Are you looking for a global stock ETF that invests all over the world but don’t have an idea where to start looking?
Global stocks are a critical component of most portfolios because they give you the opportunity to invest in companies all over the world and properly diversify your stocks from a geographical perspective.
Looking globally for stock opportunities is important since Canada’s weight in the global equity market is only 4%.
A key difference between global ETFs and international ETFs is that international ETFs do not hold U.S. stocks, while global ETFs can.
I will cover the best global equity ETFs in Canada further below and discuss some of their important features.
Pros and Cons of Global Equity ETFs
Global equity ETFs come with their advantages and disadvantages, similar to other investments that you may be considering investing in.
- Geographically diversifying your stock exposure across the world
- Accessing growth opportunities that may not be available in Canada or in North America
- Being exposed to currency fluctuations if a fund is not currency-hedged
- Economic, social, and political factors can impact companies within the portfolio
- Global equity ETFs usually have higher fees than Canadian or US stock ETFs
US stocks (and to a lesser extent, Canadian stocks) are frequently quoted for their strong performance over the past few decades.
Investors with a concentrated stock portfolio in North America may have done very well until now, but past performance does not necessarily continue into the future. Investing globally will always provide you with better geographical diversification and can help to reduce country-specific risks.
Keep in mind that global equity ETFs also invest in North American stocks and may be offered on a currency-hedged or unhedged basis.
5 Best Global Equity ETFs in Canada
- Ticker: XWD.TO
- Inception Date: June 18, 2009
- Assets under Management: $800 million
- Management Expense Ratio: 0.49%
- Management Style: Passive
- Risk Rating: Low-to-Medium
- Distributions: Semi-annual
- Yield: 1.51%
- Stock Price: $79.33
- YTD Return: 2.27%
A top pick on my list is the XWD ETF offered through Blackrock’s iShares ETF suite. The XWD ETF passively tracks the performance of the MSCI World Index, an extremely popular basket of stocks from around the world. The XWD ETF is one of the best options for plain-vanilla exposure to global stocks here in Canada.
The XWD ETF does not hedge its currency exposure – foreign currency impacts against the Canadian dollar will impact your total returns. iShares does not currently offer a currency-hedged alternative to the XWD ETF.
Geographically, XWD has a high allocation to US stocks, followed by significant country allocations to Japan, the United Kingdom, Canada, and France. The ETF’s top sector weights include information technology, healthcare, financials, industrials, and consumer discretionary.
The fund has a very long performance track record and is a huge ETF in terms of assets under management. XWD pays distributions on a semi-annual basis and pays a fairly low yield to investors.
The XWD ETF is offered at a fairly inexpensive management expense ratio relative to most global ETFs and mutual funds. Relative to passive Canadian and US stock ETFs, XWD’s fees are high.
iShares’ XWD ETF is an excellent choice to consider for global stock exposure here in Canada.
2. Vanguard Global Value Factor ETF
- Ticker: VVL.TO
- Inception Date: June 14, 2016
- Assets under Management: $306 million
- Management Expense Ratio: 0.38%
- Management Style: Active
- Risk Rating: Medium
- Distributions: Annually
- Yield: 1.44%
- Stock Price: $45.02
- YTD Return: 0.71%
Another excellent global equity ETF is offered by Vanguard in Canada under the VVL ticker. The VVL ETF is an actively-managed strategy that uses a quantitative model to analyze stocks of all sizes around the world. VVL invests with a value tilt, meaning that it aims to only include value stocks in its portfolio.
The VVL ETF also does not hedge its currency exposure, meaning that foreign currency fluctuations will affect your total returns in Canadian dollars. Vanguard does not offer a currency-hedged alternative to the VVL ETF.
Geographically, VVL has a high allocation to North American stocks, followed by allocations to Europe and the Pacific. The fund currently has a very small allocation to the Middle East. VVL’s top sector weights are in financials, consumer discretionary, industrials, and energy.
The fund has a medium-length performance track record and is a very large ETF in terms of assets under management. VVL offers annual distributions and pays a low yield to investors.
VVL is offered at a very inexpensive management expense ratio, given that it is an actively-managed global stock ETF.
If you are looking for a global value stock ETF, VVL is the top choice to consider here in Canada.
- Ticker: XAW.TO
- Inception Date: February 10, 2015
- Assets under Management: $1.81 billion
- Management Expense Ratio: 0.22%
- Management Style: Passive
- Risk Rating: Low-to-Medium
- Distributions: Semi-annual
- Yield: 2.09%
- Stock Price: $37.48
- YTD Return: 1.51%
Blackrock’s iShare ETF suite in Canada also offers the XAW ETF, which falls somewhere between an international and global stock ETF. XAW is a passive ETF that invests in stocks globally but does not invest in any Canadian equities. It is a good ETF to consider complementing an existing Canadian stock or ETF portfolio.
