XEQT: A Deep Dive into iShares All-Equity ETF Portfolio

For investors who value simplicity, low-cost diversification, and a no-fuss path to global equities, all-in-one ETF solutions have become a go-to choice. Among these single-ticket portfolios designed for long-term growth enthusiasts, XEQT (iShares Core All-Equity ETF Portfolio) shines as a noteworthy contender.

Launched by BlackRock’s iShares—a pioneer in ETFs—XEQT packages global equity exposure into one easy-to-manage ETF. If you’re looking for a growth-focused, hands-off approach to investing and can stomach the inherent volatility of an all-equity allocation, XEQT might be a compelling addition to your portfolio.

In this extensive guide, we’ll delve into what XEQT is, how it’s constructed, its advantages and drawbacks, and the kind of investor it best suits. By the end, you should have a clearer picture of whether XEQT aligns with your long-term financial ambitions.

What Is XEQT?

XEQT (iShares Core All-Equity ETF Portfolio) is a one-stop ETF that invests exclusively in equities—no bonds, no fixed-income products, no alternative assets. Its goal is to provide a globally diversified equity portfolio optimized for simplicity, low cost, and long-term growth. Similar to other all-in-one equity solutions, XEQT is a “fund of funds,” holding other iShares ETFs that give you exposure to different geographic regions and market segments.

Key Characteristics of XEQT

• Asset Class: 100% Equities
• Global Diversification: Canadian, U.S., international developed, and emerging markets
• Management Style: Passive, index-based approach
• MER (Management Expense Ratio): Competitive, reflective of iShares’ low-cost philosophy
• Ideal Timeline: Long-term investors (10+ years), comfortable with market volatility

If your objective is to grow your wealth primarily through equities—counting on decades of compounding—XEQT streamlines this strategy into a single product.

Inside XEQT’s Portfolio: What Does It Hold?

XEQT’s core proposition is broad market exposure. Although the exact allocations can vary, you can generally expect something along these lines:

• Canadian Equities (~20-25%): Provides a domestic anchor, giving you exposure to the Canadian market’s financials, energy, materials, and telecom sectors.
• U.S. Equities (~40-50%): The largest slice often goes to U.S. stocks, encompassing tech giants, consumer goods leaders, and a vast array of sectors. U.S. markets drive much of global equity returns.
• International Developed Markets (~20-30%): Diversifies your portfolio into Europe, Japan, Australia, and other developed economies, spreading geographic risk beyond North America.
• Emerging Markets (~5-10%): Offers a growth kick from fast-expanding economies like China, India, and Brazil, which can add dynamism and volatility in equal measure.

This structure aims to replicate the global equity landscape without overcomplicating your portfolio. You get the stability of large, established markets combined with the growth potential of emerging regions, all under one ticker symbol.

Why Consider XEQT?

Before zeroing in on XEQT, let’s discuss why one might choose an all-equity, all-in-one ETF solution in the first place.

1. Global Diversification in One Shot

Modern investing wisdom often highlights the importance of diversification. Traditionally, achieving global exposure required buying multiple ETFs—one for Canada, one for the U.S., another for international markets. XEQT bundles these exposures together, saving you the hassle of multiple trades, rebalancing efforts, and tracking multiple tickers.

2. Low Management Fees

iShares has built its reputation on cost-effectiveness. XEQT’s MER is generally quite low, especially when compared to actively managed funds or even the cumulative cost of assembling several international ETFs yourself. Lower fees mean more of your returns stay in your pocket, compounding over time.

3. Built-In Rebalancing

As different markets rise and fall, their proportions in your portfolio drift from the target allocation. XEQT does the rebalancing for you, buying more of what’s cheap and trimming what’s expensive, maintaining a consistent risk profile without manual intervention.

4. Set-It-and-Forget-It Convenience

If you’re a busy professional, a parent, or just someone who prefers not to tinker with your portfolio constantly, XEQT’s simplicity is hard to beat. One purchase, one holding, and you’re globally diversified in equities.

The Upside of XEQT

A. Harnessing Global Equity Returns

Historically, equities have outpaced other asset classes like bonds and cash over the long term. With XEQT, you’re positioned to capture the growth engines of global capitalism, from Silicon Valley’s tech disruptors to Asia’s manufacturing hubs and Europe’s industrial champions.

B. Long-Term Growth Emphasis

XEQT has no bonds or “safe havens” baked in. This makes it perfectly aligned with investors who have a long horizon and want maximum exposure to growth. If you’re decades from retirement, the extra volatility might not be a concern compared to the potential for higher returns.

