Investment Returns For 2025
After years of watching U.S. markets and mega-cap tech stocks soak up the spotlight, Canadian stocks finally had their moment in 2025 and made it count. The Canadian market went elbows up and steamrolled its global peers, with XIC posting a massive 31.6% return. That’s not just a good year. That’s a statement year.
Right behind Canada was international developed equities, which surprised just about everyone with a 25.37% gain (XEF). After a long stretch of underperformance, global stocks finally reminded investors why diversification exists in the first place. Valuations mattered again, leadership broadened, and patience was rewarded.
U.S. equities delivered solid but unspectacular results by recent standards. The S&P 500 gained 15.6% (XSP), while the tech-heavy NASDAQ climbed 18.41% (XQQ). Still strong returns, just without the runaway dominance we’d grown accustomed to earlier in the decade.
Emerging markets kept their quiet comeback alive with a 19.2% return (VEE). Nothing flashy, but a welcome change after years of false starts and frustration.
Then there was gold, which turned in one of the most jaw-dropping years in modern market history. Gold mining stocks exploded higher with a staggering 144.22% gain (XGD), easily the best-performing asset on the board in 2025. A mix of inflation anxiety, geopolitical uncertainty, and renewed interest in hard assets lit a fire under the sector.
Which brings us to Bitcoin, and an awkward comparison. After a huge run in 2024, Bitcoin stumbled badly in 2025, finishing the year down 10.6% in Canadian dollars. I thought Bitcoin was the new digital gold? Turns out when things got real, investors reached for the old-school version instead.
Bonds delivered another disappointing year in 2025. The long-awaited rate-cut bonanza never arrived, and renewed tariff threats reignited inflation fears just as markets were getting comfortable. The result was more sideways movement for fixed income, with Canadian aggregate bonds up only 2.4% (VAB) and short-term bonds eking out a 3.68% return (VSB).
Ben Felix has noted that bad stock returns tend to be followed by good stock returns…eventually, but bad bond returns tend to be followed by more bad bond returns. Since the bond market disaster of 2022, that observation has held up reasonably well. Bonds have recovered nominally, but after inflation, returns have likely been flat to negative in real terms over the past few years.
The takeaway from 2025 is the same lesson markets love to repeat. Leadership rotates. Yesterday’s losers become today’s winners. Shiny new narratives fade. Boring diversification works.
You know that I’m a big fan of asset allocation ETFs as a sensible way for many Canadians to invest. For around 19 basis points (0.19%) in fees, you get a globally diversified and automatically rebalancing portfolio that you can set and forget.
Indeed, if investing has largely been solved with low-cost index funds, then investing complexity has been solved with these asset allocation funds. They're a true one-stop shop for your investing needs.
Investing passively through index funds allows investors to capture the aforementioned returns, minus a very small fee. That’s a surefire way to beat 90+% of investors who invest more actively, incur higher fees and are prone to behavioural issues like performance chasing.
With that in mind, here are the 2025 investment returns for various asset allocation ETFs offered by Vanguard and iShares:
Vanguard Asset Allocation ETFs
Vanguard offers a suite of asset allocation ETFs ranging from 100% global equities (VEQT) to 20% equities and 80% bonds (VCIP). Vanguard recently reduced the management fee on these ETFs to just 0.17% – which should mean a total MER of 0.19% once other fund costs are factored in next year.
I’m including the calendar year returns of VEQT, VGRO, VBAL, and VCNS to show the results from their most popular asset allocation ETFs:
| ETF | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| VEQT (100/0) | 20.45% | 24.87% | 16.95% | -10.92% | 19.66% |
| VGRO (80/20) | 16.86% | 20.24% | 14.86% | -11.21% | 14.97% |
| VBAL (60/40) | 13.35% | 15.63% | 12.69% | -11.45% | 10.29% |
| VCNS (40/60) | 9.73% | 11.19% | 10.55% | -11.78% | 5.80% |
Interestingly, each step up the risk ladder earned you an extra return of about 3.5% last year, and about 4.5% in 2024. Even the traditionally conservative 40/60 portfolio posted near double-digit gains again thanks to strong stock performance in 2025.
iShares Asset Allocation ETFs
iShares offers a similar suite of asset allocation ETFs with ticker symbols of XEQT, XGRO, XBAL, and XCNS. iShares also quietly reduced its management fee by 0.01% so the total MER should match Vanguard's at 0.19% in 2026.
The other differences between iShares and Vanguard are slight – iShares’ asset allocation ETFs come with a bit more US and International equity, while Vanguard’s asset allocation ETFs have more Canadian and emerging market representation.
