ETF Comparison

XFN vs ZEB

Which is Better for Canadian Investors?

Quick Verdict

Choose ZEB. It charges less than half the MER of XFN and gives you pure, equally-weighted exposure to Canada's Big 6 banks — the backbone of the Canadian financial system. XFN includes insurance companies and asset managers, but its 0.61% fee is prohibitively expensive for a single-sector bet.

Side-by-Side Comparison

Metric	XFN	ZEB
Management Expense Ratio (MER)	0.61%	0.28%
Number of Holdings	~27	6
Weighting Method	Market-cap (capped at 25%)	Equal weight
Sector Focus	All Canadian Financials	Big 6 Banks Only
Includes Insurance	Yes (Manulife, Sun Life)	No
Includes Asset Managers	Yes (Brookfield)	No
Distribution Frequency	Monthly	Monthly
Approximate Yield	~3.5%	~4.0%
Listing Exchange	TSX	TSX
Eligible Accounts	TFSA, RRSP, FHSA, RESP	TFSA, RRSP, FHSA, RESP

Key Differences

Cost Comparison

XFN's 0.61% MER is more than double ZEB's 0.28%. For a concentrated sector bet on Canadian financials, paying 0.61% is excessive. ZEB delivers the core thesis — owning Canada's most important banks — at a fraction of the cost.

Holdings Scope

XFN holds approximately 27 financial companies, including insurance firms (Manulife, Sun Life, Intact Financial) and asset managers (Brookfield). ZEB holds only Canada's Big 6 banks: RBC, TD, BMO, Scotiabank, CIBC, and National Bank. ZEB is a purer bank play.

Equal Weight Advantage

ZEB equally weights all 6 banks, preventing over-concentration in RBC and TD (which dominate market-cap-weighted indexes). This equal weighting means smaller banks like National Bank and CIBC get equal representation, potentially capturing more upside from their lower valuations.

Dividend Yield

ZEB typically delivers a higher dividend yield (~4.0%) than XFN (~3.5%) because banks are the highest-yielding segment of the Canadian financial sector. Insurance companies and asset managers, which XFN includes, generally pay lower dividends.

Best For

Beginners

ZEB is simpler and cheaper. If you want to invest in Canadian banks, ZEB is the most straightforward way to own all six equally without overthinking portfolio construction.

Long-Term TFSA & RRSP Investors

ZEB wins on cost and dividend yield. Canadian banks have raised dividends for decades, and ZEB captures this income growth at a low MER inside your tax-sheltered accounts.

Dividend-Focused Investors

ZEB is the superior income vehicle. Higher yield, lower fee, and monthly distributions make it a core holding for Canadian dividend portfolios. The Big 6 banks have proven track records of consistent payout growth.

Diversified Sector Investors

XFN might appeal if you want exposure to Canadian insurance and wealth management companies alongside banks. However, you are paying a steep premium for that broader exposure. Consider buying ZEB plus individual insurance stocks for less cost.

Final Recommendation

Choose XFNif…

you specifically want exposure to the entire Canadian financial sector, including insurance companies (Manulife, Sun Life) and asset managers (Brookfield), and do not mind paying a higher MER for that breadth.

Choose ZEBif…

you want pure, equally-weighted exposure to Canada's Big 6 banks at a low fee, with higher dividend yield and monthly income. ZEB is the better choice for the vast majority of investors.

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XFN

iShares S&P/TSX Capped Financials Index ETF