What are we looking for?
Canadian equity funds that have outperformed in an already stellar year
The screen
The Canadian equity market has quietly but meaningfully outpaced the U.S. year-to-date through the end of November, a reversal of the pattern investors have grown used to in recent years. Strength has come from familiar places: financials and materials, two sectors that together make up a substantial portion of the S&P/TSX Composite Index and have contributed the lion’s share of market gains in 2025.
Materials – particularly gold and base-metals producers – have benefited from firm commodity prices, while the large Canadian banks and insurers have rebounded alongside improving credit conditions and stabilizing rate expectations.
In short, 2025’s rally is less about a broad economic rebound and more about a sector-driven rotation, where materials and financials have become the engines of outperformance.
With the benchmark being pulled upward by a couple of heavyweight sectors, the natural next question for investors is which Canadian equity funds were best positioned to harness this leadership.
To help answer this question, I used Morningstar Direct to screen for mutual fund ETFs in the top quartile of the Canadian equity category (which includes more than 230 unique funds) on a year-to-date basis ending Dec. 9, 2025.
The screen was simple, but the intent is to showcase commonalities among the top performers of the year across things such as the Morningstar rating for funds (or “star rating”), which encapsulates a longer performance history on an after-fee, risk-adjusted basis, exposures across the 11 economic sectors and whether the funds were actively or passively managed. Only the oldest share class of each unique mutual fund or ETF was considered in today’s screen.
What we found
The table accompanying this article is sorted by year-to-date performance and shows the mutual funds and ETFs that met the above criteria alongside their tickers, trailing returns, inception dates, sector exposures and MERs.
One will quickly notice that top quartile performers spanned both active, passive and strategic beta approaches (which follow a set of predetermined rules for a purposeful exposure to an investment factor such as value or growth). Additionally, many funds that did well this year boast a longer-dated track record of outperforming peers, as denoted by the star rating.
This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own independent research before buying or selling any of the investments listed.
Ian Tam, CFA, is director of investment research for Morningstar Canada.