Exchange-traded funds, or ETFs, are often low-cost instruments for investors to track popular indexes or leverage experienced manager choices to beat the market. The best ones serve as building blocks for a portfolio, and unlike open-end mutual funds, all ETFs are traded throughout the day on an exchange.
In February 2025, the worst performers included BMO S&P US Small Cap Index ETF ZSML and iShares S&P US Small-Cap Index ETF XSMC. Data in this article is sourced from Morningstar Direct.
Read here about the best-performing ETFs.
Screening for the Worst-Performing ETFs
To find the month’s worst-performing ETFs, we screened equity, allocation, and fixed-income funds that trade within Canada for those with at least C$10 million in total assets. We narrowed the list to ETFs with parent pillars for their Morningstar Medalist Ratings of average or above, meaning our analysts believe they’re backed by industry-standard asset management companies. We also excluded exchange-traded notes.
Five of the worst-performing ETFs were from the US small-cap/mid-cap equity category, where funds fell 5.84% in February.
The 10 Worst-Performing ETFs for February 2025
- BMO S&P US Small Cap Index ETF ZSML
- iShares S&P US Small-Cap Index ETF XSMC
- Middlefield Innovation Dividend ETF MINN
- iShares S&P US Small-Cap Index ETF (CAD-Hedged) XSMH
- iShares US Small Cap Index ETF (CAD-Hedged) XSU
- NBI Sustainable Global Equity ETF NSGE
- Guardian i3 Global Quality Growth ETF Unhedged GIQG.B
- Middlefield US Equity Dividend ETF MUSA
- Guardian i3 US Quality Growth Fund GIQU
- BMO S&P US Mid Cap Index ETF ZMID
Worst-Performing Canadian ETFs
Source: Morningstar Direct. Data as of Feb. 28, 2025.
Metrics for the Worst-Performing ETFs
BMO S&P US Small Cap Index ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 0.22%
- Morningstar Category: US Small/Mid Cap Equity
The worst-performing ETF in February was the C$275 million BMO S&P US Small Cap Index ETF, which lost 6.16%. The passively managed BMO ETF performed roughly in line with the average 5.84% loss on funds in the US small-cap/mid cap equity category in February. Over the past 12 months, the BMO S&P US Small Cap Index ETF rose 12.78%, placing it in the 29th percentile within its category and outperforming the 8.91% return on the average fund.
The BMO S&P US Small Cap Index ETF, launched in January 2020, has a Morningstar Medalist Rating of Bronze.
iShares S&P US Small-Cap Index ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 0.22%
- Morningstar Category: US Small/Mid Cap Equity
With a 6.12% loss, the C$70 million iShares S&P US Small-Cap Index ETF was the second-worst-performing ETF on our list for February. The passively managed iShares ETF performed roughly in line with the average 5.84% loss on funds in the US small-cap/mid cap equity category. Over the past year, the iShares S&P US Small-Cap Index ETF gained 12.41%, placing it in the 34th percentile within its category and outperforming the 8.91% return on the average fund.
The Bronze-rated iShares S&P US Small-Cap Index ETF was launched in September 2019.
Middlefield Innovation Dividend ETF
- Morningstar Rating: 5 stars
- Expense Ratio: 1.40%
- Morningstar Category: Global Equity
The third-worst-performing ETF in February was the C$98 million Middlefield Innovation Dividend ETF, which fell 5.81%. The Middlefield ETF, which is actively managed, fell further than the average 1.44% loss on funds in the global equity category. Over the past 12 months, the ETF rose 26.45% to place in the 4th percentile within its category, outperforming the average return of 17.04%.
The Middlefield Innovation Dividend ETF has a Morningstar Medalist Rating of Bronze. It launched in March 2018.
iShares S&P US Small-Cap Index ETF (CAD-Hedged)
- Morningstar Rating: 2 stars
- Expense Ratio: 0.22%
- Morningstar Category: US Small/Mid Cap Equity
The C$56 million iShares S&P US Small-Cap Index ETF (CAD-Hedged) was the fourth-worst-performing ETF in February, with a loss of 5.71%. The passively managed iShares ETF performed roughly in line with the average 5.84% loss on funds in the US small-cap/mid cap equity category. Over the past year, the ETF gained 4.58% to land in the 75th percentile within its category, underperforming the category’s average one-year return of 8.91%.
The Neutral-rated iShares S&P US Small-Cap Index ETF (CAD-Hedged) launched in September 2019.
iShares US Small Cap Index ETF (CAD-Hedged)
- Morningstar Rating: 2 stars
- Expense Ratio: 0.36%
- Morningstar Category: US Small/Mid Cap Equity
Fifth-worst was the C$678 million iShares US Small Cap Index ETF (CAD-Hedged), which lost 5.32% in February. The passively managed iShares ETF performed roughly in line with the average 5.84% decline on funds in the US small-cap/mid cap equity category. Over the past 12 months, the iShares US Small Cap Index ETF (CAD-Hedged) rose 5.05%, finishing in the 70th percentile within its category. It underperformed the category’s average return of 8.91%.