Here are the five-year returns for iShares’ asset allocation ETFs:
| ETF | 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|---|
| XEQT (100/0) | 20.45% | 24.67% | 17.05% | -10.93% | 19.57% |
| XGRO (80/20) | 16.96% | 20.46% | 14.92% | -11.00% | 15.17% |
| XBAL (60/40) | 13.33% | 16.12% | 12.78% | -11.08% | 11.06% |
| XCNS (40/60) | 10.25% | 11.99% | 10.56% | -11.19% | 6.57% |
You can see the returns are nearly identical across the board, with XEQT and VEQT actually posting the same returns in 2025. Wild.
Vanguard vs. iShares 3-5 Year Averages
Now that these asset allocation ETFs have been around for more than five years we can start to look at their three-and-five-year average returns for a better cumulative comparison.
After three calendar years of stellar returns, we may have forgotten exactly how bad returns were in 2022, especially for more conservative portfolios. That's why looking at average annual returns over multiple years can give us a more realistic look at a typical investor's experience (ideally we have data from 10+ years but here we are).
Vanguard asset allocation ETF 3-and-5-year averages:
| ETF | 1-year | 3-year | 5-year | Inception |
|---|---|---|---|---|
| VEQT (100/0) | 20.45% | 20.71% | 13.40% | 13.50% |
| VGRO (80/20) | 16.86% | 17.30% | 10.50% | 9.33% |
| VBAL (60/40) | 13.35% | 13.88% | 7.60% | 7.36% |
| VCNS (40/60) | 9.73% | 10.49% | 4.70% | 5.35% |
These five-year average annual returns are still well above the return assumptions I use in my financial planning assumptions for clients (6.10% for global equities, after fees).
You could say that we've pulled forward a few years worth of expected returns. That means we should probably lower our expectations for future returns so that the 10-year average will look more like the 6.10% assumption.
iShares' asset allocation ETF 3-and-5-year averages:
| ETF | 1-year | 3-year | 5-year | Inception |
|---|---|---|---|---|
| XEQT (100/0) | 20.45% | 20.68% | 13.36% | 13.69% |
| XGRO (80/20) | 16.96% | 17.43% | 10.66% | n/a |
| XBAL (60/40) | 13.33% | 14.07% | 7.95% | n/a |
| XCNS (40/60) | 10.25% | 10.93% | 5.26% | 6.20% |
*Note that XGRO and XBAL were different ETFs with different mandates prior to 2019 and so the “since inception” returns are not a true representation of the new asset allocation mix.
If you can’t decide between the two, hedge your bets by putting a Vanguard asset allocation ETF in one account type, and an iShares asset allocation ETF in another (or have one spouse pick Vanguard and one spouse pick iShares for a little friendly competition).
Whatever you do, don’t drive yourself crazy switching back and forth between the two chasing past performance.
My Investment Returns for 2025
I’ve been investing in Vanguard’s all-equity ETF (VEQT) since March 2019. It’s a perfect solution for someone like me who wants to buy the entire market for as cheap as possible and move on with my life.
I hold VEQT inside my RRSP, LIRA, TFSA, and corporate investing account. I did not make a contribution to my RRSP (or LIRA, of course) in 2025, but I did actively contribute to my TFSA and our corporate investing account.
As you know, the timing (and amount) of your own contributions will affect your own personal rate of return. So, while I expect my RRSP and LIRA to have a nearly identical return to VEQT’s 2025 calendar year return of 20.45%, the returns on the corporate account and TFSA may be different due to the timing of contributions. Let’s check it out:
- Corporate = 22.13%
- RRSP = 20.45%
- LIRA = 20.45%
- TFSA = 20.11%
Indeed, the corporate account benefited from significant contributions early in the year, while I didn't start contributing more aggressively to my TFSA until the second half of the year.
I switched up the kids' RESP account at the beginning of 2024 to be more conservative as they enter their age 15 and 12 years. I added short-term bonds and changed the overall mix to about 35% equities and 65% bonds.
We contributed $5,000 to the account in January to max-out the CESG for both children.
- RESP = 6.31%
While I am kicking myself for missing out on 15-20% gains had we stayed more aggressive with our equity exposure, the reality is we can't take the chance that markets tank badly before we need these funds for post-secondary expenses and take a long time to recover. C'est la vie – it's why I say the RESP is the most difficult account to manage.
Final Thoughts on 2025 Investment Returns
Most Canadians still invest in actively managed mutual funds through their bank or another investment firm. These funds have a huge hurdle to overcome – their high fees – to match (let alone beat) a passively managed portfolio of index funds.
