First, you can opt for a U.S. equity fund that trades in Canada or one trading in the U.S. Many Canadian investors prefer the simplicity of Canadian listings that minimize transaction costs (low brokerage commissions and no currency exchange fees) and make tax reporting easy. But know that these ETFs are automatically withholding a 15% tax on your dividends on behalf of the U.S. Internal Revenue Service. You can dodge that withholding tax in your RRSP, RRIF, or LIRA (which are recognized as tax shelters by the IRS) by holding a U.S.-listed ETF. Funds that trade stateside also tend to have lower MERs.
Should you decide to buy Canadian, you then have the choice of going hedged into Canadian dollars or unhedged—fees tend to be the same. Some investors would prefer to avoid the extra volatility of currency fluctuations, while others consider that a form of portfolio diversification and therefore desirable. Further, you can find Canadian-listed U.S. equity funds denominated in U.S. dollars.
Finally, most index funds are cap-weighted, which these days means a high concentration of mega-capitalization technology or technology-enabled stocks. For a higher MER, however, you can get an equal-weighted take on the S&P 500 or other indices that, so far in 2026, has outperformed the conventional funds.
Our 2026 picks for best U.S. equity ETFs
Given the options, our judging panel nominated quite a few funds with different attributes. The consensus, however, favoured unhedged and total-market funds that captured exposure to stocks beyond the S&P 500. As panellist Sam Rook put it, “the vast amount of research shows that smaller companies tend to outperform over time.” Vanguard’s Total Stock Market ETF (VTI) took the top prize. This is a U.S.-listed fund that through economy of scale offers exposure to more than 3,600 stocks for a miniscule 0.03% MER.
For investors who prefer a Canadian-listed option, the Vanguard S&P 500 Index ETF (VFV) took second place. The fund is a straight-up, unhedged take on the world’s leading stock index. Panellist Mark Seed characterized VFV as “simple and smart… With VFV, DIY investors do not need to worry about Canadian/U.S.-dollar currency conversions and since this is unhedged, you can take advantage of currency diversification. Hedging is imperfect in practice anyhow.”
In third place we had a four-way tie, evidence that this category is highly competitive and well supplied with good options. They included XUU and XUS from iShares Canada and ITOT from iShares stateside, as well as VUN from Vanguard Canada. With the exception of XUS, they all look beyond the S&P 500 to some smaller-cap stocks as well. For a higher MER, VUN gives the same very broad exposure as VTI; the others, still offering wide exposure, come in at less than 0.1% in annual fees.
XUU, panellist Michelle Roberston opined, “is probably the most well-rounded U.S. equity ETF for a Canadian investor who wants total-market exposure, not just the S&P 500.”
