10 Best Canadian Tech ETFs in December 2023

In this article, I will introduce you to some of the best Canadian Technology ETFs and explain the pros and cons of each fund.

Canadian investors who are looking for a long-term investment that has the potential to beat the market may want to look at the technology ETF sector.

These funds are full of the best Canadian tech stocks and offer exposure to the broader sector rather than trying to beat the market with individual stock picks.

ETFs are an excellent way for Canadian investors to diversify their portfolios with an asset with much lower management fees than traditional mutual funds.

Best Tech ETFs in Canada

The top 10 Canadian technology ETFs on this list are:

• Invesco NASDAQ 100 Index ETF (QQC.TO)
• TD Global Technology Leaders ETF (TEC.TO)
• iShares S&P/TSX Capped Information Technology Index ETF (XIT.TO)
• BMO NASDAQ 100 Equity Index ETF (ZNQ.TO)
• iShares NASDAQ 100 Index ETF (CAD-Hedged) (XQQ.TO)
• Harvest Tech Achievers Growth and Income ETF (HTA.TO)
• CI Tech Giants Covered Call ETF (TXF-B.TO)
• TD Global Technology Innovators Index ETF (TECI.TO)
• ARK Innovation ETF (ARKK)
• Evolve Cyber Security Index ETF (CYBR)

1. Invesco NASDAQ 100 Index ETF (QQC)

QQC is Invesco’s answer to the NASDAQ 100 Index ETF. It was established very recently, in May of 2021 and trades on the Toronto Stock Exchange.

While the fund states that it has 102 total holdings, this is actually the total sum of underlying holdings.

The reason for this is that the QQC holds just two actual assets: the Invesco QQQ, which tracks the NASDAQ 100 index, and an 85% weight in QQQM, which also tracks the NASDAQ 100 index.

What is the difference between the two? QQQM has a slightly lower MER of 0.15% compared to the 0.20% for QQQ.

Here is a list of the top holdings in QQC as of March 2023:

And here are some key facts about QQC:

• MER: 0.20%
• Number of stocks: 2 assets, 102 underlying holdings
• Dividend yield: 0.83%
• Distribution frequency: Quarterly
• Assets Under Management (AUM): $98 million
• 1-year performance: -8.00%
• Eligibility: both registered and non–registered

Since QQC is such a new ETF, we don’t really have any long-term performance history.  Still, we can reasonably assume it will mirror other NASDAQ 100 Index ETFs.

QQC has a relatively higher dividend and distribution yield that pays every quarter.

The MER of 0.20% is extremely low, and the Invesco NASDAQ ETFs, QQQ, QQC, and QQQM, are some of the most popular technology ETFs on the market.

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2. TD Global Technology Leaders ETF (TEC)

TEC is a Canadian Technology ETF from TD Asset Management that trades on the Toronto Stock Exchange and was established in 2019.

This ETF provides exposure to Canadian, American, and International technology companies for a low MER of 0.39%.

TEC holds an impressive 269 different stocks, most of which you will recognize. TEC has an 84.4% weighting towards American technology companies.

Here are some of the largest holdings in TEC as of March 2023:

And here is the geographical exposure breakdown of TEC:

Only 0.90% of the stocks in the fund are Canadian, so TEC is a great ETF for Canadian investors who want international exposure.

Here are the key facts for TEC:

• MER: 0.39%
• Number of stocks: 269
• Dividend yield: 0.80%
• Distribution frequency: Quarterly
• Assets Under Management (AUM): $1.2 billion
• 1-year performance:-12.32%
• Eligibility: both registered and non–registered

With TEC, you get a competitive MER at 0.39% and a reasonable dividend yield of 0.80%. Gaining exposure to international tech companies is a bonus that not many other ETFs can provide.

3. iShares S&P/TSX Capped Information Technology Index ETF (XIT)

XIT is an ETF from iShares by Blackrock that was established back in 2001. It trades on the Toronto Stock Exchange in Canadian dollars.

This ETF holds some of the best Canadian tech companies and has a total of 27 different holdings. Here is a list of some of the largest holdings in the ETF:

As you can see Shopify and Constellation Software make up 50% of the weight in the ETF.

