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After a solid 2024, the Canadian bond market has seen a back-and-forth start to this year. But some exchange-traded bond funds are standing out. To screen for the top-performing funds in this category, we looked for those with the best returns over the last one-, three-, and five-year periods. All names that passed the screen were index funds.
Over the last 12 months, these funds have returned 3.81%. On an annualized rate, they’ve returned 4.40% over the last three years and lost 0.57% over the last five. That compares with the Morningstar Canada Core Bond Index, which has returned 3.81% over the last 12 months, gained 4.30% per year over the last three years, and lost 0.62% per year over the last five years.
Canadian Fixed Income Funds vs. the Morningstar Canada Core Bond Index
Source: Morningstar Direct. Data as of June 13, 2025.
Insert Playfair line chart here. Title = Canadian Fixed Income Funds vs. the Morningstar Canada Core Bond Index.
What Are Canadian Fixed-Income ETFs?
Funds in the Canadian fixed-income category must invest at least 90% of their fixed-income holdings in Canadian dollars with an average duration greater than 3.5 years and less than nine years, according to the Canadian Investment Funds Standards Committee. In addition, they must invest primarily in investment-grade fixed-income securities, such that the average credit quality of the portfolio as a whole is investment-grade (BBB or an equivalent rating or higher) and not more than 40% of the holdings are in high-yield fixed-income securities.
Screening for the Top-Performing Canadian Fixed-Income ETFs
To find the best Canadian fixed income funds, we looked at returns data from the past one, three, and five years using Morningstar Direct. We screened for Canada-domiciled ETFs in the top 33% of the category using their lowest-cost primary share classes for those periods. We excluded funds with assets under C$100 million. This left three names.
BMO Mid Provincial Bond Index ETF
Over the past 12 months, the C$424.8 million BMO Mid Provincial Bond Index ETF rose 5.32%, while the average fund in its category rose 3.81%. The BMO fund, launched in March 2013, has climbed 5.32% over the past three years and 0.06% over the past five.
Fidelity Systematic Canadian Bond Index ETF
Over the past 12 months, this C$1.7 billion fund has gained 4.16%, while the average fund in its category is up 3.81%. The Fidelity International fund, launched in September 2019, has climbed 4.98% over the past three years and lost 0.16% over the past five years.
iShares High Quality Canadian Bond Index ETF
Over the past 12 months, the C$475.2 million fund has gained 4.33%, while the average fund in its category is up 3.81%. The iShares fund, launched in November 2009, has climbed 4.68% over the past three years and lost 0.17% over the past five.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.