ETFs that deliver pleasant surprises

Consistent performers for cash flow or growth

Exchange traded funds (ETFs) normally don’t surprise investors. Most are quite transparent and closely track the performance of the indexes or sectors on which they’re based.

But there are the occasional outliers – funds that perform much better or worse than people expected. I recently searched the recommended list of my Income Investor newsletter to see if we had some of the outliers listed and found several pleasant surprises.

For example, real estate has been considered a dry hole in recent years. The S&P/TSX REIT sub-index has finally come alive in 2026, with a year-to-date gain of about 11%. But we have two REIT funds on our list that are doing better than that. Here’s a look.

Real estate REITs, domestic and foreign

iShares S&P/TSX Capped REIT Index ETF (TSX: XRE) aims to provide long-term capital growth by replicating the performance of the S&P/TSX Capped REIT Index, net of expenses. The fund invests in all classes of REITs, including residential, industrial, retail, and office.

The REIT has not produced anything in the way of capital gains since it was recommended in our newsletter several years ago, which says a lot about the overall state of Canada’s real estate market. But it has delivered steady cash flow to investors and has outperformed the overall sector year-to-date with a gain of 13.35%.

The fund was launched in October 2002 and has about $1.2 billion in assets under management (AUM). It has a management expense ratio of 0.6%.

It has 14 holdings, the largest of which is RioCan REIT, which accounts for 13.14% of total assets. Retail REITs form about 51% of the portfolio while exposure to office REITs, which were hit hard during the pandemic, is very low at 3.33%.

The fund pays monthly distributions of $0.057, or $0.684 annually. The trailing yield at the current price is 4%, but remember it is not guaranteed. The company can cut or raise the distribution at any time.

iShares Global REIT ETF (NYSE: REET). If you prefer to invest in international real estate, this should be your choice, although it is heavily weighted to the U.S. (73% of assets). Other countries in the mix are Japan, Australia, Singapore, the U.K., and France. Canada comprises only 2% of the portfolio. All told, the fund holds 318 positions.

The fund was launched in July 2014 and has more than $5 billion in assets under management. The MER is low, at 0.14%.

Over the long term, REET has been an underperformer, with an average annual compound rate of return since inception of just 4.83%. But it has looked much better recently. It’s ahead 15.7% this year (as of June 30), and Morningstar gives it a four-star rating (out of five).

Distributions are quarterly and vary considerably. The trailing 12-month yield is 3.4%.

RBC bank ETF outperforms

Sometimes surprises come from funds few people are familiar with. Here is an example.

RBC Canadian Bank Yield Index ETF (TSX: RBNK). You may wonder how an ETF that invests only in six banks can outperform the Financials sub-index and funds like the BMO Equal Weight Banks Index ETF (TSX: ZEB). The answer is asset mix.

Whereas the BMO fund equally divides its holdings among the Big Six banks, this one makes bets on which will perform best. At present, Bank of Montreal is the top position at 26.1% followed closely by Scotiabank at 25.1%. They’ve both done well, with BMO ahead about 40% year to date while Scotiabank has added about 21%.

Ironically, fund sponsor Royal Bank is close to the bottom of the list with a weighting of just 8.7%. It has actually performed better than the low weighting would suggest, with a year-to-date gain of about 28%.

The fund was launched in October 2017 and has assets under management of $522 million. The MER is 0.32%.

Distributions are paid monthly, currently at a rate of $0.115 per unit ($1.38 a year). If that payout rate were to stay the same, the yield for the next year would be 3%, but based on history it will probably change several times during that period.

iShares global infrastructure ETF a solid growth performer

Finally, let’s consider an ETF in a category that’s doing reasonably well this year – but this fund is doing better than most. It’s the iShares Global Infrastructure Index ETF (TSX: CIF), and it’s ahead about 29% year-to-date.

Infrastructure can mean all kinds of things including highways, railroads, airports, dams, transmission lines, ports, pipelines – essentially the basic framework of modern society.

That’s what you’ll find in this fund, and you’ll see by the track record that it’s a good place to put some of your cash.

This ETF tracks the performance of the Manulife Investment Management Global Infrastructure Index, net of expenses. It theoretically targets infrastructure companies from around the world but in fact most of its assets are in the U.S. and Canada. The MER is 0.72%.

It was started in 2008 and has assets under management of about $1.6 billion.

This ETF has been a solid performer for a long time. The average annual compound rate of return since inception is an impressive 10.39% (to June 30). Gains over the past five years have been in double-digit territory except for 2022 when the fund was ahead only 6.71%. Even that beat all the major indexes as the entire stock market was rocked by rising interest rates that year.

Top holdings include Edison International (5.16%), ATCO (an Alberta-based utility company, with a 5.09% weight), Targa Resources (4.25%), and Caterpillar (4.12%).

About 44% of the holdings are U.S.-based companies, with 34% in Canada. Other countries in the portfolio include Brazil, Chile, the U.K., Mexico, South Korea, and Norway.

Distributions are paid quarterly and can vary significantly. If you need steady and dependable cash flow, this is not your fund. But if you’re looking for growth, this ETF has proven it can deliver above-average results in both good times and bad.

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2026 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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