Most "index funds" in Canada are actually ETFs. Here's what that means in practice, which ones are worth owning, and where to buy them without paying unnecessary fees.
When Canadians search for "index funds," they're usually looking for low-cost, passively managed investments that track a market index. The confusion is understandable: in Canada, most of these products are structured as ETFs (Exchange-Traded Funds), not as traditional mutual funds.
The practical difference comes down to how you buy them. ETFs trade on a stock exchange like any share — you need a brokerage account, and you buy at market price during trading hours. Traditional index mutual funds, by contrast, are priced once per day after markets close and can sometimes be purchased directly through a bank or fund company without a brokerage account.
For most investors, ETFs are the better deal: they tend to have lower MERs and more trading flexibility. But there's a genuine case for traditional index mutual funds in certain situations — and TD's e-Series lineup is the standout example in Canada.
These four funds each hold hundreds or thousands of underlying securities across global markets. One ticker, instant diversification, automatic rebalancing. For most DIY investors, this is where the search ends.
All-equity global portfolio: ~45% Canada, ~35% US, ~15% international, ~5% emerging markets. The default choice for investors with a long time horizon and no need for bonds. Zero need to rebalance manually.
Near-identical to XEQT in structure and purpose. Slightly higher Canadian tilt (~30%). The MER is 4 basis points higher — a minor difference on any reasonable portfolio size. Both are excellent; pick one and stay consistent.
Roughly 60% global equities, 40% bonds. A reasonable choice for investors within 10–15 years of retirement, or anyone who found the volatility of 100% equity uncomfortable during 2022's drawdown.
Vanguard's equivalent to XBAL. Same 60/40 concept, slight allocation differences. Both XBAL and VBAL deliver more stability than the all-equity options at essentially the same low cost.
The TD e-Series funds deserve their own section because they're genuinely unusual: low-cost index funds in traditional mutual fund structure, available through a TD Direct Investing account. No brokerage commissions, daily pricing, and MERs that are far below the bank mutual fund average — though still above ETF alternatives.
The lineup covers Canadian equity (~0.33% MER), US equity in CAD (~0.35%), US equity hedged (~0.35%), international equity (~0.50%), and a bond fund (~0.50%). You can build a diversified portfolio across four funds at a blended MER well under 0.50%.
Who they're for: investors who prefer not to execute stock-exchange trades, people more comfortable with mutual fund mechanics, and those already banking with TD who want to avoid opening a new account elsewhere. They're also a decent option for dollar-cost averaging small amounts where ETF bid-ask spreads would otherwise be an annoyance.
One catch: e-Series funds are only available through TD Direct Investing, not through a regular TD bank account. You need to specifically open a TD Direct Investing account — easy to do, but worth knowing upfront.
MER is the annual cost you pay as a percentage of your investment. These fees compound in reverse — they silently reduce your returns every year. Even 0.5% matters significantly over 20+ year horizons.
| Fund / ETF | Type | MER | Allocation | Where to Buy |
|---|---|---|---|---|
| iShares XEQT | ETF | 0.20% | 100% global equity | Questrade, Wealthsimple, any broker |
| Vanguard VEQT | ETF | 0.24% | 100% global equity | Questrade, Wealthsimple, any broker |
| iShares XBAL | ETF | 0.20% | 60% equity / 40% bonds | Questrade, Wealthsimple, any broker |
| Vanguard VBAL | ETF | 0.24% | 60% equity / 40% bonds | Questrade, Wealthsimple, any broker |
| TD Canadian Index – e | Mutual Fund | 0.33% | Canadian equity | TD Direct Investing only |
| TD US Index – e (CAD) | Mutual Fund | 0.35% | US equity (CAD$) | TD Direct Investing only |
| TD International Index – e | Mutual Fund | 0.50% | International equity | TD Direct Investing only |
| Typical bank equity fund | Mutual Fund | ~2.0–2.5% | Varies | Any major bank |
MERs are subject to change and may differ slightly between fund series or share classes. Always verify with the fund provider's current documents before investing. The "typical bank equity fund" figure is approximate — individual funds vary.
ETF purchases at Questrade are commission-free. Sells cost $4.95–$9.95 per trade. This makes Questrade particularly well-suited to buy-and-hold investors putting regular contributions into XEQT or VEQT — you can buy in any amount without worrying about commissions eating into small purchases. TFSA, RRSP, RESP, and margin accounts are all available.
Open a Questrade account → (affiliate link)
Both buys and sells are commission-free on Canadian and US-listed securities, including all the ETFs in the table above. The app is polished and well-suited to investors who want simplicity. USD holdings are available through the Premium tier ($10/month) — worth considering if you hold US-listed ETFs and want to avoid the 1.5% currency conversion fee on every trade.
Open a Wealthsimple account → (affiliate link)
The only place you can access TD's e-Series lineup. Opening the account is straightforward online. If you already have a TD chequing account, the integration is seamless and transfers between accounts are instant. The platform itself is more complex than Wealthsimple's app, but for investors who want mutual fund structure at low cost, it's the right tool.
Not sure whether to use a TFSA or RRSP for these investments? See our TFSA contribution room guide and the full RRSP vs TFSA decision framework.
Questrade offers free ETF purchases. Wealthsimple has zero commissions across the board. Either way, you're ahead of what a bank mutual fund costs.
Open Questrade Open WealthsimpleAffiliate links — we may earn a commission if you open an account, at no cost to you.
Nothing on this site is financial advice. MER figures are approximate and subject to change — verify directly with fund providers before investing. Some links on this page are affiliate links; we may earn a commission if you open an account, at no extra cost to you.