Summary: XEQT vs VEQT
XEQT (iShares Core Equity ETF Portfolio) and VEQT (Vanguard All-Equity ETF Portfolio) are popular choices for investors seeking diversified, low-cost exposure to global equities. Both ETFs are 100% equity-focused, making them ideal for long-term growth investors. When comparing XEQT vs VEQT, XEQT provides a slightly higher allocation to U.S. stocks, while VEQT offers a balanced mix of Canadian, U.S., and international equities. Both funds are passively managed, track multiple indices, and aim to deliver market returns with minimal fees.
What are Index Funds?
Before diving more into XEQT vs VEQT, let’s go over the basics.
An index fund is a type of mutual fund or exchange traded fund (ETF) that aims to mirror a particular market. Index funds contain a tiny piece of all the companies included in a particular market index (e.g., S&P 500 or the Dow Jones Industrial Average).
Index funds offer a great vehicle to diversify your holdings, since it spreads out your money across many companies in an index. Instead of placing all your eggs in one basket (one security), you spread them out across multiple baskets.
For a deeper dive on index funds, check out this article: Index Funds 101.
What is Vanguard?
Vanguard was founded by John Bogle in 1975 and that same year Vanguard launched the first index fund, which tracked the S&P 500. Today, Vanguard is the largest issuer of mutual funds in the world and the second-largest issuer of ETFs as well.
What is BlackRock?
BlackRock, Inc., founded in 1988 by Larry Fink, is the world’s largest asset manager with trillions in assets under management. Initially focused on risk management and fixed income, BlackRock now offers a wide range of investment products, including mutual funds, ETFs and alternative investments. Known for its Aladdin platform and significant influence in global finance, BlackRock plays a pivotal role in shaping investment trends and policies worldwide.
Comparing XEQT & VEQT: The Stats
| XEQT | VEQT | |
| Management Expense Ratio (MER) | 0.20% | 0.24% |
| Dividend Yield | 1.26% | 1.63% |
| Withholding Tax (for Canadians) | 15% (unless it’s held in your RRSP!) | 15% (unless it’s held in your RRSP!) |
| 3 Year Performance | 27.28% | 27.55% |
To review the full details of XEQT & VEQT, click on either one.
XEQT & VEQT Underlying Holdings
Both ETFs provide diversified exposure to global equities, but they differ in their allocation and focus.
- XEQT is composed of several underlying ETFs that collectively provide broad exposure to global equity markets. The top sectors represented in XEQT include technology, financials and healthcare, with significant holdings in large-cap U.S. companies like Apple, Microsoft and Amazon. Additionally, XEQT has a notable allocation to Canadian stocks, offering exposure to major Canadian banks and resource companies.
- VEQT is similarly diversified but offers a more balanced global allocation across Canadian, U.S. and international equities. The top sectors in VEQT include financials, technology and industrials, with substantial holdings in Canadian companies like Royal Bank of Canada and Toronto-Dominion Bank, alongside U.S. giants such as Alphabet and Facebook. VEQT’s broader international exposure also includes companies from Europe and the Asia-Pacific region.
One thing that is important to keep in mind is that both ETFs are passively managed and designed to track specific indices, which means the holdings will evolve as the indices are rebalanced. By investing in these specific ETFs, you’re effectively gaining access to a basket of leading companies across various sectors and regions, which again helps from a diversification standpoint.
Should I Buy XEQT or VEQT?
When deciding between XEQT and VEQT, the best choice ultimately depends on your investment priorities. Both ETFs have low MERs and offer diversified, all-equity exposure, but their strategies differ slightly.
XEQT might be more appealing if you’re looking for heavier exposure to U.S. equities, as this ETF has a higher allocation to the U.S. market, which could be beneficial if you believe in the strong performance of U.S. stocks. However, this also means your portfolio could be more sensitive to fluctuations in the U.S. dollar.
VEQT offers a more balanced exposure across Canadian, U.S., and international equities. If you’re concerned about currency risk and want broader global diversification, VEQT might be the better choice. This approach can potentially reduce volatility, especially during economic downturns when currency fluctuations can have a significant impact on returns.
If you want to dive deeper into the specifics of either XEQT vs VEQT before putting your dollars to work, click on either one.