C. Transparency and Predictability

XEQT invests in broad, market-cap-weighted indexes. There’s no star manager to follow, no complex strategy to decode. It’s about as straightforward as it gets: you own a piece of the global equity pie, weighted by their relative market sizes.

D. Easy Cost-Averaging

If you practice dollar-cost averaging—regularly contributing a set amount to your investments—XEQT makes it simple. Every contribution instantly maintains your global diversification. No need to decide which region or sector to top up this month.

The Drawbacks of XEQT

While XEQT offers plenty of benefits, no investment is perfect. Consider these potential downsides:

1. 100% Equity = Higher Volatility

Equities can be volatile. Market downturns can be stomach-churning, and with XEQT, you won’t have bonds to smooth the ride. If a 30%+ decline in your portfolio’s value would cause you sleepless nights, think twice about an all-equity allocation.

2. Limited Control Over Asset Allocation

XEQT’s allocations are predetermined. If you want a heavier tilt toward U.S. tech or emerging markets, you can’t adjust the underlying weights directly. You’re entrusting these decisions to iShares’ methodology, which is more about broad representation than tactical tilting.

3. Currency Risks

Investing internationally introduces currency fluctuations. While currency exposure adds diversification, it can also dampen returns when the Canadian dollar strengthens or amplify losses if foreign markets fall and the currency moves against you. Over decades, currency risk tends to average out, but it’s worth noting.

4. No Built-In Fixed Income

As you approach retirement or need to dampen volatility, you’ll likely need to add bonds or other low-volatility investments. XEQT doesn’t solve that piece of the puzzle—it’s all equities, all the time. Eventually, you might need another fund to create a more balanced risk profile.

Who Is XEQT Best Suited For?

1. Younger, Long-Horizon Investors: If you’re in your 20s, 30s, or even early 40s and have decades to invest, XEQT’s growth orientation makes sense. Long timelines can help you ride out the inevitable market corrections.

2. Hands-Off Investors: If you prefer to set up your investment plan and then “go live your life,” XEQT’s simplicity is a blessing. There’s no need to monitor multiple ETFs or worry about rebalancing.

3. Cost-Conscious Investors: By holding one ETF instead of multiple, you reduce transaction costs and potentially lower fees, allowing more of your hard-earned capital to grow unencumbered.

4. Investors Comfortable with Equity Risk: Understand that a pure equity portfolio can swing widely in value. If you accept that volatility as the price of admission for potentially higher returns, XEQT fits the bill.

Who Might XEQT Not Be Ideal For?

1. Near-Retirees: If you’re planning to retire within the next 5-10 years, consider whether 100% equity exposure is prudent. Many advisors recommend adding bonds or guaranteed income products to safeguard against a market crash just before you start withdrawing funds.

2. Highly Risk-Averse Individuals: If large swings in your portfolio would cause you undue stress, a balanced or conservative all-in-one ETF with a bond component might be more suitable.

3. Those Seeking Specific Tilts or Factors: If you’re into factor investing (e.g., value, growth, dividends) or want heavy emerging market exposure, XEQT’s set allocation won’t scratch that itch. You might prefer a DIY approach with multiple ETFs tailored to your convictions.

4. Income-Focused Investors: XEQT doesn’t specifically target high dividends or a steady income stream. It’s geared towards total return (price appreciation + dividends), so those needing regular income might look elsewhere.

Comparing XEQT to Alternatives

Similar ETFs exist, such as VEQT (Vanguard All-Equity ETF Portfolio) or ZEQT (BMO All-Equity ETF). How does XEQT stack up?

• MER Differences: Fees are often comparable, but small differences might sway cost-conscious investors.
• Geographic Allocation Variances: VEQT, for example, might have slightly different weightings (often a bit more Canadian equity), while XEQT’s allocation might lean differently. Review the fact sheets to pick one that resonates with your market view.
• Brand Loyalty and Track Record: Vanguard and iShares both have strong reputations. Your choice might come down to minor asset allocation differences or personal preference.

The bottom line: XEQT is one of several excellent all-equity, all-in-one solutions. Each competitor aims to simplify global equity investing, so it’s more about fine-tuning your preferences than finding a single “best” option.

Implementing XEQT in Your Strategy

1. Choosing Your Brokerage: Opt for a low-fee Canadian brokerage to minimize trading costs.
2. Initial Lump Sum or Dollar-Cost Averaging: Decide whether to invest a lump sum now or spread contributions over months or years to ease into the market.
3. Periodic Check-Ins: While XEQT doesn’t require active management, it’s wise to review annually or semi-annually to ensure it still aligns with your goals.
4. Eventually Adding Bonds or Alternatives: As your retirement horizon shortens or your comfort with volatility wanes, consider adding a bond ETF or shifting to a balanced all-in-one solution. XEQT can be a stepping stone rather than a permanent home.

