For Canadian investors looking to build a solid core in their Tax-Free Savings Account (TFSA), selecting exchange-traded funds (ETFs) that offer diversified exposure, low costs, and strong market representation can be a smart strategy. ETFs make it easy to own a basket of stocks across sectors or themes without the risk of picking individual companies — ideal for long-term, buy-and-hold investors.

One ETF that many investors consider a cornerstone holding is Vanguard FTSE Canada All Cap Index ETF (VCN). This fund gives broad exposure to the Canadian equity market, including large, mid and small-cap companies, spanning key sectors like financials, energy, and materials. Depending on economic conditions, having a base in home-country equities can provide stability and dividend income, which are both useful inside a TFSA.

For broader diversification beyond Canada, iShares Core MSCI All Country World ex Canada Index ETF (XAW) is a popular choice. XAW holds a wide array of global equities (U.S., Europe, Asia and emerging markets), giving investors participation in large multinational companies without overconcentration in any single country. By adding this ETF to a TFSA, you can balance domestic exposure with international growth opportunities, which can help smooth returns over varied market cycles.

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Investors focused on income and dividend growth may also find value in BMO Canadian Dividend ETF (ZDV). This fund targets Canadian companies with a history of paying dividends, making it attractive for income-oriented portfolios. In a TFSA, where dividend income grows tax-free, a dividend ETF can boost long-term total returns while lowering the impact of market volatility.

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Together, these three ETFs — VCN, XAW and ZDV — provide a diversified mix of home-country equities, global growth, and steady income. Holding them inside a TFSA allows your investments to compound without tax drag, making this combination worth considering for investors with a long investment horizon. Whether you’re starting your TFSA or adding to it, focusing on diversified, low-cost funds can help you build a resilient portfolio that aligns with your financial goals.