Here are some key facts for XIT:

• MER: 0.61%
• Number of stocks: 27
• Dividend yield: 0.00%
• Distribution frequency: Semi-annually
• Assets Under Management (AUM): $447 million
• 1-year performance: -9.26%
• Eligibility: both registered and non–registered

XIT is not an ETF for investors seeking out high-paying dividends. In fact, as of March 2023, XIT has temporarily stopped paying out a dividend to shareholders. 

Investing in XIT requires confidence that Canadian tech stocks like Shopify and Constellation Software will continue to outperform.

This ETF has a medium to high-risk rating, which is evident in the negative returns over the past year.

Compared to other Canadian tech ETFs, XIT has a fairly high MER. At 0.61%, it is the equivalent of paying $6.10 in fees for every $1,000 invested in XIT.

4. BMO NASDAQ 100 Equity Index ETF (ZNQ)

ZNQ is an ETF from BMO Global Asset Management that was established back in 2019. The goal of this ETF is to track the NASDAQ 100 index.

The NASDAQ 100 is an index of 100 of the largest companies that trade on the NASDAQ. ZNQ holds all 100 stocks in the same weighted proportion as the NASDAQ 100 itself. Given that NASDAQ is dominated by mostly technology companies, ZNQ is a tech-heavy ETF.

ZNQ has a total of 102 holdings that are all US-based companies. Despite this, the ZNQ trades on the Toronto Stock Exchange, saving Canadian investors extra foreign currency fees and exchange rates.

Here is a list of the top ten holdings in ZNQ by weight:

Here is a glance at the sector allocation for the ZNQ ETF:

The names at the top of the list are familiar, as the NASDAQ is dominated by mega-cap tech companies like Apple, Microsoft, and Amazon.

Here are the key facts for ZNQ:

• MER: 0.39%
• Number of stocks: 102
• Dividend yield: 0.21%
• Distribution frequency: Annually
• Assets Under Management (AUM): $464 million
• 1-year performance: -8.60%
• Eligibility: both registered and non–registered

ZNQ carries with it a medium risk, although some would argue these mega-tech companies that have achieved blue-chip status do not carry as much risk as they once did.

Like with most Canadian tech ETFs, ZNQ pays a small dividend that is distributed only once per year on an annual basis.

Since ZNQ tracks the NASDAQ 100 index, there is very little fund management necessary, allowing the ETF to have a lower MER of 0.39%.

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5. iShares NASDAQ 100 Index ETF (CAD-HEDGED) (XQQ)

XQQ is an ETF provided by iShares from Blackrock and was established back in 2011. It trades on the Toronto Stock Exchange and tracks the NASDAQ 100 index.

XQQ is our first look at a currency-hedged ETF. This means that in addition to holding the NASDAQ 100 stocks, XQQ also holds Canadian and US dollars to hedge against potential currency fluctuations.

Here is a look at the top holdings in XQQ:

• MER: 0.39%
• Number of stocks: 101
• Dividend yield: 0.41%
• Distribution frequency: Semi-annual
• Assets Under Management (AUM): $1.8 billion
• 1-year performance: -16.40%
• Eligibility: both registered and non–registered

XQQ is a solid performer and a popular ETF with over $1.8 billion in AUM.

6. Harvest Tech Achievers Growth and Income ETF (HTA)

HTA is an ETF that trades on the Toronto Stock Exchange. It was established in 2015 and provides exposure to 100% US-based tech stocks.

HTA has 20 tech stock holdings, with the largest weight dedicated to the semiconductor industry. Here are the top holdings in the HTA ETF:

And here is the sector distribution for HTA:

Here are the key facts for HTA:

• MER: 0.85%
• Number of stocks: 20
• Dividend yield: 9.25%
• Distribution frequency: Monthly
• Assets Under Management (AUM): $424 million
• 1-year performance: -14.50%
• Eligibility: both registered and non–registered

The first thing you might notice about HTA is its unusually high dividend yield. This ETF uses a covered calls strategy to earn extra income for shareholders. This also explains the high MER of 0.85%.

Once again, this is a great way for Canadian investors to gain exposure to US tech stocks through the Toronto Stock Exchange.

