Value vs Growth ETFs Canada 2026: Which Style Fits a Market Near Record Highs?

Value vs growth ETFs in Canada is a classic investing debate that matters more than usual in 2026. Both major markets are sitting close to record highs after strong runs: the S&P/TSX Composite was up about 12% for the year as of early October, and the S&P 500 was up about 12.8%. When prices are high, investors start asking whether to lean toward cheaper “value” stocks or keep riding fast-growing companies. This guide explains what each style really holds, how they have behaved, which Canadian-listed ETFs offer each style, and how to blend them without trying to time the market.

What Is the Difference Between Value and Growth ETFs?

Value and growth are two ways of sorting stocks based on price and expected earnings.

Value stocks

Value stocks trade at a lower price compared with their earnings, book value, or cash flow. They are often mature, profitable companies in sectors like banking, insurance, energy, telecom, and utilities. Many pay higher dividends. Investors buy them because they look cheap, and history shows cheap stocks have sometimes outperformed over long periods, though with long stretches of underperformance.

Growth stocks

Growth stocks are companies expected to grow sales and earnings faster than average. They often trade at high prices compared with today’s earnings, because investors are paying for future growth. Technology, communication services, and some health care and consumer companies dominate this group. Growth stocks tend to pay low or no dividends and reinvest profits instead.

How the ETFs are built

Value and growth ETFs usually track an index that ranks stocks by measures such as price-to-earnings, price-to-book, or earnings growth. Some use a strict screen, while others weight stocks by how strongly they show the factor. Two value ETFs can hold very different stocks, so always read the fund’s methodology and top holdings.

Canada is already a value market

Here is a key point for Canadians: the TSX itself leans heavily toward value. Financials, energy, and materials make up a large share of the index, while technology is small compared with the US. If you own a Canadian index ETF, you already have a value tilt. The US market, by contrast, is dominated by a handful of large growth companies.

How Have Value and Growth Performed Recently?

Style leadership changes over time, often for years at a stretch.

The long growth run

For most of the decade after the 2008 financial crisis, growth stocks beat value by a wide margin. Low interest rates made future earnings more valuable, and large US technology firms grew quickly. This pattern returned in 2023 and 2024, when a small group of large technology and AI-related stocks drove much of the S&P 500’s gains.

The 2022 and 2025-26 shifts

Value had its turn when rates rose sharply in 2022, as energy and financial stocks held up better than technology. More recently, TD Economics noted that the TSX outperformed the S&P 500 by roughly 17 percentage points from the end of February 2025, its longest run of relative strength in nearly two decades, driven by financials, materials, and energy. That is a value-style win for Canadian investors.

2026 so far

As of early October 2026, both markets have done well. The TSX was up about 12% year to date as of October 5, after a roughly 2.9% dip in September. The S&P 500 was up about 12.8% and the tech-heavy Nasdaq about 17% through October 2. That means growth-heavy US tech has caught up after Canada led earlier in the year. Neither style has a clear lock on 2026.

Why interest rates matter for style

Interest rates are one of the biggest drivers of which style leads. Growth stocks get much of their value from profits expected far in the future. When rates rise, those future profits are worth less today, so growth stocks often fall harder. When rates fall, growth tends to benefit. Value stocks, with more of their profits today, are less sensitive. Banks can even earn more when rates are higher.

In October 2026, the Bank of Canada’s policy rate is 2.25%, unchanged for about a year, while the 10-year US Treasury yield is above 5%, much higher than Canada’s 10-year yield of about 3.9%. Those rate gaps can shift money between markets and styles quickly, which is another reason not to make an all-in bet on one style.

What this means for you

Recent performance does not predict future results. Investors who chased growth after its long run, or value after 2022, often bought near a peak. The lesson is to hold both, not to guess which will lead next.

Which Canadian-Listed Value and Growth ETFs Are Available?

Canadians can find style ETFs for Canadian, US, and global stocks. Here are some value examples with published fees as of 2026, and the types of growth exposure available.

Fees and holdings change. Check each fund’s fact sheet before buying.

Growth options

Canadian-listed growth exposure mostly comes through US-focused funds. Nasdaq-100 ETFs offered by several Canadian providers are a common proxy for growth, because the index is dominated by large technology companies. There are also US and global growth index ETFs and thematic funds focused on areas like technology or AI. Keep in mind that a Nasdaq-100 fund is not a pure growth index; it simply holds the 100 largest non-financial Nasdaq companies, which happen to be growth-heavy.