Keeping an Eye on the Future

Over time, markets evolve, and iShares may adjust XEQT’s underlying holdings or weightings slightly. While broad changes are rare, it’s still good practice to skim through the fund’s annual reports or updates. This ensures you remain confident in what you own.

If life events—such as marriage, inheritance, job changes, or nearing a financial goal—shift your outlook, don’t hesitate to reevaluate whether XEQT still fits. Investing is dynamic; what worked at 30 may need refinement at 50.

Final Thoughts

XEQT aims to be a cornerstone solution for long-term, growth-oriented investors who value simplicity. By packaging global equities into one low-cost ETF, it removes many hurdles of global investing—no balancing multiple funds, fewer trades, and a straightforward approach that appeals to both novices and veterans who’ve had enough of micromanaging their portfolios.

While it’s not without its downsides—mainly the lack of fixed-income exposure and the inability to customize allocations—XEQT’s strength lies in its no-frills approach to wealth building. If your goal is to harness global equity returns over decades and you’re ready to embrace the market’s natural ebbs and flows, XEQT could be a worthy addition to your investment strategy.

In a world where complexity often reigns, XEQT’s simplicity is a breath of fresh air. For the right kind of investor, it’s not just another ETF—it’s a long-term partner on the journey to financial freedom.

FAQ

What holdings are in XEQT?

XEQT, the iShares Core Equity ETF Portfolio, holds a diversified mix of other ETFs to provide broad equity exposure. As of December 2024, its top holdings include: iShares Core S&P Total U.S. Stock Market ETF (approximately 47.76%), iShares Core S&P/TSX Capped Composite Index ETF (approximately 24.50%), iShares Core MSCI EAFE IMI Index ETF (approximately 22.43%), iShares Core MSCI Emerging Markets IMI Index ETF (approximately 4.86%). This allocation provides exposure to U.S., Canadian, international developed, and emerging market equities.

Is XEQT US or Canada?

XEQT is a Canadian-listed ETF managed by BlackRock Asset Management Canada Limited. It trades on the Toronto Stock Exchange (TSX) under the ticker symbol XEQT. While it provides global equity exposure, including U.S. stocks, it is domiciled in Canada.

What is the future prediction for XEQT?

Predicting the future performance of any investment, including XEQT, is inherently uncertain and subject to market risks. XEQT aims to provide long-term capital growth by investing in a diversified portfolio of equity ETFs. Investors should consider their own investment goals and risk tolerance and may consult financial advisors for personalized advice.

What is the average return on XEQT?

Since its inception on August 7, 2019, XEQT has achieved an average annual return of approximately 12.36%, including dividends. In the past year, it has returned about 23.37%. Please note that past performance does not guarantee future results.

Which is better, VEQT or XEQT?

Both VEQT (Vanguard All-Equity ETF Portfolio) and XEQT (iShares Core Equity ETF Portfolio) are all-equity ETFs offering global diversification. XEQT has a slightly lower management expense ratio (MER) of 0.20% compared to VEQT’s 0.24%. VEQT holds a larger number of stocks, providing broader diversification. Performance between the two has been similar, with slight variations. The choice between them depends on individual preferences regarding fees, diversification, and brand loyalty.

Is XEQT a good stock to buy?

XEQT offers a simple and efficient way to gain exposure to a globally diversified portfolio of equities, with automatic rebalancing and a low management fee. However, as with any investment, it carries risks, especially given its 100% equity allocation. Investors should assess their own financial goals, risk tolerance, and investment horizon, and may consult a financial advisor to determine if XEQT aligns with their investment strategy.

Are XEQT and VFV the same?

No, XEQT and VFV are different ETFs with distinct investment objectives. XEQT (iShares Core Equity ETF Portfolio) is an all-equity ETF that provides diversified exposure to global equities, including U.S., Canadian, international developed, and emerging markets. VFV (Vanguard S&P 500 Index ETF) seeks to track the performance of the S&P 500 Index, focusing solely on large-cap U.S. companies. Therefore, XEQT offers broader diversification across regions, while VFV concentrates on the U.S. market.

Does XEQT rebalance?

Yes, XEQT is continuously monitored and automatically rebalanced as needed to maintain its target asset allocation of 100% equity exposure across various regions. This automatic rebalancing ensures that the fund stays aligned with its investment objectives without requiring intervention from investors.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing involves risks, including the possible loss of principal. Always conduct your own research before making investment decisions.