3 Best Long-Term Bond ETFs in Canada (June 2026)
The best long-term bond ETFs in Canada include VLB.TO (~0.09% MER), XLB.TO (~0.10%), ZFL.TO (~0.20%), and ZLC.TO (~0.20%). These ETFs invest in long-duration bonds, offering higher income and potential gains when interest rates fall, but with greater sensitivity to rate changes and increased volatility compared to shorter-term bond funds.
Long-term bond ETFs are designed for Canadian investors seeking higher income and potential capital gains when interest rates decline. ETFs like VLB.TO, XLB.TO, and ZFL.TO focus on long-duration government and corporate bonds, which are more sensitive to interest rate changes than short- or mid-term bond ETFs.
Because of their longer duration, these ETFs can experience larger price swings. When interest rates fall, long-term bond ETFs tend to outperform shorter-duration funds. However, when rates rise, they can decline more significantly.
In this guide, we break down the best long-term bond ETFs in Canada, comparing duration, yield, interest rate sensitivity, and fees so you can choose the right ETF for your TFSA, RRSP, or diversified fixed-income strategy.
At a Glance: Quick Comparison
Side-by-side snapshot of fees, yield, and returns. Data updates daily.
| ETF | MER | AUM | Yield | YTD | 1Y |
|---|---|---|---|---|---|
Top VLB.TO Vanguard Canadian Long-Term Bond Index ETF | — | $263M | 3.96% | +1.58% | +1.87% |
XLB.TO iShares Core Canadian Long Term Bond Index ETF | — | $749M | 4.09% | +1.68% | +1.49% |
ZFL.TO BMO Long Federal Bond | — | $1.3B | 2.95% | +2.27% | -1.77% |
What Is an ETF?
A long-term bond ETF in Canada is an exchange-traded fund that invests in bonds with long maturities, typically 10 years or more. These ETFs generate income through interest payments and are highly sensitive to changes in interest rates due to their longer duration.
For example, VLB.TO (~0.09% MER), XLB.TO (~0.10%), and ZFL.TO (~0.20%) track long-term Canadian government and corporate bonds, offering higher yields compared to short-term bond ETFs. ZLC.TO (~0.20% MER) focuses on long-term corporate bonds, adding additional credit exposure for higher income potential.
Long-term bond ETFs are commonly used in RRSPs, TFSAs, and diversified portfolios to enhance yield or position for falling interest rates. Investors should understand that these ETFs carry higher interest rate risk and can be more volatile than other fixed-income options.
The 3 Best ETFs: Ranked & Reviewed
Detailed breakdown of each pick with live data.
Vanguard Canadian Long-Term Bond Index ETF
$20.54
+1.58% YTD
NA
Returns
YTD
+1.58%
1Y
+1.87%
3Y
+2.61%
5Y
-1.71%
iShares Core Canadian Long Term Bond Index ETF
$18.75
+1.68% YTD
Returns
YTD
+1.68%
1Y
+1.49%
3Y
+2.64%
5Y
-1.73%
BMO Long Federal Bond
$12.15
+2.27% YTD
The BMO Long Federal Bond Index ETF has been designed to replicate, to the extent possible, the performance of the FTSE TMX Canada Long Term Federal Bond Index, net of expenses. The Fund invests in a variety of debt securities primarily with a term to maturity greater than ten years. Securities held in the Index are generally issued or guaranteed by the Government of Canada, by various agencies of the Government of Canada, and by various instrumentalities that have been established or sponsored by the Government of Canada.
Returns
YTD
+2.27%
1Y
-1.77%
3Y
-0.29%
5Y
-3.98%
Pros & Cons
Pros
- Higher income potential compared to short-term and broad bond ETFs
- Strong performance potential when interest rates decline
- Provides diversification through exposure to long-duration government and corporate bonds
- Useful for strategic positioning based on interest rate expectations
Cons
- Highly sensitive to rising interest rates, leading to potential price declines
- Greater volatility compared to short-term bond ETFs
- Longer duration increases interest rate risk significantly
- Lower stability for capital preservation compared to short-duration bond funds
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 long-term bond ETF in Canada?
VLB.TO is one of the most widely used long-term bond ETFs in Canada due to its low ~0.09% MER and exposure to long-duration government bonds. Alternatives like XLB.TO and ZFL.TO offer similar exposure with slightly different structures and fees.
Why are long-term bond ETFs more volatile?
Long-term bond ETFs have higher duration, meaning their prices are more sensitive to changes in interest rates. When rates rise, bond prices fall more sharply compared to short-term bonds, increasing volatility.
Are long-term bond ETFs good for a TFSA or RRSP?
Long-term bond ETFs can be held in both TFSAs and RRSPs, but they are often better suited for RRSPs due to the tax treatment of interest income. In a TFSA, they can still provide tax-free income, though many investors prioritize growth assets in that account.