The Month’s Least Successful ETFs

Exchange-traded funds, or ETFs, are often low-cost instruments for investors to track popular indexes or leverage experienced manager choices in an attempt to beat the market. The best ones serve as building blocks for a portfolio, and unlike open-end mutual funds, all ETFs are traded throughout the day on an exchange.

In October 2024, the worst performers included iShares S&P/TSX Capped REIT Index ETF XRE and BMO Clean Energy Index ETF ZCLN. Data in this article is sourced from Morningstar Direct.

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Screening for the Worst-Performing ETFs

To find the month’s worst-performing ETFs, we screened equity, allocation, and fixed income funds that trade within Canada for those that have at least C$10 million in total assets. We narrowed the list to only ETFs with parent pillars for their Morningstar Medalist Ratings of average or above, meaning our analysts believe they’re backed by industry-standard asset management companies. We also excluded exchange traded notes, known as ETNs.

The 10 Worst-Performing ETFs for October 2024

1. iShares S&P/TSX Capped REIT Index ETF XRE
2. BMO Clean Energy Index ETF ZCLN
3. BMO Equal Weight REITs Index ETF ZRE
4. Global X Equal Weight Canadian REITs Index Corporate Class ETF HCRE
5. Middlefield Real Estate Dividend ETF MREL
6. Vanguard FTSE Canadian Capped REIT Index ETF VRE
7. BMO Equal Weight Global Base Metals Hedged to CAD Index ETF ZMT
8. BMO MSCI Europe High Quality Hedged to CAD Index ETF ZEQ
9. Wealthsimple Developed Markets ex North America Socially Responsible Index ETF WSRD
10. iShares S&P/TSX Global Base Metals Index ETF XBM

Metrics for the Worst-Performing ETFs

iShares S&P/TSX Capped REIT Index ETF

• Morningstar Rating: 1 star
• Expense Ratio: 0.61%
• Morningstar Category: Real Estate Equity

The worst-performing ETF in October was the C$1.4 billion iShares S&P/TSX Capped REIT Index ETF, which lost 8.78%. The passively managed iShares ETF underperformed the average 3.85% gain on funds in the real estate equity category in October. Over the past 12 months, the iShares S&P/TSX Capped REIT Index ETF rose 22.82%, placing it in the 92nd percentile within its category and underperforming the 27.19% return on the average fund.

The iShares S&P/TSX Capped REIT Index ETF has a Negative Morningstar Medalist Rating, meaning that our analysts expect it to be one of the worst performers within its category and think it is unlikely to deliver positive returns after fees.

BMO Clean Energy Index ETF

• Morningstar Rating: 2 stars
• Expense Ratio: 0.39%
• Morningstar Category: Global Small/Mid Cap Equity

With an 8.37% loss, the C$66 million BMO Clean Energy Index ETF was the second-worst performing ETF on our list for October. The passively managed BMO ETF underperformed the average 2.38% gain on funds in the global small/mid cap equity category. Over the past 12 months, the BMO Clean Energy Index ETF gained 1.99%, placing it in the 94th percentile within its category and underperforming the 22.67% return on the average fund.

The BMO Clean Energy Index ETF takes environmental, social, and governance criteria into consideration. This fund has a Morningstar Medalist Rating of Neutral.

BMO Equal Weight REITs Index ETF

• Morningstar Rating: 3 stars
• Expense Ratio: 0.61%
• Morningstar Category: Real Estate Equity

The third-worst performing ETF in October was the C$585 million BMO Equal Weight REITs Index ETF, which fell 7.23%. The BMO ETF, which is passively managed, underperformed the average 3.85% gain on funds in the real estate equity category. Over the past 12 months, the ETF rose 28.18% to place in the 36th percentile within its category, roughly in line with the category’s average 1-year return of 27.19%.

The BMO Equal Weight REITs Index ETF has a Morningstar Medalist Rating of Neutral. It was launched in May 2010.

Global X Equal Weight Canadian REITs Index Corporate Class ETF

• Morningstar Rating: 2 stars
• Expense Ratio: 0.33%
• Morningstar Category: Real Estate Equity

The C$42 million Global X Equal Weight Canadian REITs Index Corporate Class ETF was the fourth-worst performing ETF in October, with a loss of 7.22%. The passively managed Global X ETF performed worse than the average 3.85% gain on funds in the real estate equity category. Over the past year, the ETF gained 28.60% to land in the 31st percentile within its category, outperforming the category’s average one-year return of 27.19%.

The Neutral-rated Global X Equal Weight Canadian REITs Index Corporate Class ETF was launched in January 2019.

Middlefield Real Estate Dividend ETF

• Morningstar Rating: 4 stars
• Expense Ratio: 1.23%
• Morningstar Category: Real Estate Equity

Fifth-worst was the C$140 million Middlefield Real Estate Dividend ETF, which lost 4.91% in October. The actively managed Middlefield ETF fell short of the average 3.85% return on funds in the real estate equity category. Over the past year, the Middlefield Real Estate Dividend ETF rose 28.76%, finishing in the 28th percentile within its category. It outperformed the category’s average one-year return of 27.19%.

