XEQT vs VEQT: Which Builds Millionaire Portfolios

Let’s talk about the elephant in the room—how do you simplify your investing life without leaving money on the table? If you’ve ever felt overwhelmed by trying to pick individual stocks or juggling a dozen ETFs, you’re not alone. Enter XEQT and VEQT, two all-in-one ETFs that aim to do the heavy lifting for you.

But here’s the catch: they’re not identical twins. They’re more like siblings with different personalities. Let’s break it down.

The Big Picture: What Are XEQT and VEQT?

Both XEQT (managed by BlackRock) and VEQT (managed by Vanguard) are all-equity ETF portfolios designed to give you global exposure in one tidy package.

Think of them as the Swiss Army knives of investing—they cover Canadian, U.S., international developed, and emerging markets all under one roof. But don’t let their similarities fool you. The devil is in the details.

XEQT splits its holdings across five ETFs, while VEQT uses four. Both offer low expense ratios—0.20% for XEQT and 0.24% for VEQT—but that tiny 0.04% difference can add up over decades.

And while they’ve both returned an impressive 12.4% annually since their 2019 launches, history doesn’t always repeat itself. So, what makes them different, and why should you care?

Geographic Exposure: Where’s Your Money Going?

Here’s where things get interesting. XEQT gives you about 45% exposure to U.S. equities, including a dedicated 5% slice of the S&P 500 through its XUS holding.

That’s a big deal if you’re bullish on American tech giants like Apple, Microsoft, and Amazon. It also allocates nearly 25% to international developed markets, giving you a foothold in Europe, Japan, and Australia.

Emerging markets? About 5%. On the other hand, VEQT leans heavier on Canada, with roughly 30% of its portfolio tied to domestic stocks. This “home bias” might appeal to investors who want currency stability and prefer Canadian dividends.

So, which is better? It depends on your outlook. If you believe the U.S. will continue to dominate global markets, XEQT’s tilt might be more appealing. But if you’re wary of overexposure to American equities—or you just love those Canadian dividend tax credits—VEQT could be your go-to.

Cost Efficiency: Every Basis Point Counts

Let’s talk about fees because even small differences can snowball over time. XEQT’s 0.20% MER is slightly cheaper than VEQT’s 0.24%. Sounds negligible, right? Not so fast. On a $100,000 investment growing at 7% annually over 30 years, that 0.04% difference could save you around $12,400.

Now we’re talking real money. But before you write off VEQT entirely, remember that Vanguard has a reputation for lowering fees as assets grow. So, this gap might narrow in the future.

Still, cost isn’t everything. You’re paying for structure, diversification, and peace of mind. And both ETFs deliver on those fronts.

Diversification and Risk: How Safe Is Your Money?

Diversification is the name of the game here. XEQT holds 8,987 stocks globally, while VEQT takes it up a notch with 13,853. But raw numbers don’t tell the whole story. XEQT’s effective diversification—measured by the “effective number of stocks”—is actually higher, thanks to its lower concentration in Canadian equities. Translation: XEQT spreads your risk more evenly across global markets.

What about volatility? During the 2022 market meltdown, VEQT showed marginally lower drawdowns (-22.1% vs. XEQT’s -23.4%) due to its higher Canadian allocation. This makes sense because Canadian stocks tend to be less volatile than their U.S. counterparts. So, if you’re the type who loses sleep during market corrections, VEQT might feel like a softer pillow.

Tax Considerations: Keeping More of What You Earn

If you’re investing in a TFSA or RRSP, taxes are less of a concern. Both ETFs are equally tax-efficient in these accounts. But if you’re holding them in a non-registered account, VEQT’s higher Canadian dividend income could save you some cash.

With 30% of its portfolio generating eligible dividends, VEQT offers a slight edge for top-bracket taxpayers. For every $100,000 invested, you could save around $180 annually compared to XEQT. Not life-changing, but not pocket change either.

The Million-Dollar Question: Which One Should You Pick?

Now for the million-dollar question—literally. Both ETFs have the potential to turn consistent contributions into serious wealth over time. Assuming a more realistic 10% annual return (instead of the 12.4% they’ve averaged since inception), a $7,000 annual contribution could grow to over $1.2 million in 30 years. Not bad for setting it and forgetting it.

But how do you choose between them? Here’s a quick checklist:

• Do you want more U.S. tech exposure? Go with XEQT.
• Prefer Canadian dividends and currency stability? VEQT might be your best bet.
• Obsessed with minimizing fees? XEQT’s slightly lower MER could tip the scales.
• Looking for broader emerging market exposure? VEQT’s 6.76% allocation edges out XEQT’s 4.83%.

Ultimately, both ETFs are solid choices. If you’re already invested in one, there’s no urgent need to switch. But if you’re starting fresh or looking to consolidate your holdings, consider how each aligns with your long-term goals.

Final Thoughts: Keep It Simple, Stay Consistent

Investing doesn’t have to be complicated. XEQT and VEQT prove that you can build wealth without micromanaging your portfolio. Whether you lean toward XEQT’s U.S.-heavy approach or VEQT’s Canadian focus, the key is consistency. Stick to your plan, max out your contributions, and let compound interest do the rest.

Remember, the best investment strategy is the one you can stick with—not the one that looks perfect on paper.

So, pick your horse, stay disciplined, and watch your money grow. After all, becoming a millionaire isn’t about timing the market—it’s about time in the market.