Balance Your TFSA: A Top Strategic Canadian ETF to Own

If there is one exchange-traded fund (ETF) every Canadian investor should consider holding inside their Tax-Free Savings Account (TFSA), it is the Vanguard S&P 500 Index ETF (TSX:VFV).

It is simple, low-cost, and has an enviable track record. Over the long run, this ETF has turned modest contributions into serious wealth, and I think it should form the core of most Canadian portfolios.

Why VFV belongs in your TFSA right now

Here is the simplest way to think about VFV. When you buy this ETF, you are buying a slice of 500 of the biggest companies in America. The fund invests across industries, ranging from technology to banking and healthcare.

In 2026, a significant portion of its holdings is geared towards companies that are reshaping how the world works through artificial intelligence (AI).

NVIDIA is the largest holding in the VFV ETF, accounting for 7.6% of the fund. The other key holdings include Apple at 6.7%, Alphabet at 5.4%, and Microsoft at 4.9%.

These are the companies that spend tens of billions of dollars on AI infrastructure, software, and chips. They are the central players in the (AI) race.

NVIDIA is building the chips that power AI data centres worldwide. Alphabet and Microsoft are embedding AI into every product they sell.

Information technology accounts for 32.9% of the VFV ETF, with communication services adding another 10.3%. When you hold VFV, you are buying a front-row seat to one of the most important technological shifts in modern history.

So when people ask whether VFV is still relevant in today’s market, the answer is yes. Possibly more than ever.

A track record built over more than a decade

A $10,000 investment in VFV at inception would have grown to $72,890 today. If we adjust for dividend reinvestments, cumulative returns are closer to $88,790.

On a year-by-year basis, the fund returned 12.3% in 2025, 35.24% in 2024, 23.25% in 2023, and 27.64% in 2021.

The rough patch came in 2022, when rising interest rates sent markets tumbling, and VFV fell 12.7%. But investors who held through that period were quickly rewarded.

That resilience is part of what makes this ETF worth owning for the long haul.

What makes VFV a smart TFSA play

Inside a TFSA, the VFV ETF becomes even more powerful. Every bit of growth, and every quarterly distribution is yours to keep. Over decades of compounding, that tax shelter adds up to a meaningful difference in your final balance.

The cost to hold VFV is quite low. The management expense ratio is 0.09%, which amounts to $0.90 per $1,000 invested annually. There is no trailing commission either, per Vanguard Canada’s documentation.

In addition to price appreciation, the fund pays quarterly distributions. In 2025, that came to roughly $1.53 per unit. Back in 2012, when the fund was started, it paid out just $0.15 per unit. That quiet, steady growth in distributions over 13 years tells you something about the quality of what sits inside this ETF.

In a nutshell, VFV does the heavy lifting in the background while you get on with your life.