Holding an all-equity portfolio that you pick yourself and ensuring its proper diversification is not an easy task for even the most experienced investors. It requires more than a basic understanding of financial markets.
Instead of worrying about your stock picks losing momentum, you can choose to invest in a portfolio made of several Exchange-Traded Funds (ETFs) that can do all the rebalancing for you.
The iShares Core Equity ETF Portfolio (XEQT) is an all-in-one ETF that invests 100% in equity securities. In my iShares XEQT review, I will discuss everything you need to know about this ETF portfolio to help you make a more well-informed investment decision.
Pros of BlackRock iShares XEQT
- Easy to use and purchase
- Provides worldwide diversification in one neat package
- Much lower fees than mutual funds
- Highly liquid
- Set it and forget it
Cons of BlackRock iShares XEQT
- Does not provide exposure to fixed-income securities
- You can expect volatility with 100% stock holdings
- You may have to hold your entire holding if your risk tolerance changes
Table of Contents
What is BlackRock iShares Core Equity ETF Portfolio?
iShares XEQT is an ETF portfolio that provides investors with long-term capital growth through investing in one or several ETFs managed by BlackRock Canada or an affiliate that provides exposure to stocks.
XEQT aims to have 100% exposure to equity securities. However, you can expect it to have a small amount of cash or cash equivalents from time to time. The ETF portfolio provides investors with geographically diversified exposure to equity ETFs managed by BlackRock Canada.
The ETF portfolio’s holdings, as of November 11, 2020, are 0.26% in cash or cash equivalents, while the remaining 99.74% of funds are invested in various all-equity ETFs.
How do All-In-One Portfolio’s Work
All-in-one ETFs are essentially a portfolio of several ETFs designed to make diversified and passive investing easier for investors.
Before all-in-one ETFs came around, it was much more difficult to make an ETF portfolio. You would have to purchase several ETFs yourself and rebalance them to align with your investment goals and risk tolerance based on each ETF’s performance.
You can find out more details about all-in-one ETFs in my list of the best all-in-one ETFs in Canada.
What does BlackRock iShares XEQT Invest in?
Going back to the iShares XEQT review, the ETF portfolio is a low- to medium-risk investment that you can consider. The ETF portfolio invests in a basket of ETFs that, in turn, invest entirely in stocks. By investing primarily in four underlying ETFs, XEQT provides investors with low-cost exposure to over 9,000 individual stocks trading on several exchanges worldwide.
The ETF provides you with diversified exposure to stocks. 46.51% of its entire focus is on US equity securities. 22.65% of it is exposed to Canadian equity securities, and the rest are focused on stocks in emerging markets and the Pacific.
The ETF portfolio has had a prolific performance based on the swings in the respective stock markets, providing exposure diversified across several sectors of the economy. It has $172.77 million in total assets under management as of December 29, 2020.
XEQT Asset Allocation
In this section of my iShares XEQT review, I would typically tell you about the breakdown of its total funds between fixed-income and equity securities. However, iShares XEQT invests primarily in equities and has some exposure to cash or cash equivalents. It provides 99.55% exposure to equities and 0.45% exposure to cash or derivatives.
I will show you its exposure breakdowns to equity securities based on the geography as of December 30, 2020.
iShares XEQT diversifies across several countries, primarily focusing on the US and Canada. The remaining exposure is divided between Japan, the UK, Switzerland, France, China, Germany, Australia, and the Netherlands.
XEQT Top Holdings
iShares XEQT provides investors with highly diversified exposure to equity securities worldwide. However, it does have significant exposure to some stocks. Its top ten holdings consist primarily of companies based in the US and in Canada. These top ten holdings comprise 13.75% of its entire holdings of equity securities as of November 30, 2020.
Here is a breakdown of its underlying holdings for the top ten securities. iShares XEQT primarily focuses on Apple Inc. with a 2.46% allocation, Microsoft comes in second with 2.08% allocation, and Amazon comes in third with a 1.73% allocation of its funds.
XEQT Sector Weighting
iShares XEQT is diversified across various sectors of the economy. While three of the top holdings for this ETF portfolio comprise tech sector equity securities, it’s sector weighting is strongly inclined towards the Financial Services sector.
