Younger investors drive ETF growth, but many remain unclear on cross-border tax rules
Exchange-traded funds are gaining ground among Canadian investors, particularly younger cohorts, but a widespread lack of understanding around key tax differences is raising concerns, according to new research.
The national survey, conducted by SAGO and commissioned by CETFA, shows that 21% of Canadians now hold ETFs, with ownership skewing toward younger age groups. Among those aged 35 to 54, participation climbs to 25%, underscoring the role of younger investors in accelerating ETF adoption.
Despite this momentum, the findings point to a significant gap in investor knowledge. Nearly two thirds of Canadians (65%) are unaware that Canadian-listed and US-listed ETFs are subject to different tax treatments. Even among those already invested in ETFs, confusion remains: 36% of ETF holders and 45% of investors with US-listed ETF exposure say they do not understand these distinctions.
“ETFs are becoming an increasingly important tool for Canadian investors, particularly younger Canadians who are building their long-term financial plans,” said Eli Yufest, Executive Director of the Canadian ETF Association. “But the data also shows that many investors may not fully understand the implications of investing in different markets. Improving investor awareness around tax treatment and market structure is essential to ensuring Canadians can make fully informed investment decisions.”
Cross-border investing is also becoming more common. The survey found that 21% of Canadians own both domestic and US-listed ETFs, highlighting the ease with which investors are allocating capital beyond Canada’s borders.
Regional differences emerged as well. Investors in Western Canada are more likely to hold both Canadian and US ETFs, with participation rates reaching 24% in British Columbia and 25% in Alberta, compared with 19% in Ontario and 16% in Atlantic Canada. Higher levels of education also correlate with ETF ownership, with 28% of university-educated respondents reporting investments in both markets.
The survey also examined how global events are shaping investor behavior. While half of Canadians said geopolitical tensions in the Middle East have not altered their investment plans, younger investors appear more reactive. Among those aged 18 to 34, 13% reported already making portfolio changes, and 17% said they intend to review their investments, compared with just 4% of Canadians aged 55 and older.
ETF investors, in particular, appear more engaged with market developments. About 15% indicated they plan to adjust their strategies in response to global conditions, suggesting a more active approach among ETF users.
At the same time, ETFs are increasingly viewed as a tool for navigating volatility. The data shows that 10% of Canadians are more inclined to increase ETF holdings during turbulent periods, while nearly one-third would stay invested without making changes. Among existing ETF investors, confidence is stronger, with 23% saying they are more likely to buy during volatile markets.
“These results support what we’ve seen globally — ETFs are increasingly viewed as resilient investment vehicles that investors turn to during uncertain times,” added Yufest.
CETFA said the findings reinforce the need for continued investor education as ETF adoption expands, particularly around tax implications and market structure, to help Canadians make more informed decisions.
