Best RESP ETFs for Kids: Top Picks for Every Age [2023 Guide] (2026)

Building a nest egg for your child's education is a wise investment, especially with rising tuition fees and living expenses. RESPs (Registered Education Savings Plans) are a popular choice, offering tax advantages and government grants. In this article, we explore the best ETF picks for children at different stages of growth, providing a comprehensive guide to help parents and guardians make informed decisions.

Early Years: Ages 0 to 9

For young children, the iShares Core Equity ETF Portfolio (XEQT-T) is a strong recommendation. This global equity ETF, comprising five iShares funds, is well-suited for long-term investment. With a focus on Canadian, U.S., and international markets, it has demonstrated an impressive 13.42% annualized return over five years. Its low management expense ratio (MER) of 0.20% makes it an attractive option, despite a slight increase in effective MER due to management-fee adjustments. The XEQT-T is a popular choice among investors, as evidenced by its substantial assets of $22.1 billion and its presence on social media platforms like Reddit.

Middle Years: Ages 10 to 14

During the middle years, the BMO Growth ETF (ZGRO-T) takes center stage. This ETF, with a balanced 80% equity and 20% bond allocation, is ideal for growth-oriented investments. The BMO Growth ETF has shown a solid 10.88% annualized return over five years, with a MER of 0.17%, down from 0.18% due to management-fee reductions. The fund's equity exposure is well-diversified, with 60% in North America and 20% in international and emerging markets. This strategy provides a solid foundation for long-term growth, especially as the cost of education tends to rise during these years.

Another notable pick for this stage is the Fidelity All-in-One Growth ETF (FGRO-NE). With a 3% allocation to Bitcoin, this ETF offers a unique approach. Bitcoin, gaining institutional support, is considered a serious investment class by portfolio manager Richard Orrell. While the Bitcoin exposure may not significantly impact the overall portfolio, it can provide upside if the U.S. dollar depreciates. The FGRO-NE's MER of 0.42% is slightly higher, but it has delivered a 13.34% annualized return over five years, showcasing its potential for growth.

Final Years: Ages 15 to 18+

As your child approaches the end of their high school years, the Vanguard All-Equity Portfolio (VEQT-T) becomes an excellent choice. This ETF, with a focus on equity funds, is well-suited for RESPs with multiple-year withdrawals. Ms. Hagerman recommends this approach, as it allows for the withdrawal of fixed-income portions only when needed, ensuring a balanced distribution. The VEQT-T's allocation includes the Vanguard Morningstar U.S. Total Market Index ETF and the Vanguard FTSE Canada All Cap Index ETF, providing a solid foundation for long-term growth. With an annualized return of 13.39% over five years and a MER expected to decrease to 0.19% next year, this ETF is a reliable choice for the final years before post-secondary education.

For the final stage, the Purpose High Interest Savings Fund (PSA-T) is a prudent option for parking cash. This ETF, investing in treasury bills and high-interest savings accounts, offers capital preservation, which is crucial as your child nears university or college. With an annualized return of 3.22% over five years and 2.27% over 10 years, the PSA-T provides a safe haven for funds, especially in a volatile market like 2022, where bonds can lose value.

In conclusion, RESPs are a valuable tool for securing your child's education, and ETFs offer a strategic approach to investing. By carefully selecting the right ETF for each stage of growth, parents can build a robust financial foundation for their children's future. These picks provide a balanced approach, considering market volatility, growth potential, and the importance of capital preservation during different life stages.