In this post, we will be comparing two popular All-in-one ETFs: iShares Core Equity – XEQT vs Vanguard All-Equity – VEQT. The comparison will encompass: historical performance, management fees and allocation.
Both XEQT and VEQT have the same objective: providing long-term capital growth by investing primarily in one or more exchange-traded funds.
Why All-in-one ETFs are so popular?
Many Canadians prefer investing in ETFs because of their low management fee and diversification. ETFs now exist for every asset class and sector. The dilemma is to choose the right ones to build your portfolio. The all-in-one ETFs respond directly to this need. By buying one ETF, the investor can have exposure to various types of assets. It does not require rebalancing because the ETF manager takes care of this for you. These features make all-in-one ETFs the best ETF in Canada.
So, it’s simply a matter of choosing one and holding onto it. The all-in-one ETFs are marketed based on the investors’ tolerance to risk. There are 3 main types: Conservative, Balanced or Growth.
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XEQT vs VEQT – Allocation and MER
| % | MER | Equity | Bonds |
| VEQT | 0.24 | 100% | 0% |
| XEQT | 0.20 | 100% | 0% |
XEQT has a lower MER. The difference is not that significant though. Both ETFs are all equity ETFs with 100% allocation.
XEQT vs VEQT – Price, Number of holdings, AUM and Dividend yield
| % | Nbre of holdings | Div Yld |
| VEQT | 4 | 1.23 |
| XEQT | 4 | 1.53 |
XEQT and VEQT have the same number of holdings and both offer similar dividend yield and liquidity.
XEQT vs VEQT – Historical performance
Geographic allocation comparison
| XEQT | Fund |
|---|---|
| United States | 43.79 |
| Canada | 24.00 |
| Japan | 5.88 |
| United Kingdom | 3.75 |
| France | 2.75 |
| Switzerland | 2.53 |
| Australia | 2.08 |
| Germany | 2.02 |
| China | 1.72 |
| Netherlands | 1.20 |
| VEQT | Fund |
|---|---|
| United States of America | 42.5% |
| Canada | 30.2% |
| Japan | 4.5% |
| United Kingdom | 3.1% |
| China | 2.5% |
XEQT and VEQT are both globally diversified ETFs offered by Vanguard Canada, but they have some differences in their geographic allocation.
XEQT has a more diversified allocation among countries with its top 3 allocations being United States (43.79%), Canada (24.00%), and Japan (5.88%). XEQT also has exposure to a broad range of countries, including France, Switzerland, Australia, Germany, and the Netherlands, which are not included in VEQT’s top allocations.
VEQT, on the other hand, has a higher allocation to Canada (30.2%) and the United States (42.5%), and has smaller allocations to Japan (4.5%) and the United Kingdom (3.1%). Additionally, VEQT includes exposure to China (2.5%), which is not included in XEQT’s top allocations.
Overall, both ETFs provide broad exposure to global markets, but their geographic allocations differ slightly. Investors may choose to invest in one or the other based on their personal preferences, risk tolerance, and investment goals.
XEQT vs VEQT Holdings
| XEQT Holdings | Weight (%) | |
|---|---|---|
| ITOT | ISHARES CORE S&P TOTAL U.S. STOCK | 44.63 |
| XEF | ISHARES MSCI EAFE IMI INDEX | 25.49 |
| XIC | ISHARES S&P/TSX CAPPED COMPOSITE | 24.72 |
| IEMG | ISHARES CORE MSCI EMERGING MARKETS | 4.95 |
| USD | USD CASH | 0.25 |
| USD | USD/CAD | 0.00 |
| CAD | CAD CASH | -0.04 |
| VEQT / Weight % | |
|---|---|
| U.S. Total Market Index | 42.72% |
| FTSE Canada All Cap Index | 29.98% |
| FTSE Developed All Cap ex North America Index | 20.00% |
| FTSE Emerging Markets All Cap Index | 7.29% |
Which one to pick?
VEQT Vanguard All-Equity invests in four different ETFs managed by Vanguard. These ETFs are highly diversified and aim to capture the whole US and Canadian Market. The indexes used by Vanguard seem to offer a better coverage than those used iShares.
If we take a look at the Canadian market, Vanguard is using the FTSE Canada All Cap Index, whereas iShares is relying on the S&P/TSX Capped Composite. I personally prefer the FTSE Canada All Cap Index; I don’t see the advantage of using a capped index.
Vanguard’s VEQT invests more in emerging markets than XEQT iShares Core Equity (7.3% vs 4.6%). This further confirm Vanguard’s VEQT offers more diversification.
Considering all the above, I personally would opt for VEQT!