How to choose ETFs for your investment portfolio

By MoneySense Editors on December 15, 2022
Estimated reading time: 3 minutes

If you’ve done any research into ETFs available to Canadian investors, you know the selection is huge. Here’s how to pick funds that fit your goals.

Canada’s ETF industry is still relatively small in comparison to its mutual fund arena: At the end of October 2022, ETF assets totalled $300 billion, a fraction of the $1.796 trillion in mutual fund assets. But the number of available ETFs has grown steadily over the past couple of decades, in Canada and around the world—and now investors have thousands to choose from.

Like mutual funds, ETFs are “baskets” of securities, assembled by investment professionals. A single ETF may hold shares in hundreds or even thousands of companies. ETFs can be very broad—tracking, or mimicking, an entire stock market—or very niche, focusing on a particular sector, asset type, commodity, geographical region or theme. ETFs can also hold other types of assets, including bonds, commodities, currencies and cryptocurrencies.

ETF investment strategies, asset mixes, risk levels and management fees can vary widely. How do investors pick from this veritable asset buffet? As with any kind of investment, it pays to do your research. Begin with a fund’s ETF Facts sheet—but don’t stop there.

Here’s your starter kit for ETF research.

How to evaluate ETFs based on financial reports
ETF providers are required to issue several kinds of financial reports and documents, which investors can use to their advantage. We provide an overview of what’s available, how often reports are updated, where to find them, and what you can learn if you venture beyond an ETF’s fact sheet and prospectus.

Which type of ETF investor are you?
No two investors are alike. In this article, we look at different needs, risks and attitudes—ranging from first-timers and newbies to more experienced balanced, conservative and aggressive investors—and the strategies, asset mixes and ETF types that may fit their goals and risk tolerances.

What seasoned investors look for in an ETF prospectus
What is an ETF Facts sheet, and what’s inside an ETF’s long-form prospectus? We take a close look at these two documents, each one a treasure trove of details that can help you make an informed decision. We explain where to find ETF fact sheets and prospectuses, what they contain and what aspects to zero in on—plus other financial reports worth getting to know. We read the fine print, not so you don’t have to, but so you can know what to look for.

Explore ETFs even further

ETFs for different life stages

Now you can dig deeper into how ETFs might fit within your investment strategy. We have ideas for everyone from kids saving up for school (via their parents or guardians, of course) to retirees looking to build a resilient portfolio.

ETF investing strategies

How do you switch from mutual funds to ETFs—and should you? Can a single ETF serve as your entire portfolio? We’ve covered these questions and more.

About MoneySense Editors

MoneySense editors and journalists work closely with leading personal finance experts in Canada. Since 1999, our award-winning magazine has helped Canadians navigate money matters.