7. CI Tech Giants Covered Call ETF (TXF-B.TO)

TXF-B is a Canadian tech ETF provided by CI Global Asset Management. The fund was created in 2017, and as its name suggests, it incorporates a covered call options strategy. 

As with other covered call ETFs like HTA, this ETF has a relatively high MER as the portfolio requires much more active management. 

Here are some of the top holdings in TXF-B:

And here are some more allocations for the TXF-B ETF as of 2023:

Here are the key facts for TXF-B:

• MER: 0.65%
• Number of stocks: 53 (including covered call contracts)
• Dividend yield: 11.20%
• Distribution frequency: Quarterly
• Assets Under Management (AUM): $50 million
• 1-year performance: -16.60
• Eligibility: both registered and non–registered

The MER is high but lower than its fellow covered call tech ETF: HTA. As explained, this is due to the fund being actively managed as it incorporates the covered call option strategy. 

This ETF is ideal for those seeking capital appreciation as well as a steady quarterly dividend payout. 

8. TD Global Technology Innovators Index ETF (TECI.TO)

TECI is another tech index ETF from TD Global Asset Management. This fund was established in November 2021, making it one of the newest funds on this list. 

This Canadian tech ETF trades on the Toronto Stock Exchange and holds 110 of the world’s innovation leaders in the technology sector. 

Here are the top holdings in the TECI ETF:

You might notice that these tech stocks are not the same names that dominate the NASDAQ 100 index. TECI takes a global approach to technology and includes international names like MercadoLibre.

Here is a look at TECI’s asset allocation: 

Here are the key facts for TECI:

• MER: 0.50%
• Number of stocks: 110
• Dividend yield: 0.67%
• Distribution frequency: Quarterly
• Assets Under Management (AUM): $4.6 million
• 1-year performance:  -20.99%
• Eligibility: both registered and non–registered

9. Ark Innovation ETF (ARKK)

Ark Invest is a popular investment company owned by noted investor Cathie Wood. Ark ETFs are actively managed, and the Ark Innovation ETF is the company’s flagship fund.

The ETF was established in 2014 and trades on the US exchange. For Canadian investors, you might be better off looking at the ARKK fund provided by BMO Global Asset Management and trades on the TSX. 

Here are some of the top holdings of ARKK.

And here is the geographical breakdown of the holdings in ARKK:

Here are the key facts for ARKK:

• MER: 0.75%
• Number of stocks: 29 as of March 2023
• Dividend yield: 0.00%
• Distribution frequency: N/A
• Assets Under Management (AUM): $7.6 billion
• 1-year performance:  -66.99%
• Eligibility: both registered and non–registered

ARKK has had a tough year, as seen by its one-year performance. The ETF does not pay any dividends and does not have a set number of stocks, as it is actively managed daily.

Since ARKK is actively managed, it has a higher MER at 0.75% than most other ETFs. This ETF is for investors with a higher risk tolerance and a longer investing horizon.

10. Evolve Cyber Security Index ETF (CYBR)

CYBR is an ETF from Evolve which focuses specifically on the cybersecurity industry. It was established in 2017 and trades on the Toronto Stock Exchange.

CYBR is another Canadian dollar-hedged ETF. While this ETF itself is not specifically hedged, it is because it tracks the Solactive Global Cyber Security Index Canadian Dollar hedged (SOLGCYH).

CYBR has 39 different holdings from all over the world. Here are the top holdings of the fund:

And here is the asset allocation for CYBR:

• MER: 0.40%
• Number of stocks: 39
• Dividend yield: $0.01 per share
• Distribution frequency: Monthly
• Assets Under Management (AUM): $151 million
• 1-year performance: -22.87%
• Eligibility: both registered and non–registered

CYBR has a reasonably 0.40% MER, and unusual for the technology sector, the ETF pays out a monthly dividend, although currently, it is only $0.01 per share.

This fund is an excellent investment option for Canadian investors who believe in the cybersecurity sector over the long term.

It provides excellent exposure to multiple different regions of the world as well, which is something you usually can’t get without incurring foreign exchange fees.

What is a Technology ETF?

A Technology ETF is as it sounds: a fund that provides a basket approach to the broader tech industry or that focuses on a specific tech sector.

Technology ETFs hold high-growth tech stocks and can potentially return massive gains in the future.

