XEQT ETF is a multi-asset ETF that invests in one or more ETFs managed by BlackRock Canada or its affiliates that offer exposure to equity stocks.
The ETF offers investors long-term capital growth. With XEQT you get exposure to over 9,000 individual stocks traded worldwide.
The ETF is part of a group of 5 ETFS that can be used to manage a portfolio based on your desired bond and equity exposure.
Benefits of the iShares XEQT ETF
- XEQT offers exposure to ETFs that are diversified across regions.
- It is continuously monitored and also rebalanced.
- Cheaper with a MER of 0.20%.
Disadvantages of iShares XEQT ETF
- Offers exposure to equity ETFs managed only by BlackRock Canada.
- XEQT’s management fee is higher than the MER of individual ETFs.
iShares XEQT ETF facts
- Starting time: 7th August 2019
- Benchmark: None – 100% equity ETF from iShares Core ETF portfolios
- Net worth: $ 495 million
- MER: 0.20%
- Distribution income: 1.55%
- Dividend plan: Quarterly
iShares XEQT ETF MER – management expense ratio
XEQT’s management fee is 0.18% and MER is 0.20%. Vanguard’s VEQT ETF has a MER of 0.25%.
The MER is what Blackrock needs to run the fund. It’s much cheaper than mutual funds and, in some cases, cheaper than investing on your own.
Mutual funds can charge over 2% and rob you of your returns. It’s time to ditch your mutual funds and switch to ETFs as soon as possible. Many brokers like Questrade offer free ETFs.
iShares XEQT ETF performance
The annual return of the iShares XEQT ETF since inception is 15.99%. While it looks great, for the length of time that it comes, it isn’t exactly great. The ETF is only 2 years old and the SP500 has made double the return.
When it comes to investing 100% in equity, there are many options. A simple SP500 index can do the job. You know the saying, keep it stupid simple (KISS).
Take your TFSA account as an example. The rules are the same for everyone and I mean everyone. Ultimately, growth is a factor in your investment performance, provided you meet your TFSA contribution limit each year. The annual performance of an ETF is important as you can see from the 20+ year growth below.
|1||2009||5,000||5,000||5,250||5,500||Not pursued||Not started|
|2||2010||5,000||10,000||10,762||11,550||Not pursued||Not started|
|3rd||2011||5,000||15,000||16,550||18.205||Not pursued||Not started|
|4th||2012||5,000||20,000||22,628||25,525||Not pursued||Not started|
|5||2013||5,500||25,500||29,534||34,128||$ 41,742||Not started|
|6th||2014||5,500||31,000||36,786||43,590||$ 52,820||Not started|
|7th||2015||10,000||41,000||49.125||58.949||$ 56,307||Not started|
|8th||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|
iShares XEQT ETF holdings
Unlike an S&P500 ETF, where your exposure comes 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 far better to look at the country presence it gives you.
iShares XEQT ETF Geography Exposure
The iShares XEQT Core Equity ETF Portoflio invests in 4 different ETFs in order to achieve the geographical diversification described.
- ITOT – (46.80%) SHARES CORE S&P TOTAL US SHARES
- XIC – (24.70%) ISHARES S & P / TSX CAPPED COMPOSITE
- XEF – (23.25%) ISHARES MSCI EAFE IMI INDEX
- IEMG – (4.90%) ISHAFT KERN-MSCI-EMERGING MARKETS
Why hold iShares XEQT ETF?
Since this is pure 100% equity, I’m not sure why you shouldn’t just buy the top 500 companies in the US. All of them operate all over the world and bring you closer to these regions via proxy.
I am voting to stick with an S&P500 ETF like VFV.
If you want the dividends, it’s not clear you’re getting the same growth, but the best banks and the best utility stocks will bring you more income.