Where the ETF Wrapper Is Winning in Canada: 2025 Mutual Fund vs. ETF Divergence

ETF adoption in Canada doesn’t grab headlines the way it does in the U.S., where ETFs have pulled in more than $1 trillion of inflows for three straight years, but the trend north of the border is moving in the same direction.

The shift has been more deliberate and increasingly powered by active ETFs, which represented 55% of all ETFs listed in Canada as of February 28, 2025, according to the TrackInsight Global ETF Survey—the highest share among major ETF markets.

The clearest areas of divergence mirror the U.S.: the foundational building blocks of portfolio construction. Canadian Equity, U.S. Equity, International Equity, and Global Equity all demonstrate meaningful ETF advantages over mutual funds, indicating where advisors are retooling their core sleeves.

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Canada’s fixed-income landscape has also evolved to meet the moment of wrapper migration. Canadian Fixed Income, Global Fixed Income, and Canadian Corporate Fixed Income ETFs have become the preferred tools for navigating rate volatility and enhancing income potential. 

With this backdrop, we compiled a definitive look at where the ETF wrapper has been most preferred over its mutual fund counterparts in Canada.

ETF vs Mutual Fund Canada: The Strongest Wrapper Advantages in 2025

Ranking Canadian fund categories by their ETF–mutual fund flow differential reveals a clear wrapper hierarchy. U.S. Equity ($20.1B), International Equity ($15.2B), Canadian Equity ($13.9B), and Global Equity ($11.9B) dominate the top of the list, collectively representing most of Canada’s wrapper migration in 2025.

Similar to the US, each category is touched frequently during client onboarding, rebalances, and model updates, which naturally accelerates ETF adoption. 

As such, these four categories alone represent the majority of Canada’s wrapper migration in 2025, underscoring that advisors are transitioning the core building blocks of multi-asset portfolios the most aggressively. 

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Beyond these top four, the next cluster of ETF-favored categories includes Canadian Dividend & Income Equity ($4.9B), Canadian Fixed Income ($4.8B), and Sector Equity ($2.9B), signaling that advisors are increasingly comfortable using ETFs for income, balanced mandates, reflecting Canada’s unique leadership in active ETFs.

ETF vs Mutual Fund Canada: Equity Categories Leading the Shift

Equities are the clearest battleground for Canada’s wrapper divergence. Canadian Equity, U.S. Equity, International Equity, and Global Equity all show multi-billion-dollar ETF advantages, reinforcing ETFs as the preferred tool for core portfolio construction.

Advisors consistently prioritize the wrappers that offer lower costs, cleaner execution, and greater transparency, especially in frequently rebalanced sleeves.

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Momentum has also extended beyond broad beta. Categories such as Canadian Dividend & Income Equity, Sector Equity, Canadian Focused Equity, and U.S. Small/Mid Cap Equity highlight the growing appeal of active ETFs and more specialized exposures, strengthening equity’s position as the leading arena for Canada’s wrapper migration.

Fixed Income: A More Nuanced Wrapper Migration in Canada

Fixed income presents a more balanced picture, with both ETF strength and meaningful mutual fund persistence across the landscape. The strongest ETF advantages appear in Canadian Fixed Income ($4.8B), Global Fixed Income ($2.2B), Canadian Corporate FI ($1.7B), and Canadian Short-Term FI ($1.4B). 

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At the same time, several categories still favor mutual funds, often by wide margins. 

Multi-Sector FI (–$6.3B), Global Corporate FI (–$4.2B), and Canadian Long-Term FI (–$2.8B) highlight where incumbent fund lineups and embedded distribution create structural inertia. This mix reveals a fixed-income market where ETF adoption is growing steadily, but not uniformly, driven by the specific needs of advisors rather than a wholesale replacement of mutual fund structures.

Canada’s wrapper migration may be slower and more uneven than the U.S., but the flow data makes one trend undeniable: advisors are steadily choosing ETFs where transparency, precision, and implementation efficiency matter most. 

As Canadian practices continue to modernize their portfolio construction workflows, ETF adoption is likely to expand naturally into more categories over time.

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