XEQT - ETF Overview
A Comprehensive Guide to the iShares Core Equity ETF Portfolio (XEQT)
For individuals seeking to learn about analyzing Exchange-Traded Funds (ETFs), I suggest reviewing my earlier post that explains the fundamentals of ETFs and the analysis process.
iShares Core Equity ETF Portfolio (XEQT) - Snapshot
Overview
The iShares Core Equity ETF Portfolio (XEQT) is a diversified, all-in-one investment option managed by BlackRock Canada. It aims to provide long-term capital growth by investing in equity securities globally.
Investment Strategy
XEQT allocates its assets entirely to equity securities, targeting 100% stock composition for its portfolio. This aggressive strategy is designed to capitalize on the growth potential of equities by excluding bonds, which are often used to mitigate volatility.
Top Holdings
XEQT invests in a basket of four underlying iShares ETFs, which in turn invest in stocks. This provides exposure to over 9,000 individual stocks traded worldwide. The top holdings of XEQT include:
iShares Core S&P Total U.S. Stock ETF (ITOT): 45%
iShares S&P/TSX Capped Composite ETF (XIC): 25%
iShares MSCI EAFE IMI Index ETF (XEF): 24%
The portfolio's underlying holdings comprise AAPL, MSFT, NVDA, RY, AMZN, and others.
Sector Allocation
XEQT's sector allocation is diversified across various regions:
United States: 45%
Canada: 25%
International Developed Markets: 25%
Emerging Markets: 5%
Risk Level
LOW to MEDIUM - based on the historical volatility of the ETF's returns, which have shown moderate fluctuations from year to year.
Performance
Over the past year, XEQT has had a total return of 28.91%. Since its inception, the average annual return has been 12.15%, including dividends.
Expense Ratio
XEQT has a management expense ratio (MER) of 0.20%, which is considered low cost and helps investors maximize their returns.
This means that for every $1,000 invested, the annual cost would be $2.
Dividend Yield
The forward dividend yield for XEQT is 1.85% as of the latest data.
This means that if you invest $1,000 in this ETF, you can expect to receive approximately $18.50 in dividends over a year, assuming the yield remains constant.
Other Information
Rebalancing: The portfolio is continuously monitored and automatically rebalanced to maintain target asset weights.
Similar Alternatives
Several alternatives to the XEQT ETF provide a diversified, all-in-one investment strategy with a 100% equity allocation. Some options include:
1. Vanguard All-Equity ETF Portfolio (VEQT)
Management Expense Ratio (MER): Slightly higher than XEQT.
Sector Allocation: Similar to XEQT, with a mix of US, Canadian, international developed, and emerging market equities.
Performance: Comparable to XEQT, with a strong track record of returns.
2. BMO All-Equity ETF (ZEQT)
Management Expense Ratio (MER): Similar to XEQT.
Sector Allocation: Also focuses on a global mix of equities, similar to XEQT.
Performance: Competitive with XEQT, offering a similar risk and return profile.
3. Horizons 100 ETF (HGRO)
Management Expense Ratio (MER): Competitive with XEQT.
Sector Allocation: Focuses on a broad range of equities, similar to XEQT.
Performance: Offers a similar risk and return profile to XEQT.
Here's a comparison of the expense ratios, yield, and performance of the XEQT ETF and its close alternatives:
Each of these ETFs provides a similar investment strategy and sector allocation, making them suitable alternatives to XEQT. The choice between them may come down to factors like management fees, historical performance, and personal investment preferences.
Target Investors
The XEQT is designed for investors who:
Seek long-term capital growth: XEQT aims to provide growth by investing in a diversified portfolio of global equities.
Plan to hold investments for the medium to long term: Given its equity focus, it's best suited for those with a longer investment horizon.
Want broad exposure to global equities: XEQT offers diversified exposure across regions, including the U.S., Canada, international developed markets, and emerging markets.
Have a high-risk tolerance: With a 100% equity allocation, XEQT is more volatile and suitable for investors who are comfortable with market fluctuations.
Reason to Invest…
Diversification: XEQT provides broad exposure to global equities, including the U.S., Canada, international developed markets, and emerging markets.
Simplicity: It's a one-stop solution for investors who want a diversified portfolio without the need to manage multiple funds.
Low Fees: With an MER of 0.20%, XEQT is cost-effective compared to many mutual funds.
Automatic Rebalancing: The portfolio is continuously monitored and automatically rebalanced to maintain target asset weights.
Long-Term Growth: Designed for long-term capital growth, making it suitable for investors with a medium to long-term investment horizon.
Reason Not to Invest…
High Equity Exposure: With 100% allocation to equities, it's not suitable for conservative investors who prefer a balanced or fixed-income approach.
Market Volatility: Being fully invested in stocks, it's subject to market fluctuations and may see significant ups and downs in value.
Lower Dividend Yield: XEQT focuses on capital growth rather than regular income, so it may not be ideal for investors seeking high dividend payouts.
Higher Fees Compared to Individual Stocks: While low compared to mutual funds, individual stocks or ETFs might offer lower fees.
