2 Best Energy ETFs in Canada (June 2026)
The best energy ETFs in Canada include XEG.TO (~0.61% MER) and ZEO.TO (~0.61%). These ETFs provide exposure to Canadian oil and gas companies, offering strong upside during commodity cycles but with high volatility, making them best suited as a tactical or satellite position in a diversified portfolio.
Energy ETFs are designed for Canadian investors looking to gain exposure to oil, gas, and energy infrastructure companies. ETFs like XEG.TO and ZEO.TO provide access to major Canadian energy producers, making them a direct way to invest in the commodities-driven energy sector.
The key advantage of energy ETFs is their strong performance potential during periods of rising oil and commodity prices. However, they are highly cyclical and can be volatile, as returns depend heavily on global energy demand and price fluctuations.
In this guide, we break down the best energy ETFs in Canada, comparing holdings, fees, and risk so you can decide how they fit into your TFSA, RRSP, or growth-focused portfolio.
At a Glance: Quick Comparison
Side-by-side snapshot of fees, yield, and returns. Data updates daily.
| ETF | MER | AUM | Yield | YTD | 1Y |
|---|---|---|---|---|---|
Top XEG.TO iShares S&P/TSX Capped Energy Index ETF | — | $2.3B | 2.80% | +27.21% | +55.81% |
ZEO.TO BMO Equal Weight Oil & Gas Index ETF | — | $352M | 2.69% | +27.95% | +48.22% |
What Is an ETF?
An energy ETF in Canada is an exchange-traded fund that invests in companies involved in oil, gas, and energy production. These ETFs typically focus on upstream producers, pipelines, and energy infrastructure companies listed on the TSX.
For example, XEG.TO (~0.61% MER) tracks a broad index of Canadian energy companies, including major oil sands producers and integrated firms. ZEO.TO (~0.61% MER) provides similar exposure but uses equal weighting, reducing concentration in a few large companies. HXE.TO (~0.28% MER) offers a more tax-efficient structure with exposure to Canadian energy stocks.
Energy ETFs are commonly used in TFSAs and RRSPs as a tactical or satellite position. Investors should consider commodity price cycles, geopolitical factors, and sector concentration risk when investing.
The 2 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
iShares S&P/TSX Capped Energy Index ETF
$24.87
+27.21% YTD
Returns
YTD
+27.21%
1Y
+55.81%
3Y
+26.83%
5Y
+28.03%
BMO Equal Weight Oil & Gas Index ETF
$103.70
+27.95% YTD
The BMO Equal Weight Oil and Gas Index ETF has been designed to replicate, to the extent possible, the performance of the Solactive Equal Weight Canada Oil and Gas Index, net of expenses. The Fund invests in and holds the Constituent Securities of the Index in the same proportion as they are reflected in the Index.
Returns
YTD
+27.95%
1Y
+48.22%
3Y
+27.33%
5Y
+24.77%
Pros & Cons
Pros
- Strong upside potential during rising oil and commodity price cycles
- Direct exposure to Canadian energy sector leaders
- Can provide high dividend income from energy companies
- Useful for tactical positioning in commodity-driven markets
Cons
- Highly cyclical and dependent on oil and gas prices
- Significant volatility compared to broad-market ETFs
- Heavy concentration in a small number of large energy companies
- Sensitive to geopolitical events and global demand shifts
Compare These ETFs Head-to-Head
Drill into a side-by-side breakdown of performance, AUM, and yield.
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Frequently Asked Questions
What is the best energy ETF in Canada?
XEG.TO is one of the most popular energy ETFs in Canada because it provides broad exposure to major oil and gas companies. Investors seeking more diversification may consider ZEO.TO, which uses equal weighting to reduce concentration risk.
Are energy ETFs a good investment?
Energy ETFs can perform well during periods of rising oil prices, but they are highly cyclical and volatile. They are best used as a tactical allocation rather than a core holding in a long-term portfolio.
Should I invest in energy ETFs long term?
Energy ETFs can be held long term, but due to their cyclical nature, many investors prefer using them as a smaller satellite position. Diversifying with broader ETFs can help balance the risks associated with commodity price fluctuations.