Investing in these does come with some volatility so a higher risk tolerance is important when investing in any Canadian Tech ETF (similar to Energy ETFs, Metaverse ETFs, and other themed ETFs).

Technology stocks are a popular investment, and some of the largest companies in the world, such as Apple, Tesla, Google, Alphabet and others, are represented in these ETFs.

How To Buy Tech ETFs in Canada in 2023

Questrade

Questrade is a great platform for Canadian investors to buy the best Canadian Tech ETFs for their portfolios.

It offers zero commission buying for ETFs and only has a fee for selling which is $4.95. This provides an incentive for investors to buy and hold the ETFs for the long term.

Questrade also supports options, stocks, mutual funds, bonds, CFDs, precious metals, and many other investment assets. It is one of the best trading apps in Canada.

Wealthsimple Trade

Wealthsmiple is another popular brokerage platform amongst Canadians. It is a digital brokerage with both a mobile and desktop application.

Wealthsimple Trade offers zero commission fees for both buying and selling Canadian ETFs. It only supports stocks and ETFs.

Qtrade

Qtrade is another Canadian investing platform that is a discount brokerage with competitive trading fees.

On Qtrade, Canadian investors can buy from a list of free Canadian ETFs to trade on the platform, which includes XIT.

Are Technology ETFs a Good Investment?

Technology ETFs can be a great investment if you have a higher risk tolerance for your investments. Tech stocks can come with more volatility than other sectors.

Tech companies are among the most powerful and valuable in the world, and Technology ETFs give you exposure to them.

ETFs are great because they have low management fees, and you can get exposure to a basket of different companies. They also provide exposure to foreign stocks, which aren’t always available to trade on the Toronto Stock Exchange.

Taking advantage of discount brokerages like Questrade and Wealthsimple Trade which offer no-fee ETF trading, is a great way to get started.

How To Pick Technology ETFs

With hundreds of different ETFs to choose from, it is always a challenge to figure out which one is best for you.

Start by choosing ETFs with lower MERs so you maximize your gains in the long run.

You can also look at things like dividend yield and exposure to foreign stocks that would otherwise cause you foreign currency fees.

Technology ETFs that provide exposure to multiple different sectors will also come with lower volatility and risk.

Downsides of Tech ETFs and Stocks

The downsides of Technology ETFs and stocks are, of course, the volatility and risk involved with high-growth companies.

If you are a fan of dividends, few tech stocks pay these out. As you already saw, most tech ETFs pay a lower dividend yield than, say, an index fund.

Being exposed to just one sector can be risky for your portfolio as well. You will likely need to own other assets from other sectors if you want to be diversified.

Bonus: Top 5 Tech Stocks in Canada

Here are some of the top tech stocks to consider in Canada:

Shopify (TSE:SHOP)

An Ottawa-based eCommerce platform for online retailers and point-of-sale systems. The platform has well over 1.7 million businesses across 175 different countries as of May 2021.

Constellation Software (TSE:CSU)

Constellation Software is a diversified technology company that acquires smaller tech companies and holds them for the long term. Constellation owns over 500 different companies across various tech sectors.

Kinaxis Inc (TSE: KXS)

Kinaxis is a Kanata-based supply chain management software provider. It was founded in 1984 and has a market capitalization of nearly $5 billion. This company provides software to global brands like Ford, Cisco and Qualcomm.

Lightspeed Commerce (TSE:LSPD)

Lightspeed started as a point of sale processor but has moved into also working in digital finance services. It is one of the most widely used payment processors in North America, especially in restaurants and hospitality businesses.

Well Health Technologies (TSE:WELL)

Well Health is one of Canada’s largest digital healthcare service providers, and its largest owner of outpatient health clinics. Well Health’s digital healthcare platform offers services like telehealth consultations, electronic medical records, and direct billing.

Conclusion

Investing in Canadian Technology ETFs is a fantastic way to add both domestic and international tech sector exposure to your portfolio.

Tech stocks come with higher risk and increased volatility than other sectors. For this reason, taking a basket approach with an ETF limits downside volatility.

Canadian investors looking to add tech ETFs can easily do so at discount brokerages like Wealthsimple and Questrade for commission-free ETF buying.

Canadian Tech ETFs FAQ