Start 2026 Strong: 3 Canadian ETFs for Smart Investors

In 2026, smart Canadian investors understand three things.

First, diversification matters. This is not about hitting home runs. It is about avoiding permanent capital loss.

Second, low fees matter. Just as dividends compound positively, high expense ratios compound negatively year after year.

Third, accessibility matters. Buying one exchange-traded fund (ETF) is far simpler than managing dozens of individual stocks.

With that framework in mind, here are three ETF picks from Vanguard that provide exposure to Canadian blue-chip stocks, each with a different balance of diversification and yield.

Broad Canadian stocks

The first ETF to look at is Vanguard FTSE Canada All Cap Index ETF (TSX:VCN). This fund represents what is generally considered the investable Canadian equity market.

It holds 207 stocks across large, mid-, and small capitalizations and is weighted by market cap. Because of that structure, the largest positions are familiar names such as Canadian banks, pipelines, railways, and energy companies.

Costs are extremely low. The expense ratio is 0.06%, which means $10,000 invested results in about $6 per year in fee drag. The trailing 12-month yield is 2.27%, and most of that is paid as eligible dividends, which are relatively tax efficient in non-registered accounts.

Canadian blue chips

Some investors are less comfortable with the added volatility that can come from mid- and small-cap exposure. If that applies to you, Vanguard FTSE Canada Index ETF (TSX:VCE) is a reasonable alternative.

VCE is similar to VCN but more focused. It holds 80 large-cap Canadian stocks and excludes most mid- and small-cap names. It is still market-cap weighted, so the largest holdings overlap heavily with VCN, but the portfolio is more concentrated, particularly in financials and energy.

Fees are identical at 0.06%, while the trailing 12-month yield is slightly higher at 2.42%, reflecting the higher income profile of large-cap Canadian companies.

Canadian dividends

If income is the priority rather than share price growth, Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is the option to consider.

This ETF holds Canadian dividend-paying stocks that rank in the top 55% of the market by yield. The result is a trailing 12-month yield of 3.55%, well above both VCN and VCE.

The trade-off is diversification. The portfolio holds just 56 stocks and is heavily concentrated in the banking sector, with two banks alone making up roughly a quarter of the fund.

Fees are also higher at 0.22%. While still low compared with many active funds, the higher expense ratio and concentration risk are important to understand.

The post Start 2026 Strong: 3 Canadian ETFs for Smart Investors appeared first on The Motley Fool Canada.

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More reading

• 3 Reliable ETFs to Deliver Dividends to Your TFSA
• The 2 Best Monthly Canadian Dividend ETFs for December
• 2 High-Yield Dividend ETFs to Buy to Generate Passive Income

Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.