Here is a breakdown of iShares XEQT sector weightings as of December 30, 2020.
iShares XEQT invests heavily in the Financial Services sector, making up 18.03% of its holdings. The Technology sector comes in second with a 16.72% asset allocation, followed by Industrials at 11.50% and Consumer Cyclical at 10.26%. Its lowest exposure is towards the Utilities sector at 3.52%.
iShares XEQT MER and Fees
iShares XEQT is among the low-cost ETF portfolios that you can consider investing in. It has total assets under management standing at $172.77 million as of December 29, 2020.
XEQT has a management fee of 0.18% and an MER of 0.20%. While the MER is higher than what you would get if you purchased individual ETFs, the higher MER comes with several benefits:
- You don’t need to spend time on rebalancing the ETFs in the portfolio because it is automatically realigned to match with your goals.
- The MER is much lower than mutual funds and lower than robo-advisors.
iShares XEQT Performance and Returns
XEQT is among the relatively newer funds issued by BlackRock. The fund’s inception was on August 7, 2019, giving it barely a year’s worth of performance to track. However, XEQT has had a fantastic performance in the short time it has been around.
Its average annual returns as of November 30, 2020, are 9.72% year over year and 13.64% since its inception. Here is a chart showing the growth of a hypothetical $10,000.
XEQT’s chart shows a dip in the performance during the February-March sell-off. However, it has since recovered and even returned to better valuations than 12 months ago.
iShares XEQT Dividend Yield
As of December 24, 2020:
- 12-month trailing yield: 1.94%
- Distribution yield: 1.34%
- Dividend schedule: Quarterly
iShares XEQT vs. Other ETFs
iShares XEQT vs. iShares XAW
iShares XAW is another all-in-one ETF portfolio offered by BlackRock iShares. It consists of several BlackRock ETFs that focus on equities. The difference is that it does not include any Canadian stocks in its holdings. You can choose iShares XAW if you do not want any Canadian stocks in your portfolio.
iShares XEQT vs. Vanguard VEQT
VGRO is Vanguard’s Growth ETF portfolio. It consists of several ETFs offered by Vanguard. The primary difference between XEQT and VGRO is that VGRO offers you a more conservative option. It has an 80/20 split between equity and fixed-income securities.
Read my full VEQT review here.
Is iShares XEQT a Good Investment For You?
Investing in iShares XEQT could be an ideal option for you to consider if you do not mind getting 100% exposure to equity securities. The biggest advantage of investing in XEQT is its ability to provide you with returns that match various stock markets’ performance.
While geographical and sector-based diversification can reduce the overall risk, your returns depend entirely on the performance of the stocks. The all-equity portfolio entails above-average investment risks if it makes up your entire investment portfolio.
Since it is automatically rebalanced, you can save a lot of time and trading fees that you would have to spend by manually rebalancing a portfolio of individual stocks. As with any other investment, you can lose money with XEQT. It all depends on the stock market swings.
How to Buy BlackRock iShares XEQT ETF in Canada
My two favourite ways to buy iShares ETFs in Canada are the following:
- Questrade – Canada’s leading discount broker, I use Questrade to trade most of my stocks. It has a desktop and mobile trading platform. All Canadian ETF purchases are commission-free, but be aware that selling ETFs will cost a small fee. With this special offer, you can also get $50 of commission-free stock trades here.
- Wealthsimple Trade – Better known as a robo-advisor, Wealthsimple has now released this fantastic trading platform that now comes in both desktop and mobile versions. All Canadian stock and ETF trades are commission-free. Get a $10 signup bonus when you sign up here.
Passive investors without a significant knowledge of stock market investing and financial markets might have an interest in stocks but do not know where to begin. ETFs provide you with a basket of stocks to invest in, based on your investment goals.
An all-in-one ETF portfolio like XEQT provides you with even more diversification by investing in a basket of ETFs that focus on equity securities.
If you are okay with the risks that all-equity investing entails, you can consider investing in XEQT. To round off my iShares XEQT review, I will rate it highly with a Wealth Awesome thumbs up.