Exchange-traded funds, or ETFs, are often low-cost instruments for investors to track popular indexes or leverage experienced manager choices in an attempt 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 the first quarter of 2025, the worst performers included Middlefield Innovation Dividend ETF MINN and Harvest Travel & Leisure Index ETF TRVL. Data in this article is sourced from Morningstar Direct.
To read about the best-performing ETFs, check out our other story.
Screening for the Worst-Performing ETFs
To find the quarter’s worst-performing ETFs, we screened equity, allocation, and fixed-income funds that trade within Canada for those that have at least C$10 million in total assets. We narrowed the list to only 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.
Among the worst-performing ETFs, four were from the US small-cap/mid-cap equity category, where funds fell 7.27% in the first quarter.
The 10 Worst-Performing ETFs for Q1 2025
- Middlefield Innovation Dividend ETF MINN
- Harvest Travel & Leisure Index ETF TRVL
- Franklin Innovation Fund FINO
- Guardian i3 US Quality Growth Fund GIQU
- iShares US Small Cap Index ETF (CAD-Hedged) XSU
- Middlefield US Equity Dividend ETF MUSA
- iShares S&P US Small-Cap Index ETF (CAD-Hedged) XSMH
- Guardian i3 Global Quality Growth ETF Unhedged GIQG.B
- iShares S&P US Small-Cap Index ETF XSMC
- BMO S&P US Small Cap Index ETF ZSML
Worst-Performing Canadian ETFs
Source: Morningstar Direct. Data as of March 31, 2025.
Metrics for the Worst-Performing ETFs
Middlefield Innovation Dividend ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 1.40%
- Morningstar Category: Global Equity
The worst-performing ETF in the first quarter was the C$88 million Middlefield Innovation Dividend ETF, which lost 12.63%. The actively managed Middlefield ETF fell further than the average 1.31% loss on funds in its category in the first quarter. Over the past 12 months, the Middlefield Innovation Dividend ETF rose 13.04%, placing it in the 22nd percentile within its category and outperforming the 9.24% return on the average fund.
The Middlefield Innovation Dividend ETF, launched in March 2018, has a Morningstar Medalist Rating of Bronze.
Harvest Travel & Leisure Index ETF
- Morningstar Rating: 2 stars
- Expense Ratio: 0.62%
- Morningstar Category: North American Equity
With a 12.6% loss, the C$44 million Harvest Travel & Leisure Index ETF was the second-worst-performing ETF on our list for the first quarter. The passively managed Harvest Portfolios ETF fell further than the average 2.01% loss on funds in the North American equity category. Over the past year, the Harvest Travel & Leisure Index ETF gained 6.60%, placing it in the 72nd percentile within its category and underperforming the 8.03% return on the average fund.
The Bronze-rated Harvest Travel & Leisure Index ETF launched in January 2021.
Franklin Innovation Fund
- Morningstar Rating: 3 stars
- Expense Ratio: 0.90%
- Morningstar Category: Global Equity
The third-worst-performing ETF in the first quarter was the C$23 million Franklin Innovation Fund, which fell 12.35%. The Franklin Templeton ETF, which is actively managed, fell further than the average 1.31% loss on funds in its category. Over the past 12 months, the ETF rose 6.41% to place in the 73rd percentile within its category, underperforming the category’s average return of 9.24%.
The Franklin Innovation Fund has a Morningstar Medalist Rating of Neutral. It launched in February 2021.
Guardian i3 US Quality Growth Fund
- Morningstar Rating: 1 star
- Expense Ratio: 0.71%
- Morningstar Category: US Equity
The C$17 million Guardian i3 US Quality Growth Fund was the fourth-worst-performing ETF in the first quarter, with a loss of 11.28%. The actively managed Guardian Capital ETF performed worse than the average 4.11% loss on funds in its category. Over the past year, the ETF gained 2.35% to land in the 95th percentile within its category, underperforming the category’s average one-year return of 9.61%.
The Neutral-rated Guardian i3 US Quality Growth Fund launched in August 2020.
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$564 million iShares US Small Cap Index ETF (CAD-Hedged), which lost 9.84% in the first quarter. The passively managed iShares ETF fell further than the average 7.27% decline on funds in its category. Over the past 12 months, the iShares US Small Cap Index ETF (CAD-Hedged) fell 5.5%, finishing in the 83rd percentile within its category. It dropped further than the category’s average loss of 0.8%.
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.
Middlefield US Equity Dividend ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 1.49%
- Morningstar Category: US Dividend & Income Equity
The sixth-worst-performing ETF in the first quarter was the C$44 million Middlefield US Equity Dividend ETF, which lost 9.46%. The actively managed Middlefield ETF underperformed the average 0.56% gain on funds in its category. Over the past year, the Middlefield US Equity Dividend ETF rose 15.57%, placing it in the 19th percentile within its category and outperforming the 12.00% return on the average fund.
The Middlefield US Equity Dividend ETF has a Morningstar Medalist Rating of Silver. It launched in December 2013.
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
With a 9.32% loss, the C$50 million iShares S&P US Small-Cap Index ETF (CAD-Hedged) was the seventh-worst-performing ETF on our list for the first quarter. The passively managed iShares ETF fell further than the average 7.27% loss on funds in its category. Over the past 12 months, the iShares S&P US Small-Cap Index ETF (CAD-Hedged) lost 5.04%, placing it in the 78th percentile within its category and putting it down further than the 0.80% loss on the average fund.
The iShares S&P US Small-Cap Index ETF (CAD-Hedged), launched in September 2019, has a Morningstar Medalist Rating of Neutral.
Guardian i3 Global Quality Growth ETF Unhedged
- Morningstar Rating: 4 stars
- Expense Ratio: 0.81%
- Morningstar Category: Global Equity
The eighth-worst-performing ETF in the first quarter was the C$39 million Guardian i3 Global Quality Growth ETF Unhedged, which fell 9.10%. The Guardian Capital ETF, which is actively managed, fell further than the average 1.31% loss on funds in its category. Over the past year, the ETF rose 9.53% to place in the 50th percentile within its category, roughly in line with the average one-year return of 9.24%.
The Guardian i3 Global Quality Growth ETF Unhedged, launched in August 2020, has a Morningstar Medalist Rating of Neutral.
iShares S&P US Small-Cap Index ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 0.22%
- Morningstar Category: US Small/Mid Cap Equity
The C$59 million iShares S&P US Small-Cap Index ETF was the ninth-worst-performing ETF in the first quarter, with a decline of 8.95%. The passively managed iShares ETF performed worse than the average 7.27% loss on funds in its category. Over the past 12 months, the ETF gained 2.28% to land in the 31st percentile, outperforming the category’s average loss of 0.80%.
The iShares S&P US Small-Cap Index ETF has a Morningstar Medalist Rating of Bronze. It launched in September 2019.
BMO S&P US Small Cap Index ETF
- Morningstar Rating: 4 stars
- Expense Ratio: 0.22%
- Morningstar Category: US Small/Mid Cap Equity
Tenth-worst was the C$240 million BMO S&P US Small Cap Index ETF, which lost 8.88% in the first quarter. The passively managed BMO ETF fell further than the average 7.27% loss on funds in its category for the quarter. Over the past year, the BMO S&P US Small Cap Index ETF rose 2.18%, finishing the 12-month period in the 34th percentile in its category. It outperformed the category’s average one-year loss of 0.80%.
The Bronze-rated BMO S&P US Small 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 ETFs 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.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
Correction: (April 9, 2025): A previous version of this article misstated the expense ratio for Franklin Innovation Fund. It is 0.90%, not zero percent.