Watch for concentration

Growth funds can be very concentrated. A few large companies may make up a big share of the fund. Value funds can also be concentrated in banks and energy, especially in Canada. Look at the top 10 holdings and sector weights to see what you are really buying.

Currency and account placement

US growth and value ETFs expose you to the US dollar unless they are hedged. For US dividend-paying holdings, an RRSP is often the most tax-efficient home for US-listed funds because of the tax treaty, while Canadian-listed funds holding US stocks lose some withholding tax in any account. Canadian value ETFs with higher dividends can work well in a TFSA or in a taxable account, where eligible Canadian dividends get the dividend tax credit.

How Should You Blend Value and Growth?

For most investors, the simplest answer is to own the whole market and let both styles work.

Start with a broad core

A broad index ETF or an all-in-one asset allocation ETF already holds both value and growth stocks, weighted by market size. This is the lowest-maintenance approach and avoids style bets entirely. Our guide on diversification for Canadian investors explains why owning a wide mix lowers your risk.

Add a modest tilt if you want one

If you believe in a style, add a tilt of about 10% to 30% of your equities, not your whole portfolio. For example, with $100,000 in stocks, you might keep $80,000 in broad index ETFs and add $20,000 to a value or growth ETF. This lets you express a view without betting everything on it.

Use style to balance home bias

Because the TSX already leans toward value, a Canadian who holds mostly Canadian stocks is already making a value bet. Adding US or global exposure, which leans toward growth, can balance that tilt. In the other direction, a US-heavy portfolio is growth-heavy, and some Canadian or global value exposure can balance it.

A sample three-fund mix

Here is one simple way a Canadian investor might combine styles, using $100,000 of stocks as an example. Keep $30,000 in a broad Canadian index ETF, which already leans value. Put $50,000 in a broad US or global index ETF, which leans growth. Add $20,000 as a tilt toward whichever style you want more of. This is an illustration, not a recommendation; your mix should reflect your goals and risk tolerance.

Rebalance on a schedule

Set a target mix and rebalance once a year, or when a position drifts more than five percentage points. This forces you to trim whichever style has run up and add to the one that has lagged. A rules-based plan is easier to follow when markets swing, as described in our systematic investing framework.

Rebalancing inside a TFSA or RRSP has no tax cost. In a taxable account, try to rebalance with new contributions or dividends first, so you avoid selling winners and triggering capital gains you do not need to realize yet.

Mind the costs

Style ETFs usually charge more than broad market ETFs. Paying 0.30% to 0.40% instead of under 0.10% adds up over decades. Make sure a tilt is worth the extra fee, and avoid holding several overlapping style funds.

Key Takeaways

• Value ETFs hold cheaper, mature companies; growth ETFs hold fast-growing firms, mostly in technology.
• In 2026, the TSX was up about 12% and the S&P 500 about 12.8% year to date by early October, so neither style has a clear lead this year.
• The TSX already leans value; adding US or global equity balances that tilt for Canadian investors.
• Canadian value ETFs such as ZVC (about 0.40%) and FCCV (about 0.39%) cost more than broad index ETFs, so keep any tilt purposeful.
• Limit a style tilt to about 10% to 30% of equities and rebalance once a year.
• Do not chase last year’s winner; style leadership often flips without warning.

Frequently Asked Questions

Is value or growth better for Canadian investors in 2026?

Neither is clearly better. Canada’s value-heavy TSX led from early 2025, but US growth stocks caught up in 2026. A balanced mix of both is the most reliable approach for most investors.

Does the TSX count as a value index?

It is not officially a value index, but it leans that way. The TSX has large weights in banks, energy, and materials, and a small weight in technology compared with the US market.

Should I hold value ETFs in a TFSA or RRSP?

Canadian value ETFs with high dividends work well in a TFSA or taxable account, where eligible dividends are taxed favourably. US-focused funds are often better in an RRSP to reduce US withholding tax. Your best choice depends on your overall plan.

How much should I tilt toward value or growth?

If you tilt at all, keep it modest, such as 10% to 30% of your stock holdings. Most of your money can stay in broad market ETFs that already hold both styles.

Conclusion

The value vs growth ETFs debate in Canada has no permanent winner. With both the TSX and S&P 500 near record highs in 2026, the smarter move is to own both styles through a broad core and add a small tilt only if it fits your plan. Remember that Canadian stocks already lean value, so global exposure helps balance your mix. Keep costs low, rebalance once a year, and stay patient through style swings. For more ideas, read our guide to where to invest in uncertain 2026 markets, and review the Financial Consumer Agency of Canada’s investing guidance.