BLK - BlackRock

XEQT ETF Review: One Equity Portfolio ETF

Affiliate Disclosure

XEQT ETF is a multi-asset ETF that invests in one or more ETFs managed by BlackRock Canada or its affiliates, providing exposure to equity securities.

The ETF offers long-term capital growth to investors. With XEQT you get exposure to over 9,000 individual stocks traded worldwide.

The ETF is part of group of 5 ETFS that can be used to manage a portfolio based on your desired fixed income and equity exposure.

Pros of iShares XEQT ETF

  • XEQT provides exposure to ETFs that are diversified across regions.
  • It is continuously monitored and also rebalanced.
  • Less expensive with an MER of 0.20%.

Cons of iShares XEQT ETF

  • Provides exposure to equity ETFs managed only by BlackRock Canada.
  • XEQT’s management fee is higher compared to the MER of individual ETFs.

iShares XEQT ETF Facts

  • Inception Date: August 7, 2019
  • Benchmark: None – 100% Equity ETF from iShares Core ETF Portfolios
  • Net Assets: $495M
  • MER: 0.20%
  • Distribution Yield: 1.55%
  • Dividend Schedule: Quarterly

iShares XEQT ETF MER – Management Expense Ratio 

XEQT’s management fee stands at 0.18% and MER is 0.20%. Its contemporary Vanguard’s VEQT ETF has an MER of 0.25%.

The MER is what Blackrock takes to manage the fund for you. It’s much cheaper than mutual funds and in some cases cheaper than investing on your own.

Mutual funds can charge over 2% and it robs you of your returns. It’s time to ditch your mutual funds and switch to ETF ASAP. Many brokers such as Questrade offer free ETFs.

iShares XEQT ETF Performance

The annual rate of return for iShares XEQT ETF since inception is 15.99%. While it looks great, it’s not actualy great for the time span it comes. The ETF is only 2 years old and the SP500 has had twice that return.

When it comes to investing 100% in equity, there are many options. A simple SP500 index can do the trick. You know the saying, keep it stupid simple (KISS).

XEQT ETF performance vs TSX and SP500
Dividend Adjusted Chart by Stock Rover - Try it out.

Take your TFSA account as an example. The rules are the same for everyone and I mean everyone. The growth is ultimately a factor of your investment performance provided you make your TFSA contribution limit every year. The annual performance of an ETF matters as you can see below the growth over 20+ years.

wdt_ID Year Yearly Limit Cumulative 5% Growth 10% Growth Dividend Earner Spousal
1 2009 5,000 5,000 5,250 5,500 Not Tracked Not Started
2 2010 5,000 10,000 10,762 11,550 Not Tracked Not Started
3 2011 5,000 15,000 16,550 18,205 Not Tracked Not Started
4 2012 5,000 20,000 22,628 25,525 Not Tracked Not Started
5 2013 5,500 25,500 29,534 34,128 $41,742 Not Started
6 2014 5,500 31,000 36,786 43,590 $52,820 Not Started
7 2015 10,000 41,000 49,125 58,949 $56,307 Not Started
8 2016 5,500 46,500 57,356 70,984 $70,200 Not Started
9 2017 5,500 52,000 65,999 84,034 $78,900 $13,308
10 2018 5,500 57,500 75,074 98,487 $96,937 $58,818
11 2019 6,000 63,500 85,128 114,986 $129,467 $82,596
12 2020 6,000 69,500 95,684 133,030 $153,993 $95,906
13 2021 6,000 75,500 106,769 152,933 $181,601 $113,194
14 2022 6,000 81,500 118,407 174,827 $183,031 $144,633
15 2023 6,500 88,000 131,152 199,459 $217,738 YTD $167,963 YTD
16 2024 7,000 95,000 145,061 227,105
17 2025 7,000 102,000 159,664 257,516
18 2026 7,000 109,000 174,997 290,967
19 2027 7,000 116,000 191,097 327,764
20 2028 7,500 123,500 208,526 368,791
21 2029 7,500 131,000 226,828 413,920
22 2030 7,500 138,500 246,044 463,562
23 2031 7,500 146,000 266,221 518,168
24 2032 7,500 153,500 287,407 578,235
25 2033 7,500 161,000 309,653 644,308
26 2034 7,500 168,500 333,011 716,989
27 2035 7,500 176,000 357,536 796,938
28 2036 7,500 183,500 383,288 884,881
29 2037 7,500 191,000 410,327 981,620
30 2038 7,500 198,500 438,719 1,088,032

iShares XEQT ETF Holdings

Unlike an S&P500 ETF where your exposure is from US companies, XEQT is diversified across countries and continents.

It holds over 1,200 companies. It’s not worth listing them all here and instead it’s much better to look into the country exposure you are getting from it.

iShares XEQT ETF Geography Exposure

The iShares XEQT Core Equity ETF Portoflio invests in 4 different ETFs to bring the outlined geographical diversification.

  • ITOT – (46.80%) ISHARES CORE S&P TOTAL U.S. STOCK
  • XIC – (24.70%) ISHARES S&P/TSX CAPPED COMPOSITE
  • XEF – (23.25%) ISHARES MSCI EAFE IMI INDEX
  • IEMG – (4.90%) ISHARES CORE MSCI EMERGING MARKETS
XEQT Geography Diversification 2021

Why hold iShares XEQT ETF

As a pure play 100% equity, I am not sure why you should not just buy the best 500 companies in the US. All of them operate around the world bringing you exposure to those regions by proxy.

I vote to stick with an S&P500 ETF such as VFV.

If you want the dividends, it’s not clear you will get the same growth but the the best banks and the best utility stocks will give you more income.