How to invest in the S&P 500 from Canada

Investing in the S&P 500 – one of the world’s most widely tracked stock market indices – has long been a cornerstone strategy for investors seeking exposure to the US equity market. If you’re based in Canada, you may be wondering how to gain access to this investment and what the most efficient way is to do so from a Canadian account.

In this guide, we walk you through how to buy the S&P 500 from Canada step by step. We cover the key things to consider when choosing a suitable S&P 500 ETF (including the choice between Canadian-listed and US-listed options), tips for picking the right broker, currency hedging considerations, and how tax-advantaged accounts like TFSAs, RRSPs, FHSAs, and RESPs interact with US equity exposure.

How to buy the S&P 500 from Canada (Step-by-step guide)

1. Pick an ETF tracking the S&P 500

The S&P 500 tracks the performance of 500 of the largest US-listed companies, spanning a wide range of sectors and representing the bulk of the US equity market by capitalisation. Investing in it gives you broad exposure to the US economy and can serve as a cornerstone of a well-diversified long-term portfolio.

Investing in each of the 500 underlying stocks individually from Canada would be costly and impractical. Exchange-Traded Funds (ETFs) solve this by giving you a single, low-cost investment vehicle that tracks the index as a whole. By investing in S&P 500 ETFs, Canadian investors can participate in the long-term growth of the index, benefit from instant diversification, and crucially – do so within tax-advantaged accounts like a TFSA, RRSP, FHSA, or RESP where allowed.

Canadian investors can choose between two main routes:

• Canadian-listed S&P 500 ETFs: trade in CAD on the Toronto Stock Exchange (TSX). No CAD-to-USD conversion required; some offer CAD-hedged versions to remove USD/CAD currency risk.
• US-listed S&P 500 ETFs: trade in USD on US exchanges (NYSE Arca, NASDAQ). Generally cheaper TERs but require CAD-to-USD conversion (and may have FX implications inside tax-advantaged accounts).

The table below shows some of the largest S&P 500 ETFs available to Canadian investors, with both TSX-listed (CAD) and US-listed (USD) options. Data is filtered using TMX Money for TSX-listed funds and ETF issuer pages for US-listed options.

Largest S&P 500 ETFs available to Canadian investors

Don’t worry if you’re not familiar with what “replication method” and “distribution policy” mean – we’ll explain them later in this guide. For now, let’s move on to the second step of how to buy the S&P 500 from Canada.

2. Choose a good ETF broker

Once you’ve identified the ETF that suits your strategy, the next step is to pick a broker that lets you buy it efficiently. The right broker depends on your priorities – cost, tax-account support (TFSA, RRSP, FHSA, RESP), platform usability, and whether you also want access to US-listed S&P 500 ETFs (which require USD account capability and a strong FX cost structure). Below is a brief summary of what each broker offers for Canadian S&P 500 investors.

Beyond ETF availability, other factors matter when selecting a Canadian ETF broker: transaction fees, minimum deposit, range of available ETFs, tax-advantaged account support (TFSA, RRSP, FHSA, RESP), USD account capability (essential if you also want US-listed ETFs like SPY, VOO, or IVV), and FX conversion costs when moving between CAD and USD. Here’s how the major Canadian brokers compare:

3. Place a “buy order”

Once you’ve chosen a broker and funded your account, you’re ready to place a “buy order” for your chosen S&P 500 ETF. In this example, we’ll use Interactive Brokers, but the same general steps apply to any major Canadian broker (Qtrade, Wealthsimple, Questrade):

a) Search for the desired S&P 500 ETF

Use the search function or browse the available ETFs to find your chosen S&P 500 ETF. Search by ticker symbol to locate it accurately – in our example, we’ll search for ZSP (BMO S&P 500 Index ETF, TSX-listed in CAD).

You may notice that brokers sometimes offer multiple versions of the same ETF, listed in different currencies (USD, CAD, EUR) or on different exchanges. Pick the listing that matches your account currency – as a Canadian investor with a CAD account, choosing a CAD-listed version (e.g., ZSP on TSX) avoids CAD-to-USD conversion fees on every trade.