Your job this month is to pull up your investment statement and look at last year’s returns, along with the returns over the past five years, and see if your portfolio is keeping pace with the returns of an asset allocation ETF.
Make sure you’re comparing apples-to-apples, that is you’re matching up your portfolio’s asset allocation with the returns from a similar asset allocation ETF (i.e. 60/40 to 60/40) to get the full story. No sense comparing your 60/40 portfolio to the NASDAQ 100. It likely wouldn’t be appropriate to invest in 100% tech stocks.
If you’ve reviewed your investment statement and find your returns aren’t measuring up, it might be worth switching to a self-directed investing platform and buying a risk appropriate asset allocation ETF.
I truly believe that pairing low-cost index investing with on-demand financial planning advice at key life stages can lead to wildly successful outcomes for many Canadians. Put that on your New Year’s resolution list for 2026.
If one subscribes to the “Random Walk” model then last year’s returns tell us nothing about future returns. You just start from scratch, blank sheet. Sooner or later a bad year/bad years will come but we don’t know when and we haven’t “borrowed” from future returns by having good returns over the last 3 years.
Malkiel’s “random walk” applies much more to individual stocks than to the broad market. Stock-specific returns are largely unpredictable, which is why stock picking is such a tough game.
At the market level, it’s different. While short-term returns are still noisy, valuations matter. When strong past returns leave prices high relative to earnings, future expected returns should be lower. Not negative, just lower.
That’s why most 10-year capital market forecasts have been pretty pessimistic for the last few years. We can’t time the bad years, but starting valuations do influence long-run expectations for the market as a whole.
Its a great book but its not Malkiel’s theory. The basic theory goes back to 1900 (forgot author). It was formalized by Fama in 1965. https://www.chicagobooth.edu/~/media/34F68FFD9CC04EF1A76901F6C61C0A76.PDF. And it deals specifically with average market returns and the efficient market theiry.
Fama’s core position is that predicting future returns from past returns is intrinsically difficult because markets incorporate information quickly. While Fama is somewhat sympathetic to claims that dividend yields and interest rates taken together might give some indication of future returns, he is extremely sceptical that this can be used as predictive tool for any kind of “mean reversion” argument.
Recently Robin Greenwood and Andrei Shleifer provided further empirical basis, which essentially confirmed Fama’s theory that sharp increases in prices do not lead to reductions in future returns. https://www.sciencedirect.com/science/article/abs/pii/S0304405X1830254X
It is true that the likes of Robert Shiller and hundreds of others regularly claim ability to predict the future but I found their forecasts to be very consistent in being worse than random. Like this: https://www.cnbc.com/2018/04/14/solid-earnings-may-not-prevent-another-correction-robert-shiller.html. Not sure why they appear to be worse than a monkey randomly throwing darts… Someone should write a paper on that.
The 60/40 portfolio is a loosing proposition. I got caught in that lingo 30 years ago and diversified my portfolio. – No more mistakes for me. I was in charge of HR once for a company and when the worker reached their first year of employment- they would come see me to pick out what they wanted to invest in. I gave them a questionarie to determine their risk level. That was that most stupid form there was- sure no one wants to lose money- but on the flip side they want to make money. It was a strange job- I would advice one person one set of mutual funds and another person on a more aggressive set of mutual funds. _ As I got burned on 60/40 and bonds – my strangely leaned to the USA and Cdn. Resources. I tried to lure the employee to be aggressive in their portfolio picks. How ever I had to watch myself so I would not get fired.
Bottom line- the advisor you pick can make you rich or just hanging.
The death of the 60/40 portfolio has been greatly exaggerated over the decades, and yet it has still delivered strong returns.
It’s a perfectly sensible asset mix for a more conservative investor.
Hi Rob, you mentioned that you use 6.1% as a guide for returns on some of your investments, what do use for an inflation factor and is that return of 6.1% before or after inflation?
Thanks
Hi Ken, I assume inflation of 2.1% (that’s the number FP Canada uses in its projection and assumption guidelines) and so the 6.1% global equity returns (net of fees) is before inflation – meaning a 4% real rate of return.
Historically, stocks have pretty reliably delivered a 5% real rate of return, so I’m being a bit conservative in my long-term planning assumptions given today’s higher stock prices.
Huge fan of this blog. I am 5 years out from retirement. I have been 100% invested in veqt but have just rebalanced my portfolio to include 20% XBB. Will likely shift another 10% into bonds in next few years. Allows me to sleep better knowing I may not have to sell veqt when market is down.
Hi Jeff, thanks for the kind words.
One thing to keep in mind for your bonds is duration. In retirement, you ideally want the average duration of your safer assets to line up with when you’ll actually need to spend the money.
