Best fixed-income ETFs for Canadian investors 2026

With the downturn in stock markets in 2026, many investors are grudgingly coming around to the realization that they need exposure to other asset classes in their portfolios. And the most readily available is bonds, which have the advantage, historically, of being negatively correlated to stocks. That is, they tend to increase in value a bit when stocks fall.

Of course, the bond market globally is bigger than the stock market, and seasoned bond investors have all manner of strategies to play it. Long-duration bonds usually generate higher than average income but can be volatile. Conversely, short bonds can save investors from taking a loss, at the cost of lower yields. Government bonds have the lowest risk and lowest returns, high-yield bonds the highest.

Out picks for the top fixed-income ETFs

ETFTickerManagement feeMERHoldingsDescription

Vanguard Canadian Aggregate Bond Index ETF	VAB	0.08%	0.09	1,257	Tracks the Bloomberg Global Aggregate Canadian Float Adjusted Bond Index
TD Canadian Aggregate Bond Index ETF	TDB	0.07%	0.08	1210	aggregate Canadian bond exposure at a very affordable MER
BMO Aggregate Bond Index ETF	ZAG	0.08%	0.09	1685	The most liquid Canadian aggregate bond ETF, tracks FTSE Canada Universe Bond Index

The strategy our panel of judges this year more or less agreed on is opting for aggregate bond funds that represent a cross-section of the Canadian bond market, including government and corporate issues of all durations. Their favourite, collectively, was the Vanguard Canadian Aggregate Bond Index ETF (VAB), which tracks the Bloomberg Global Aggregate Canadian Float Adjusted Bond Index for a modest MER of 0.09%. Remember, fees are especially important when yields and overall returns are expected to be slim.

Our judges also called attention to the TD Canadian Aggregate Bond Index ETF (TDB), which has an even lower MER, as well as BMO’s Canadian Aggregate Bond Index ETF (ZAG). “ZAG is the largest and one of the cheapest broad aggregate Canadian bond ETFs with an average duration of about seven years. For a core fixed-income allocation it is hard to beat on cost and liquidity,” said panellist Ioulia Tretiakova. 

Again, when you expect your returns to be modest, it’s important not to pay even a few pennies too much for a fund because of its bid-ask spread. Hence, liquidity matters.

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