Wondering which one to choose among XEQT, VEQT and VFV for your RRSP or TFSA? These three Canadian ETFs are the most popular in the DIY investing community, but they do NOT do the same thing. Here is a detailed comparison.
| ETF | Issuer | MER | Allocation | Strategy |
|---|---|---|---|---|
| XEQT | iShares (BlackRock) | 0.20% | 100% global equities | Aggressive all-in-one |
| VEQT | Vanguard Canada | 0.24% | 100% global equities | Aggressive all-in-one |
| VFV | Vanguard Canada | 0.09% | 500 US stocks (S&P 500) | Single-market US |
TL;DR: XEQT and VEQT are nearly interchangeable (global all-in-one). VFV is completely different — US-only exposure. For most long-term Canadian investors, XEQT remains the most balanced choice (MER slightly lower than VEQT, same performance).
This is where the difference shows up. XEQT and VEQT both aim for global diversification, but with different weightings:
| Region | XEQT | VEQT | VFV |
|---|---|---|---|
| United States | ~46% | ~42% | 100% |
| Canada | ~25% | ~30% | 0% |
| International developed | ~22% | ~21% | 0% |
| Emerging markets | ~7% | ~7% | 0% |
VEQT has a stronger Canadian home country bias (30% vs 25%). If you believe Canadian companies will outperform, VEQT gives you more exposure. If you prefer to follow global market-cap weightings (US-dominated), XEQT.
The MER (Management Expense Ratio) is charged annually on your assets. On $1,000 invested over 30 years with a 7% annualized return:
| MER | Final value | Cumulative cost in fees |
|---|---|---|
| 0.09% (VFV) | ~$7,460 | ~$150 |
| 0.20% (XEQT) | ~$7,220 | ~$390 |
| 0.24% (VEQT) | ~$7,130 | ~$480 |
VFV costs ~$330 less than VEQT over 30 years for $1,000 invested. But that is negligible compared with the diversification benefit XEQT/VEQT bring. The MER is not everything — and neither is diversification.
The Canada-US tax treaty exempts the 15% withholding tax on US dividends held inside an RRSP. VFV (S&P 500) is ultra-efficient inside an RRSP. XEQT and VEQT also hold US equities, so they enjoy the same advantage proportionally.
No treaty applies — the 15% withholding on US dividends applies and is not recoverable. On a VFV at 1.3% dividend yield, that is ~0.20% lost per year. XEQT and VEQT have less direct US exposure, so less withholding. XEQT/VEQT are slightly more efficient than VFV in a TFSA.
All dividends are taxed. Canadian dividends benefit from the eligible dividend tax credit (38% gross-up + 15% federal credit). VEQT (30% CA) benefits a bit more than XEQT (25% CA). VFV is disadvantaged (US dividends taxed at marginal rate).
XEQT — characteristics: simplicity, global diversification, low MER, high liquidity. It is the ETF most commonly cited on r/PersonalFinanceCanada for beginners since 2021.
XEQT or VEQT — characteristics: the US withholding on VFV (15% non-recoverable) eats ~0.2%/yr of return. Over 30 years, it compounds into a meaningful difference.
VFV (60%) + XEC (20% emerging markets) + XIU (20% Canada) — characteristics: you replicate XEQT manually for ~0.07% weighted MER. Manual rebalancing effort required, however.
VFV — characteristics: pure S&P 500 exposure. But accept the geographic concentration risk.
VEQT — characteristics: 30% Canada vs 25% for XEQT. Relevant if you believe in Canadian banks and the energy/materials sector.
| ETF | 5-year annualized return | Volatility (standard deviation) |
|---|---|---|
| VFV | ~13.5% | 17% |
| XEQT | ~10.5% | 14% |
| VEQT | ~10.2% | 14% |
VFV outperformed over the past 5 years thanks to the US tech bull run. But past returns guarantee nothing — the 2000-2010 decade saw the opposite (US Lost Decade vs emerging markets rising).
XEQT combines global diversification, low MER and simplicity. VEQT is nearly identical (preference depends on your Canadian bias). VFV is an excellent RRSP complement but not a standalone portfolio core.
Something to consider: track your portfolio in real time with WealthWise to see the geographic and sector allocation, and the performance of each of your ETFs.
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