Worth noting: some Canadian brokers also let you “Norbert’s Gambit” your way into USD ETFs efficiently if you specifically want to hold US-listed S&P 500 ETFs like VOO or IVV at their ultra-low TERs – particularly useful inside an RRSP, where US-listed ETFs avoid the 15% US dividend withholding tax under the Canada-US tax treaty. This is a more advanced strategy worth researching separately if you’re going down that path.

b) Click on “Buy” or “Invest”

Once you’re on the ETF’s page, you’ll see a chart and key information about the fund – typically the option to place an order is clearly displayed.

c) Choose the order details

Now choose the order type that fits your strategy:

• Limit order: set by default on IBKR. You specify the maximum price you’re willing to pay; the trade only executes if the market reaches or falls below your limit. Useful when you want price control rather than speed.
• Market order: executes at the prevailing market price, providing immediate execution. Best for most retail ETF buyers making long-term contributions, since timing precision matters less than the cost of missing the trade.
• Amount or units: specify either a fixed dollar amount to invest (if your broker supports fractional shares) or a specific number of shares. Many Canadian brokers – including Wealthsimple Trade and IBKR – now support fractional ETF shares, letting you invest specific dollar amounts without buying whole units.

d) Place the order

Finally, click “Submit Buy Order”. The broker will process the transaction and attempt to execute the trade at your specified parameters. Take a moment to review the order confirmation (ticker, quantity, price, total cost including any commissions and FX fees) before submitting.

What to look for in any ETF?

Not all ETFs are the same, and several factors are worth weighing up before deciding. Here are the most important:

1. Fees (MER)

Different asset managers charge different fees for their ETFs. Providers like BMO, Vanguard, BlackRock (iShares), and Global X charge a small annual fee that’s deducted directly from the fund’s assets – so it doesn’t show up as a separate line on your account, but it quietly reduces your returns over time. Choosing a low-fee ETF can make a meaningful long-term difference. This fee is known in Canada as the Management Expense Ratio (MER), and elsewhere as the Total Expense Ratio (TER) or Ongoing Charges Figure (OCF). For Canadian-listed S&P 500 ETFs, MERs typically range from 0.08% (VFV) to around 0.10% – all very competitive.

2. Replication method

ETFs use two main replication methods:

• Physical replication: the fund actually holds the underlying assets in the index. For an S&P 500 ETF, this means owning shares in the 500 underlying US companies (ZSP, VFV, XSP, XUS).
• Synthetic replication: the fund uses derivatives (typically total return swaps) to mirror the index’s performance rather than holding the underlying stocks directly. The Canadian S&P 500 ETF using this approach is Global X’s HXS.

For S&P 500 exposure specifically, both approaches work well given the deep liquidity of the underlying companies. However, synthetic replication has one important Canadian tax advantage: because HXS doesn’t hold US stocks directly, it isn’t subject to the 15% US withholding tax on dividends – the dividend income is instead converted into capital gains via the swap structure. This makes HXS particularly attractive in non-registered (taxable) accounts, where avoiding the dividend withholding can outweigh the additional counterparty risk.

3. Distribution policy (accumulating vs distributing)

ETFs differ in how they handle income (mainly dividends) generated by the underlying companies:

• Accumulating ETFs automatically reinvest dividends back into the fund, increasing the share price over time rather than paying out cash. Among Canadian S&P 500 ETFs, only HXS (Global X) follows this structure via its swap-based design.
• Distributing ETFs pay dividends directly to your brokerage account on a regular schedule (typically quarterly for US equity ETFs). The major Canadian-listed S&P 500 ETFs – ZSP, VFV, XSP, XUS – are all distributing.

The right choice depends heavily on your situation and account type:

• Inside a TFSA, RRSP, FHSA, or RESP: dividend taxation isn’t an immediate concern (TFSA/FHSA/RESP are tax-sheltered; RRSP defers tax until withdrawal), so the distinction matters less from a tax perspective – it’s mainly an operational preference for whether you want cash distributions or automatic reinvestment.
• In a non-registered (taxable) account: Canadian-listed S&P 500 ETF distributions are taxed in the year received – even if you reinvest them via a DRIP. Distributions from US-source dividends (which is the bulk of S&P 500 dividends) also incur the 15% US withholding tax, except when held in an RRSP. HXS sidesteps both the immediate distribution taxation and the US withholding via its swap structure, making it the most tax-efficient option for S&P 500 exposure in a non-registered account – though it does carry some counterparty risk.