XAW does not hedge its currency exposure, which will impact your total return in Canadian dollars. There is currently no currency-hedged alternative to the XAW ETF.
The XAW ETF has a high geographic allocation to the US, followed by significant allocations to Japan, the United Kingdom, and China. From a sector perspective, top weights include information technology, financials, healthcare, and industrials.
The ETF has a medium-length performance track record and is a massive ETF in terms of AUM – one of the largest Canadian global stock ETFs by assets. XAW pays semi-annual distributions and offers a fairly low yield to investors.
With the lowest management expense ratio on my list, XAW is currently one of the most cost-efficient ways to get global stock exposure in Canada.
Although it excludes Canadian stocks, XAW is an extremely inexpensive ETF for global stock investing and an excellent fund to consider.
4. CIBC Sustainable Global Equity ETF
- Ticker: CSGE.NE
- Inception Date: July 19, 2021
- Assets under Management: $19.6 million
- Management Expense Ratio: 0.90%
- Management Style: Active
- Risk Rating: Medium
- Distributions: Annually
- Yield: N/A
- Stock Price: $19.89
- YTD Return: 1.37%
CIBC offers a sustainable global equity ETF that essentially replicates one of its mutual funds, the CIBC Sustainable Global Equity Fund. CSGE is an actively-managed ETF that takes a responsible investing approach to investing in global stocks around the world.
Be mindful that CSGE is listed on the NEO exchange in Canada and not on the Toronto Stock Exchange.
CSGE does not hedge its foreign currency exposure and does not come with a currency-hedged alternative fund.
The CSGE ETF has a high geographic allocation to the US, followed by sizable weights toward Ireland, France, Canada, and Japan. Top sector weights include information technology, financials, healthcare, consumer discretionary, and industrials.
The ETF has a very short performance track record and is a tiny ETF in terms of assets. CSGE pays out distributions annually and does not have a disclosed yield.
With a fairly high management expense ratio, CSGE will be significantly more expensive than some of its peers on my list. This is due to both the active management of the fund as well as the ETF’s ESG focus.
If you are looking to responsibly invest in global stocks, CSGE is a great (but relatively expensive) ETF to consider.
5. TD Active Global Equity Growth ETF
- Ticker: TGGR.TO
- Inception Date: May 26, 2020
- Assets under Management: $5.7 million
- Management Expense Ratio: 0.72%
- Management Style: Active
- Risk Rating: Low-to-Medium
- Distributions: Quarterly
- Yield: 0.53%
- Stock Price: $24.73
- YTD Return: 3.03%
Another global equity ETF to consider here in Canada is offered by TD Asset Management. TD’s TGGR ETF is actively-managed and takes a plain vanilla approach to investing in global stocks. Criteria for including stocks in the portfolio are largely based on fundamental analysis done by the portfolio management team.
TGGR is currency unhedged and does not have a currency-hedged counterpart.
The TGGR ETF, like most other ETFs on our list, has a high allocation to the US, followed by sizable allocations to China, Denmark, and Japan. Top sector weights include information technology, healthcare, consumer discretionary, financials, and communication services.
The ETF has a very short performance track record and is a very tiny ETF in terms of assets. Investors have to be careful when investing in very small ETFs, as they can be at risk of closing early if they are unable to attract enough capital to remain profitable.
TGGR pays quarterly distributions and offers a very low yield. The ETF comes with a relatively high management expense ratio relative to peers on my list, likely due to its active management.
If you would like to invest in global stocks through an actively-managed strategy, TD’s TGGR ETF is a good option to consider.
How to Buy the Best Global Equity ETFs in Canada
The cheapest way to buy ETFs is from discount brokers. My top choices in Canada are:
- 105 commission-free ETFs to buy and sell
- Excellent customer service
- Top-notch market research tools
- Easy-to-use and stable platform
- Stock and ETF buys and sells have $0 trading fees
- Desktop and mobile trading
- Reputable fintech company
- Fractional shares available
- ETF buys have $0 trading fees
- Excellent market research tools
- Most types of registered accounts available
To learn more, check out my full breakdown of the best trading platforms in Canada.
Conclusion
Investing in stocks globally allows you to reduce country biases and properly diversify your stock exposure. Since performing individual research on individual global stocks is very difficult, global equity ETFs are a great way to add this exposure to your portfolio.
If you are a newer investor, make sure to read my guide on how to start investing in Canada to try and avoid any unnecessary mistakes.