XBB has a duration north of seven years, which means its price can still swing around quite a bit when interest rates move. That’s fine for long-term money, but it makes it a poor fit for a retirement “cash wedge” that’s meant to cover near-term spending.
If the goal of moving away from 100% VEQT is to reduce stress and fund the next few years of withdrawals, a long-duration bond fund doesn’t really solve that problem.
Short-term bonds or high-interest savings ETFs are a much better match for money you expect to spend soon.
I started investing in index funds before these asset allocation ETFs were available. Index funds were simple in principle, sell what is high and buy what is low. However the transaction fees often prevented me from rebalancing properly unless things were really out of balance, instead only adding to the fund that was lowest and basically letting the rest ride. As the accounts grew larger, rebalancing with inflows became more ineffective.
2025 was the year I finally pulled the trigger and switched to an asset allocation ETF. Buying my house is no longer my largest transaction, VBAL now holds that distinction.
6 weeks later, TD introduced commission free ETF trades. So ¯\_(ツ)_/¯.
I think you’ll still be happy with the switch to a one-ticket solution. It’s less about the $10 fee(s) and more about an automatic rebalancing mechanism so we don’t even have to think about it.
And with the MER coming down to 0.19% on Vanguard’s asset allocation ETFs can you even make a compelling case for holding the individual ETFs to save on fees?
I agree the automatic rebalancing is a great feature of these funds, and one of the reasons I made the switch.
The only account I still have individual index funds in is the family RESP, since I am using the e-series funds. Now that TD has commission free ETFs, I might follow your lead and rename my children VCNS and XBAL.
Agreed re the shrinking fee difference. The other argument for holding a mix of individual ETFs is that one can take advantage of the preferential tax treatments of certain stock classes (Canadian dividends, US ETF in USD, etc.) in different account types. That case still fully applies. My vague recollection is it can come to about 0.2-0.3% in savings.
Hi Peta, that is true *if* implemented properly – and the trade-off is increased complexity with holding foreign currency, Norbert’s Gambit, some type of rebalancing system. My experience is that the juice is not worth the squeeze, but your mileage may vary.
Hi Robb – very true, no argument here. Personally, I went the more complex route because I was being paid in US$, so buying at least some ETFs directly on US exchanges was the most straightforward option. But the asset mix is definitely harder to manage now, when I’m taking cash out of the accounts in retirement…
A very solid write-up. I love how you capture the “disappointment” or sentiment around the S&P500 returning “only” 16%.
Thanks Mark! I’d imagine the headlines would be different if Canadian stocks were up 16% and US stocks were flat at 0%.
It’s an important point, though. Often I hear from clients and readers who claim to be happy with their investment performance at, say, 11%, when the broad market delivered 13.5%. Benchmarking matters.
Benchmarking, and asset allocation!
VBAL returns of 13% can be feel disappointing, but it’s much better than the 11% or so that a balanced mutual fund with the big banks would return for the same level of risk.
No matter what asset allocation ETF a person selects, it feels good knowing one isn’t giving up 2% or so to the big banks.
Blackrock and Vanguard are 2 of the worst companies to invest with from an ethical standpoint. They are literally part of the WEF plan to take over the world. Are there other companies that do this well that are not objectively evil?
Time to take a break from the internet.
Why does anyone even want bonds in their portfolio?
A Bond is a mortgage on a company/Country/Province.
People flock to bonds – only because of their advisor talking them into it- I think they get more commissions selling bonds to innocent people.
My sister fell for this bond portfolio purchase- She paid a very big price in fees and a very big price in poor performance.
What do you suggest then for a couple approaching 80?
What do you suggest then for a couple approaching 80?
Approaching 80- i just turned 70 so i am in this category.
My portfolio consists of Canadian paying dividend stocks like Freehold Royalites- 7.8% Dividend. -Better than Bonds- and get a Dividend Tax Credit at same time- WOW
– Canoe income fund 7.8% Dividend. – Keyera, BNS and Barrick Gold.
The combination of above in my TFSA and Margin Trading account- Generates $35,000.00 per year dividends. The Freehold Royalties and Canoe Income Fund pay close to 8.0% dividend on a monthly bases.
I also have Mackenzie Precious Metals Fund MFC(8535) which represents 25 % of my holdings. I also have 50% in BNS Nasdaq Index Fund – Low MER- great value.
No Bonds- just some good old fashioned Dividend paying stocks- you just keep it simple and avoid all the ETF’s luring you to buy them. Just a waste of money- and why buy something you do not understand. Keep the OLD Fashioned WAY of Investing – works all the time.