The Middlefield Real Estate Dividend ETF has a Morningstar Medalist Rating of Neutral. It was launched in April 2011.

Vanguard FTSE Canadian Capped REIT Index ETF

• Morningstar Rating: 2 stars
• Expense Ratio: 0.39%
• Morningstar Category: Real Estate Equity

The sixth-worst performing ETF in October was the C$297 million Vanguard FTSE Canadian Capped REIT Index ETF, which lost 4.80%. The passively managed Vanguard ETF underperformed the average 3.85% gain on funds in the real estate equity category. Over the past 12 months, the Vanguard FTSE Canadian Capped REIT Index ETF rose 34.02%, placing it in the 1st percentile within its category and outperforming the 27.19% return on the average fund.

The Vanguard FTSE Canadian Capped REIT Index ETF has a Morningstar Medalist Rating of Neutral. It was launched in November 2012.

BMO Equal Weight Global Base Metals Hedged to CAD Index ETF

• Morningstar Rating: 2 stars
• Expense Ratio: 0.61%
• Morningstar Category: Natural Resources Equity

With a 4.74% loss, the C$186 million BMO Equal Weight Global Base Metals Hedged to CAD Index ETF was the seventh-worst performing ETF on our list for October. The passively managed BMO ETF underperformed the average 2.33% gain on funds in the natural resources equity category. Over the past 12 months, the BMO Equal Weight Global Base Metals Hedged to CAD Index ETF gained 44.28%, placing it in the 8th percentile within its category and outperforming the 12.68% return on the average fund.

The BMO Equal Weight Global Base Metals Hedged to CAD Index ETF, launched in October 2009, has a Morningstar Medalist Rating of Negative.

BMO MSCI Europe High Quality Hedged to CAD Index ETF

• Morningstar Rating: 5 stars
• Expense Ratio: 0.45%
• Morningstar Category: European Equity

The eighth-worst performing ETF in October was the C$1 billion BMO MSCI Europe High Quality Hedged to CAD Index ETF, which fell 4.63%. The BMO ETF, which is passively managed, underperformed the average 0.58% gain on funds in the European equity category. Over the past 12 months, the ETF rose 15.30% to place in the 90th percentile within its category, underperforming the average one-year return of 22.39%.

The BMO MSCI Europe High Quality Hedged to CAD Index ETF, launched in February 2014, has a Morningstar Medalist Rating of Bronze.

Wealthsimple Developed Markets ex North America Socially Responsible Index ETF

• Morningstar Rating: 1 star
• Expense Ratio: 0.28%
• Morningstar Category: International Equity

The C$701 million Wealthsimple Developed Markets ex North America Socially Responsible Index ETF was the ninth-worst performing ETF in October, with a decline of 4.11%. The passively managed Mackenzie ETF performed worse than the average 1.08% gain on funds in the international equity category. Over the past year, the ETF gained 22.05% to land in the 43rd percentile, roughly in line with the category’s average one-year return of 22.22%.

The Wealthsimple Developed Markets ex North America Socially Responsible Index ETF has a Morningstar Medalist Rating of Silver. It was launched in June 2020.

iShares S&P/TSX Global Base Metals Index ETF

• Morningstar Rating: 3 stars
• Expense Ratio: 0.60%
• Morningstar Category: Natural Resources Equity

Tenth-worst was the C$287 million iShares S&P/TSX Global Base Metals Index ETF, which lost 4.09% in October. The passively managed iShares ETF underperformed the average 2.33% return on funds in the natural resources equity category for the month. Over the past year, the iShares S&P/TSX Global Base Metals Index ETF rose 30.52%, finishing the 12-month period in the 15th percentile within the natural resources equity category. It outperformed the category’s average one-year return of 12.68%.

The Neutral-rated iShares S&P/TSX Global Base Metals Index ETF was launched in April 2011.

What Are ETFs?

Exchange-traded funds are investments that trade throughout the day on stock exchanges, much like individual stocks. They differ from traditional mutual funds – known as open-end funds – which can only be bought or sold at a single price each day. Historically, ETFs have tracked indexes, but in recent years, more ETFs have been actively managed. ETFs cover a range of asset classes, including stocks, bonds, commodities, and most recently cryptocurrency.

ETFs: More Ideas to Consider

Investors who would like to find more ETF investment ideas can do the following:

• Use the ETF Screener tool to find the best ETFs according to your specific criteria. You can search for funds based on their fees, Morningstar Medalist Ratings, manager tenures, and more.

• Find ideas specific to your needs, or learn more about ETFs, on our ETF Insights page.

• Compare funds and ETFs side by side and easily follow their valuations, ratings, and fees.

This article was compiled by Bella Albrecht, edited by Lauren Solberg, and reviewed by Andrew Willis.

This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.

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