The iShares US Small Cap Index ETF (CAD-Hedged) has a Negative Morningstar Medalist Rating, meaning our analysts expect it to be one of the worst performers within its category and think it is unlikely to deliver positive returns after fees.
NBI Sustainable Global Equity ETF
- Morningstar Rating: 1 star
- Expense Ratio: 0.73%
- Morningstar Category: Global Equity
The sixth-worst-performing ETF in February was the C$470 million NBI Sustainable Global Equity ETF, which lost 5.27%. The actively managed ETF fell further than the average 1.44% loss on funds in the global equity category. Over the past year, the NBI Sustainable Global Equity ETF rose 6.78%, placing it in the 96th percentile within its category and underperforming the 17.04% return on the average fund.
The NBI Sustainable Global Equity ETF considers environmental, social, and governance criteria. The fund has a Morningstar Medalist Rating of Neutral.
Guardian i3 Global Quality Growth ETF Unhedged
- Morningstar Rating: 5 stars
- Expense Ratio: 0.81%
- Morningstar Category: Global Equity
With a 5.02% loss, the C$43 million Guardian i3 Global Quality Growth ETF Unhedged was the seventh-worst-performing ETF on our list for February. The actively managed Guardian Capital ETF fell further than the average 1.44% loss on funds in the global equity category. Over the past 12 months, the Guardian i3 Global Quality Growth ETF Unhedged gained 20.73%, placing it in the 24th percentile within its category and outperforming the 17.04% return on the average fund.
The Guardian i3 Global Quality Growth ETF Unhedged, launched in August 2020, has a Morningstar Medalist Rating of Neutral.
Middlefield US Equity Dividend ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 1.49%
- Morningstar Category: US Dividend & Income Equity
The eighth-worst-performing ETF in February was the C$48 million Middlefield US Equity Dividend ETF, which fell 4.98%. The Middlefield ETF, which is actively managed, underperformed the average 0.62% gain on funds in the US dividend & income equity category. Over the past year, the ETF rose 28.49% to place in the 1st percentile within its category, outperforming the average one-year return of 20.36%.
The Middlefield US Equity Dividend ETF, launched in December 2013, has a Morningstar Medalist Rating of Silver.
Guardian i3 US Quality Growth Fund
- Morningstar Rating: 1 star
- Expense Ratio: 0.71%
- Morningstar Category: US Equity
The C$19 million Guardian i3 US Quality Growth Fund was the ninth-worst-performing ETF in February, with a decline of 4.85%. The actively managed Guardian Capital ETF performed worse than the average 2.09% loss on funds in the US equity category. Over the past 12 months, the ETF gained 14.48% to land in the 82nd percentile, underperforming the category’s average return of 19.73%.
The Guardian i3 US Quality Growth Fund has a Morningstar Medalist Rating of Neutral. It launched in August 2020.
BMO S&P US Mid Cap Index ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 0.16%
- Morningstar Category: US Small/Mid Cap Equity
Tenth-worst was the C$392 million BMO S&P US Mid Cap Index ETF, which lost 4.81% in February. The passively managed BMO ETF dropped less than the average 5.84% loss on funds in the US small-cap/mid cap equity category for the month. Over the past year, the BMO S&P US Mid Cap Index ETF rose 15.37%, finishing the period in the 20th percentile within the US small-cap/mid-cap equity category. It outperformed the category’s average one-year return of 8.91%.
The Silver-rated BMO S&P US Mid Cap Index ETF launched in January 2020.
What Are ETFs?
Exchange-traded funds are investments that trade throughout the day on stock exchanges, much like individual stocks. They differ from traditional mutual funds—known as open-end funds—which can only be bought or sold at a single price each day. Historically, ETFs have tracked indexes, but in recent years, more have been actively managed. ETFs cover a range of asset classes, including stocks, bonds, commodities, and most recently cryptocurrency.
ETFs: More Ideas to Consider
Investors who would like to find more ETF investment ideas can do the following:
- Use the ETF Screener tool to find the best ETFs according to your specific criteria. You can search for funds based on their fees, Morningstar Medalist Ratings, manager tenures, and more.
- Find ideas specific to your needs, or learn more about ETFs, on our ETF Insights page.
- Compare funds and ETFs side by side and easily follow their valuations, ratings, and fees.
This article was compiled by Bella Albrecht, edited by Lauren Solberg, and reviewed by Tom Lauricella.
This article was generated with the help of automation and reviewed by Morningstar editors. Learn more about Morningstar’s use of automation.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
