%
• 5-year: 9.23%
• 10-year: 11.68%
• Since inception: 12.54%

9. Invesco S&P 500 Equal Weight ETF (RSP)

• Inception date: April 24, 2003
• Management fee: 0.20%
• MER: 0.20%
• Average return since inception: 10.79%
• Dividend yield: 1.84%
• Distribution frequency: Quarterly

The last on this compilation of the best US-listed S&P 500 ETFs in Canada is the Invesco S&P 500 Equal Weight ETF. This ETF is also traded on the NYSE Arca exchange with the ticker “RSP”.

RSP invests a minimum of 90% of funds in the S&P 500 index that is equally weighted and quarterly rebalanced.

One major drawback of this ETF is that it has a relatively high management fee and management expense ratio that exceed the fees of all the S&P 500 ETFs on this compilation. 

That being said, the Invesco S&P 500 Equal Weight ETF provided the following returns as of September 30, 2022:

• 1-year: 13.53%
• 3-year: 7.68%
• 5-year: 8.02%
• 10-year: 11.47%
• Since inception: 10.79%

Canadian-Listed vs US-Listed S&P 500 ETFs: Which to Choose? 

You can’t go wrong with either Canadian-listed S&P 500 ETFs or US-listed S&P 500 ETFs as they both track the performance of the S&P 500 Index. Thus, your selection should depend on the currency and exchange you want to invest with.

If you want to invest in the S&P 500 ETF in Canadian dollars, then you should consider the Canadian-listed S&P 500 ETFs. But if you want to invest in US dollars, the US-listed S&P 500 ETFs are available for you on the NYSE Arca exchange. 

That being said, there are key factors to consider when looking to make a cost-effective decision. With the exception of the Invesco S&P 500 Equal Weight ETF, all the above US-listed S&P 500 ETFs have competitive fees compared to the Canadian-listed S&P 500 ETFs.

But since the US-listed S&P 500 ETF are traded in US dollars, it means you will be spending on fx fees on CAD to USD conversion. However, this may not be a problem if you already have US dollars to invest with.

One major advantage of Canadian-listed S&P 500 ETFs is that they are easily accessible as you don’t have to make any currency conversion to invest in them.

Depending on your investment account, you may incur foreign withholding tax by investing in US-listed S&P 500 ETFs.

In summary, Canadian-listed S&P 500 ETFs are more easily accessible but have higher fees. On the other hand, US-listed S&P 500 ETFs can be time-consuming to invest in but they have lower fees. 

Is It Worth Investing in S&P 500 ETFs?

If you’re a passive investor without high-risk tolerance, you can’t go wrong with the S&P 500 ETFs. These index ETFs provide you with the top benefits of regular ETFs the major being broader diversification. 

With broader diversification, your investment risk is reduced as the failure of one ETF can’t undermine your entire returns.

Because they’re passively managed, the S&P 500 ETFs are low-cost compared to actively managed ETFs that require regular maintenance. On the other hand, S&P 500 ETFs can provide low returns as they don’t have control over the performance of the underlying index funds. 

However, the S&P 500 ETFs have proven to be more stable than individual stocks. They also have several records of outperforming bonds and other traditional investment vehicles. 

Overall, you are in the right position to determine whether or not the S&P 500 ETF is worth investing in. To make an informed decision, consider your investment objective, risk tolerance, and investment time horizon.

How Do I Buy an S&P 500 ETF in Canada?

You can buy S&P 500 ETFs through any Canadian brokerage that supports them. Some of the best discount brokerages to consider include Wealthsimple Trade, Questrade, and Qtrade. Below is a quick highlight of the key features of these brokerages:

Once you choose the brokerage that suits your needs, the next step is to sign up with it. After that, follow the steps below to buy your favorite S&P 500 ETF:

• Log in to your brokerage account
• Fund your account
• Enter the name of the ETF on the search button
• Click the ETF to place an order

Verdict

The S&P 500 ETF is one of the best index ETFs worldwide due to its wide diversification and impressive returns. 

For Canadians, this is a great opportunity to get exposure south of the border using Canadian dollars or US dollars.

Hopefully, now you know the best S&P 500 ETFs in Canada that are traded in CAD and USD. Which of the ETFs are you going with? Let me know in the comment below. 

If you also have a worthy recommendation of the best S&P 500 ETFs in Canada, kindly share your experience with me as well.

To learn more about the best investment deals in Canada, visit our Investing Archive or check out the following popular posts: 

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