As stock markets softened in 2026, many investors are recognizing the need to broaden their portfolios beyond equities. One of the most accessible alternatives is bonds, which historically have tended to move inversely to stocks and can therefore help reduce overall portfolio volatility. Bonds come in many forms and strategies: long-duration bonds typically offer higher income but can be more sensitive to interest-rate swings, while short-duration bonds sacrifice yield for greater price stability. Government bonds generally carry lower risk and lower yields, whereas high-yield corporate bonds offer higher returns at greater risk.
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Our picks for the top fixed-income ETFs
| ETF | Ticker | Management fee | MER | Holdings | Description |
|---|---|---|---|---|---|
| Vanguard Canadian Aggregate Bond Index ETF | VAB | 0.08% | 0.09% | 1,257 | Tracks the Bloomberg Global Aggregate Canadian Float Adjusted Bond Index, offering broad Canadian bond exposure. |
| TD Canadian Aggregate Bond Index ETF | TDB | 0.07% | 0.08% | 1,210 | Low-cost aggregate Canadian bond exposure suitable for core fixed-income allocations. |
| BMO Aggregate Bond Index ETF | ZAG | 0.08% | 0.09% | 1,685 | The most liquid broad Canadian aggregate bond ETF, tracking the FTSE Canada Universe Bond Index. |
For investors seeking a straightforward, diversified fixed-income allocation, our panel gravitated toward aggregate bond ETFs that represent the Canadian bond market across issuers and durations. These funds typically include government and corporate bonds of varying maturities, providing balance between income and interest-rate sensitivity. The Vanguard Canadian Aggregate Bond Index ETF (VAB) was a collective favourite because it tracks a comprehensive benchmark with a modest MER of 0.09%, making it an efficient way to gain exposure to Canadian bonds.
Low fees matter especially when bond yields and expected returns are modest. Even small differences in management expense ratios (MERs) or bid-ask spreads can erode returns over time, so cost and liquidity are important selection criteria. The TD Canadian Aggregate Bond Index ETF (TDB) was noted for having an even lower MER, while BMO’s ZAG stands out for liquidity and tight spreads—useful when executing trades without paying extra in price impact.
Duration is another key consideration. Funds with an average duration around seven years, like some broad aggregate ETFs, will offer a reasonable yield but will still be sensitive to interest-rate moves. Investors who prefer less price volatility might combine an aggregate ETF with shorter-duration or cash-alternative holdings. Conversely, those comfortable with duration risk can tilt toward longer-duration bond funds for a higher income profile.
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Watch: ETF Academy Lesson 10
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