Small cap stocks are shares of smaller listed companies, commonly described as those worth a few hundred million to a few billion dollars (there is no official cut-off). This page covers small cap ETFs, Canadian small cap stocks by sector, how small caps compare with large caps, and how much of a portfolio investors commonly give them. Market values are from Toronto Stock Exchange data (TMX Money) as of September 25, 2026 and change daily. The very smallest companies are covered separately in our guide to penny stocks, and every other guide in this section is listed in the Canadian stocks hub.
Best Small Cap ETFs in Canada
TSX-Listed
ETF
Ticker
MER
Yield
Holdings
Distribution
Focus
iShares S&P/TSX SmallCap
XCS
0.60%
2.45%
236
quarterly
S&P/TSX SmallCap Index
Vanguard FTSE Canada All Cap
VCN
0.05%
2.04%
212
quarterly
All cap (includes small)
Yields are each fund’s distribution yield (the latest distribution annualized). BMO’s ZSML tracks the US S&P SmallCap 600 Index, so it is in the US table below.
Grows by buying other software businesses (in January 2024 it agreed to buy Sonic Foundry’s Mediasite video business)
Quarterhill
QTRH
$0.4 billion
Intelligent transportation systems
Traffic management and commercial-vehicle inspection technology
Magnet Forensics
MAGT
Acquired
Digital forensics
Bought by Thoma Bravo in April 2023 and delisted: an example of a small cap being taken over
Mining & Resources
Company
Ticker
Market Cap
Resource
Stage
Lundin Gold
LUG
$22.1 billion
Gold (Ecuador)
Producing (Fruta del Norte mine)
Ero Copper
ERO
$5.6 billion
Copper and gold (Brazil)
Producing
Wesdome Gold Mines
WDO
$5.4 billion
Gold (Ontario and Quebec)
Producing
Solaris Resources
SLS
$1.7 billion
Copper, with gold and molybdenum (Ecuador)
Development (Warintza project)
Filo Corp, a copper-gold developer in Argentina, was bought by BHP and Lundin Mining; the deal closed in January 2025 and its shares were delisted.
Healthcare & Cannabis
Company
Ticker
Market Cap
Business
WELL Health Technologies
WELL
$1.2 billion
Outpatient clinics and health technology
Neighbourly Pharmacy (formerly NBLY) is no longer listed: its controlling shareholder, Persistence Capital Partners, took the company private in March 2024.
Consumer & Industrial
Company
Ticker
Market Cap
Business
Pet Valu
PET
$1.2 billion
Canadian pet food and supplies retailer
Aritzia
ATZ
$11.3 billion
Clothing design and retail
goeasy
GSY
$0.7 billion
Non-prime consumer lending
Boyd Group Services
BYD
$3.2 billion
Collision repair centres
Richelieu Hardware
RCH
$2.0 billion
Specialty hardware distribution
Several of these companies (Lundin Gold and Aritzia in particular) have grown well beyond small-cap size, and others have shrunk; check current market values before treating any of them as a small cap.
Small Cap vs Large Cap in Canada
Factor
Small Cap (XCS)
Large Cap (XIU)
Company size
Hundreds of millions to a few billion dollars
60 large companies (the S&P/TSX 60)
Number of holdings
236
61
Distribution yield
2.45%
2.17%
Analyst coverage
Low
High
Volatility
Higher
Lower
Liquidity
Lower, with wider bid/ask spreads
High
Sector mix
Materials 34% and energy 22% of XCS
Banks, energy, materials
Downturns
Usually fall further
Usually fall less
Holdings and yields are from each fund’s provider (XCS holdings as of September 24, 2026).
The Small Cap Premium
Period to December 31, 2025
S&P/TSX Completion (small and mid caps)
S&P/TSX Composite
Difference
1 year
42.47%
31.68%
10.79 points
5 years (per year)
16.56%
16.09%
0.47 points
10 years (per year)
12.45%
12.66%
-0.21 points
Total returns in Canadian dollars (S&P Dow Jones Indices, SPIVA Canada Year-End 2025). The S&P/TSX Completion Index holds the Composite’s members that are not in the S&P/TSX 60. Small and mid caps led over one and five years and trailed slightly over ten, which is why the “premium” is described as unreliable over periods of a decade or less. Long-run figures for the broad S&P/TSX Composite Index are on our historical stock market returns page. Past performance does not guarantee future results.
TSX vs TSX Venture Exchange
Feature
TSX (Small Caps)
TSX Venture (TSXV)
Company size
Small but established
Usually smaller and earlier-stage
Listing requirements
Moderate
Very low
Quality of companies
Established small businesses
Early-stage, speculative
Dominant sectors
Mining, tech, consumer
Mining exploration, cannabis, tech startups
Liquidity
Moderate
Very low; can be hard to trade
Failure rate
Moderate
Very high
Appropriate for
Small cap tilt in diversified portfolio
Experienced speculators only
Portfolio Allocation
How Much to Allocate to Small Caps
There is no standard figure; the ranges below are examples of how investors with different risk tolerances might approach it.
Investor profile
Example small-cap share
Implementation
Conservative
0–5%
VCN includes small caps at market weight
Balanced
5–10%
Add XCS alongside core holdings
Growth
10–15%
XCS + IWM for Canadian + US small caps
Aggressive
15–20%
individual picks + TSXV names (risky)
Sample Portfolio with Small Cap Tilt
An illustration, not a recommendation:
Holding
Allocation
Role
XEQT (All-equity)
60%
Core global equity
XCS (Canadian small cap)
10%
Canadian small cap premium
IWM (US small cap)
10%
US small cap premium
ZAG (Bonds)
15%
Stability
Cash
5%
Dry powder for opportunities
Risks of Small Cap Investing
Risk
Detail
Higher volatility
Declines are usually deeper than for large caps
Illiquidity
Wide bid/ask spreads, hard to sell in panic
Less information
Little analyst coverage, so harder to research
Higher failure rate
Small companies more likely to go bankrupt
Resource concentration
Materials and energy make up much of XCS (34% and 22%)
Management risk
Smaller companies depend heavily on key individuals
Dilution
Frequent share issuance for capital raises
Small cap premium not guaranteed
Can underperform for a decade or more
Survivorship bias
Lists of small-cap winners leave out the companies that failed
The figures and rules on this page come from these sources, last checked against them between September 25, 2026 and October 13, 2026. How we check facts.