For personalised tax advice, consult a qualified Canadian tax professional. When you eventually sell your ETF holdings, capital gains tax may also apply depending on the account type and your overall tax situation.

4. Fund size

Consider the overall fund size (AUM – Assets Under Management) when selecting an ETF. Larger funds generally carry a lower risk of liquidation than smaller ones, with tighter bid-ask spreads and better day-to-day liquidity. In the event of liquidation, a fund sells its holdings, settles obligations, and returns the remaining proceeds to investors – which can trigger capital gains in non-registered accounts. For Canadian S&P 500 ETFs, sticking to options with at least CAD $1 billion+ AUM is a sensible rule of thumb; ZSP, VFV, and XSP all comfortably exceed this threshold.

5. Currency hedging

Some ETFs use currency hedging (typically forward contracts) to mitigate fluctuations between the ETF’s listing currency (CAD) and the underlying assets’ currency (USD for the S&P 500). Hedging comes at a small additional cost – typically increasing the MER by 0.10%-0.15% – and can protect you against short-term currency swings, but the hedging cost can drag on returns over decades.

Among the Canadian S&P 500 ETFs covered above, only XSP (iShares Core S&P 500 Index ETF CAD-Hedged) is currency-hedged – the others (ZSP, VFV, XUS, HXS) leave you with unhedged USD exposure. Most academic research and long-term investors suggest that for very long holding periods (10+ years), unhedged USD exposure works out reasonably well, since currency fluctuations tend to balance out over time. CAD-hedged ETFs are typically more useful for shorter-term or income-focused investors, or for those who specifically want to remove the CAD/USD currency variable from their portfolio.

The bottom line

In conclusion, investing in the S&P 500 from Canada is one of the most popular ways to gain broad exposure to the US stock market. Here’s a summary of the steps:

1. Pick an S&P 500 ETF: options like ZSP (BMO, 0.09% MER, CAD-listed), VFV (Vanguard, 0.08% MER, CAD-listed), XSP (iShares, CAD-hedged), XUS (iShares, unhedged), and HXS (Global X, swap-based and tax-efficient for non-registered accounts) all track the same index with different structures. Sophisticated investors with an RRSP may also consider US-listed ETFs like VOO, IVV, or SPY to avoid the 15% US dividend withholding tax under the Canada-US tax treaty.
2. Find a suitable broker: choosing the right broker matters. Consider available ETFs, transaction and platform fees, FX conversion costs (particularly important if buying US-listed ETFs), tax-advantaged account support (TFSA, RRSP, FHSA, RESP), and minimum deposit. See our list of brokers offering free stocks, trades, and cash bonuses in Canada for current promotions.
3. Open an account and deposit funds: once you’ve picked a broker, complete the digital onboarding (typically same-day for major Canadian brokers), verify your identity, and fund the account in CAD via Interac e-Transfer, bank transfer, or other supported methods.
4. Place your order: on your broker’s platform, search for the ETF by ticker (ZSP, VFV, XSP, XUS, or HXS), choose your order type (market for simplicity, limit for price control), specify the amount or quantity, and confirm. Fractional shares are now supported by several Canadian brokers (Wealthsimple Trade, IBKR) if a full share is more than you want to buy.
5. Hold for the long term and use tax wrappers: S&P 500 investing is most effective as a long-term strategy. Consider setting up automatic monthly contributions, and prioritise holding inside tax-advantaged accounts (TFSA for tax-free growth, RRSP for tax-deferred growth and US-listed ETF tax efficiency, FHSA for first-home savings, or RESP for children’s education) to maximise long-term after-tax returns.

We hope this guide has answered your questions. Always do your own research to determine the best strategy for your specific situation.

Happy investing!

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