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Four ways to find exchange-traded funds for your tax-free savings account:

  • Check out the Globe and Mail ETF Buyer’s Guide
  • Use Google to find blog posts and articles that offer best ETF lists
  • Try your online broker’s ETF research area – most brokers carry research and tools from the independent analysis company Morningstar that highlights top ETFs
  • Use artificial intelligence apps like ChatGPT

I asked ChatGPT to build a portfolio of ETFs last summer and got some decent results. Now, let’s see what ChatGPT can do for investors who want to use ETFs specifically for TFSAs. A TFSA offers tax-free compounding, and then tax-free withdrawals. If you’re using a TFSA for long-term wealth building, you ideally want ETFs that will deliver lots of growth over the years.

My specific question to ChatGPT was: “What are the best TSX-listed exchange-traded funds for my tax-free savings account?” Ask this question without the “TSX-listed” qualifier and you get mainly ETFs listed on U.S. exchanges. Buying these funds will generally require you to pay stiff foreign exchange fees as your Canadian dollars are converted into the U.S. dollars needed to buy U.S.-listed ETFs.

ChatGPT produced a list it described as “some of the best” TSX-listed funds for TFSAs:

  • iShares S&P/TSX 60 Index ETF (XIU-T): Hold big Canadian blue chips.
  • Vanguard FTSE Canada All Cap Index ETF (VCN-T): Broader Canadian market exposure than XIU
  • BMO S&P/TSX Capped Composite Index ETF (ZCN-T): Tracks the benchmark S&P/TSX Capped Composite Index.
  • iShares Canadian Select Dividend Index ETF (XDV-T): Focuses on dividend-paying stocks.
  • Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY-T): More dividend stocks.
  • BMO Aggregate Bond Index ETF (ZAG-T): Exposure to the broad Canadian bond market, including government and corporate bonds. “Offering diversification and stability to a TFSA portfolio through fixed-income securities,” ChatGPT says.
  • Horizons S&P/TSX 60 Index ETF (HXT-T): Tax-efficient exposure to Canadian blue chips.
  • iShares Canadian Growth Index ETF (XCG-T): Emphasis on growth stocks.
  • BMO Equal Weight Banks Index ETF (ZEB-T): Holds shares of the Big Six banks in equal proportion.
  • Vanguard Canadian Aggregate Bond Index ETF (VAB-T): Broad bond market exposure.

I give the list a B grade. Good candidates throughout, but there was no mention of fees, and the choices were limited to only the largest ETF companies. Also, no asset allocation ETFs were included. These funds offer a fully diversified portfolio in a single fund, and there are versions for investors with a variety of risk levels. Intelligent investors should consider them.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 3:55pm EDT.

SymbolName% changeLast
XIU-T
Ishares S&P TSX 60 Index ETF
+0.61%33.14
VCN-T
Vanguard FTSE Canada All Cap ETF
+0.48%44.41
ZCN-T
BMO S&P TSX Capped Comp ETF
+0.45%29.17
XDV-T
Ishares Canadian Select Div Index ETF
+0.83%26.77
VDY-T
Vanguard FTSE CDN High Div Yld Index ETF
+0.93%43.41
ZAG-T
BMO Aggregate Bond Index ETF
+0.15%13.3
HXT-T
Horizons S&P Tsx60 Index ETF
+0.6%55.71
XCG-T
Ishares Canadian Growth Index ETF
+0.27%48.97
ZEB-T
BMO S&P TSX Equal Weight Banks Index ETF
+0.62%35.61
VAB-T
Vanguard CDN Aggregate Bond Index ETF
+0.18%22.15

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