30% in domestic stocks. That is a big overweight compared to Canada’s actual weight of around 3% in the .
You can use something like the Vanguard Global All Cap ex Canada Index ETF (TSX:) or the iShares Core MSCI All Country World ex Canada Index Share Class (TSX:) to dial in your Canadian exposure. But doing so adds complexity and goes against the appeal of a single-ticket global equity solution.
I think there are better options for Canadians who want broad global equity exposure from a Canadian-listed ETF, without ignoring Canada entirely or heavily overweighting it. Below are my two top picks heading into 2025.
iShares MSCI World Index ETF (XWD)
iShares MSCI World Index ETF (TSX:) is a bit of an old-school pick. It has been around since June 2009 and manages about $1.2 billion in assets. The ETF follows a fund-of-funds structure, holding three other iShares ETFs.
Two are U.S.-listed funds that track the and the MSCI EAFE, and the third is a Canadian-listed fund tracking the . The approximate weightings are 73%, 24%, and 3%, respectively.
The portfolio focuses exclusively on large- and mid-cap stocks, covering about 1,260 companies. It does not include small caps or emerging markets like China and India. That’s why I like it. This is a clean, developed-market equity exposure with no extra frills.
The yield is modest, at 1.197% based on the trailing 12 months, paid out semi-annually. Still, the performance has been strong, with an annualized 10.94% return over the past decade.
The only drawback is the 0.48% expense ratio, which is more than double that of many modern all-equity ETFs. But if you want true market cap weighting and no emerging market exposure, XWD is one of the most time-tested options out there.
BMO MSCI All Country World High Quality Index ETF (ZGQ)
For a slightly higher 0.5% expense ratio, you can swap out XWD and go with ZGQ instead. This ETF doesn’t follow a plain-vanilla market cap weighting. It’s one of BMO’s smart beta strategies, specifically tilted toward the quality factor.
ZGQ tracks the BMO MSCI All Country World High Quality Index Series Units ETF (TSX:). Quality in this context means a combination of high return on equity, stable year-over-year earnings growth, and low financial leverage.
Each stock is given a quality score based on those metrics, and then the portfolio weights each company by multiplying that score by its market cap. To reduce concentration risk, individual holdings are capped at 5%, and the ETF rebalances twice a year.
I really like this fund. The quality tilt makes fundamental sense, and it has delivered historically. Over the past 10 years, ZGQ returned 12.94% annualized, outperforming XWD by a wide margin. The yield is lower at 0.68%, but total return is what ultimately matters.
TD Global Technology Leaders Index ETF
If you want growth and tech-heavy exposure similar to the but without the restriction to U.S. stocks or the exclusion of financials, TD Global Technology Leaders Index ETF (TSX:) is a strong pick.
TEC tracks the Solactive Global Technology Leaders Index with a 0.39% expense ratio. It’s one of the most popular tech-focused ETFs in Canada, with over $3.26 billion in assets under management. The fund still gives you all the Magnificent Seven, so the U.S. tech backbone is intact.
But unlike the Nasdaq 100, TEC includes NYSE-listed innovators like Salesforce (NYSE:) and Intuitive Surgical (NASDAQ:), as well as financial powerhouses like Visa (NYSE:), Mastercard (NYSE:), and S&P Global. Its global scope also brings in leaders like ASML (AS:), SAP, and Spotify (NYSE:). Even a few Canadian tech names like Constellation Software and Shopify (NASDAQ:) make the cut.
Over the past 10 years, TEC has delivered an 18.32% annualized return, beating both XWD and ZGQ by a wide margin. That being said, valuations for TEC are rich right now, so be careful!