VEQT vs XEQT: What's the Difference?

The Most Common Question in Canadian ETF Investing

If you've spent any time on Canadian personal finance forums, you've seen this debate. "Should I buy VEQT or XEQT?" It might be the single most asked question in Canadian ETF investing.

The short answer: for most investors, it doesn't matter much. They're very similar products with very similar outcomes. But let's look at the actual differences.

The Basics

	VEQT	XEQT
Provider	Vanguard	iShares (BlackRock)
MER	~0.20%*	~0.20%
Holdings	~13,700	~9,300
Equity Allocation	100%	100%
Inception	January 2019	August 2019

Both are all-equity, globally diversified, fund-of-funds ETFs that trade on the TSX. Both are designed to be a complete equity portfolio in a single purchase.

Geographic Allocation: The Real Difference

This is where the meaningful difference lies:

Region	VEQT	XEQT
United States	~40%	~45%
Canada	~30%	~25%
International	~23%	~22%
Emerging Markets	~7%	~8%

VEQT holds more Canada. XEQT holds more US. That's the most visible difference, but there's a subtler structural one worth noting: VEQT's non-Canadian allocation uses market-cap weighting — it adapts organically as global markets shift. If US markets shrink relative to the rest of the world, VEQT's US allocation adjusts accordingly. XEQT uses fixed target weights (45% US, 25% Canada, etc.) that represent a human judgment call about what the "right" allocation should be.

Market-cap weighting is the more systematic, passive-consistent approach — it follows global economic reality rather than an asset manager's fixed opinion.

MER: Effectively the Same

After Vanguard's November 2025 fee reduction, both VEQT and XEQT have effective MERs of approximately 0.20%. The management fee difference is tiny (0.17% for VEQT vs 0.18% for XEQT), and with operating expenses factored in, they land in the same ballpark.

On a $100,000 portfolio, we're talking about a difference of maybe $10-20 per year. This should not be your deciding factor.

Number of Holdings

VEQT holds approximately 13,700 stocks compared to XEQT's ~9,300. The difference comes from index methodology — VEQT tracks FTSE and CRSP indices, which capture more of the total market including smaller companies, compared to the S&P and MSCI indices used by XEQT. VEQT also allocates more to emerging markets (~7% vs ~5%), giving you broader exposure to the fastest-growing economies.

More holdings means more diversification — and for a product whose entire purpose is to give you globally diversified equity exposure, casting the wider net is the approach that better serves the mission.

Structure: Different Underlying ETFs

Both are fund-of-funds, but they use different building blocks:

VEQT holds Vanguard ETFs: VUN, VCN, VIU, VEE

XEQT holds iShares ETFs: ITOT, XIC, XEF, IEMG (plus some direct index exposure)

The underlying indexes are similar but not identical. VEQT generally tracks FTSE indexes, while XEQT tracks a mix of S&P and MSCI indexes. In practice, the difference in returns from index methodology is very small.

The Companies Behind the Funds

This is often overlooked but worth understanding.

Vanguard operates under a mutual ownership structure — the company is owned by its funds, and those funds are owned by the people who invest in them. There are no outside shareholders. When Vanguard reduces fees, the savings flow directly to investors because the investors are the owners. This isn't marketing — it's the legal and financial reality of how Vanguard operates.

BlackRock, the company behind XEQT and iShares, is publicly traded on the NYSE under ticker BLK. It has external shareholders who expect the company to grow revenue and profit margins. BlackRock is well-run and has delivered competitive products, but there's a structural tension: leadership must balance the interests of fund investors with the interests of BlackRock shareholders. Those don't always point in the same direction.

Both are competent companies. But Vanguard's structure uniquely aligns their incentives with yours.

Performance: Very Close

Since XEQT launched in August 2019, the two funds have tracked remarkably close to each other. Any short-term divergence is almost entirely explained by the US vs Canada allocation difference.

Over a 20-30 year holding period, the difference in total returns between VEQT and XEQT is likely to be small relative to the overall growth of your portfolio. Market returns will dominate, not the choice between these two specific funds.

You can see the live performance comparison on our compare page.

Common Deciding Factors

Since the funds are so similar, here's what actually tips the decision for most investors:

Your brokerage's commission structure. Some brokerages offer commission-free trading on specific ETFs. If your brokerage offers free XEQT trades but charges for VEQT (or vice versa), that's a legitimate reason to pick one over the other, especially for investors making frequent small contributions.

Preference for US vs Canada tilt. If you want more US exposure, lean toward XEQT. If you're comfortable with more Canadian exposure, lean toward VEQT.

Brand loyalty or familiarity. Some investors simply have a preference for Vanguard or iShares. Both are reputable, well-established providers.

What you already hold. If you already have positions in one, there's rarely a good reason to switch to the other. Switching can trigger capital gains in a non-registered account and achieves very little.

The Honest Answer

Both VEQT and XEQT are excellent products and you'll do well with either. The amount of time Canadian investors spend agonizing over this choice would be better spent increasing their savings rate or maximizing their TFSA contributions.

But if you're choosing for the first time, we think VEQT has the edge — not because of any single number, but because of the company behind it and how the portfolio is constructed. Vanguard's investor-owned structure, broader index coverage, and market-cap-weighted global allocation add up to a product that's built from the ground up to serve you.

If you already hold XEQT, there's no reason to switch — the tax drag and transaction cost would outweigh any benefit. But if you're starting fresh, VEQT is our pick.

Read our full editorial on why we choose VEQT →