3 Canadian ETFs to Buy and Hold in a TFSA Forever

Don’t feel that you need to add risk to your life or remain too conservative. These ETFs are the perfect balance for any TFSA.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 20, 2025 3:45 pm EST

Investors looking to maximize the benefits of their Tax-Free Savings Account (TFSA) should consider exchange-traded funds (ETF) that provide long-term growth, stability, and income. With the right mix of diversification and steady returns, some ETFs can serve as strong buy-and-hold options for decades. Instead of focusing solely on large-cap stocks, mid-cap ETFs can offer a balance between growth potential and lower volatility compared to smaller stocks. Three ETFs stand out in this space: iShares S&P/TSX Completion Index ETF (TSX:XMD), BMO Equal Weight Banks Index ETF (TSX:ZEB), and Harvest Equal Weight Global Utilities Income ETF (TSX:HUTL).

XMD

iShares S&P/TSX Completion Index ETF is an excellent choice for those who want to expand beyond the big names in the TSX. This ETF tracks the S&P/TSX Completion Index, which includes mid-cap and small-cap stocks in Canada. These stocks often fly under the radar but have significant growth potential.

Unlike large-cap stocks that dominate headlines, many of the companies in this ETF still have room to expand and can deliver strong returns over time. With a year-to-date return of 1.91% and a yield of 1.58%, XMD provides a balance of income and growth. Recent holdings have all demonstrated resilience and solid earnings performance in the past quarter.

ZEB

For those who believe in the long-term strength of Canadian banks but want to avoid concentration risk in one or two major players, BMO Equal Weight Banks Index ETF offers an attractive solution. This ETF equally weighs the top Canadian banks. This approach prevents any single bank from having too much influence over the ETF’s performance, reducing the risk tied to any one company’s financials.

With a yield of 3.92%, ZEB is also an income-generating powerhouse, making it ideal for investors who want steady dividends in their TFSA. Canadian banks have historically been among the most stable dividend payers, and despite short-term market fluctuations, these have proven to be strong long-term investments.

HUTL

One of the most overlooked opportunities in ETFs is the ability to invest in defensive sectors that provide both income and resilience during market downturns. Harvest Equal Weight Global Utilities Income ETF is designed to do just that. This ETF focuses on utilities, telecommunications, and energy infrastructure companies — industries that generate reliable cash flow regardless of economic conditions.

The ETF currently has a high yield of 8.31%, making it particularly attractive for investors looking to generate passive income in their TFSA. With holdings in companies large and mid-cap companies across North America, it spreads risk across multiple sectors while ensuring a stable source of dividends.

Bottom line

While short-term market fluctuations can be unpredictable, these ETFs are designed to perform well over the long haul. These provide exposure to companies with strong financials and proven business models. In many cases, there is a history of returning value to shareholders through dividends. Investors who adopt a buy-and-hold strategy with these ETFs can take full advantage of the tax-free growth that a TFSA offers — compounding returns over time without worrying about capital gains taxes.

Building a TFSA portfolio is all about long-term thinking, and these three ETFs align perfectly with that strategy. Whether you’re looking for capital appreciation, dividend income, or a defensive hedge against market volatility, XMD, ZEB, and HUTL each bring something unique to the table. By holding these ETFs for the long run, investors can benefit from diversification, steady cash flow, and the compounding power of tax-free growth.