You know an exchange-traded fund (ETF) has developed a loyal following when investors create an entire online community around buying it. The iShares Core Equity ETF Portfolio (TSX: XEQT) is one of those funds.
Canadian investors have even built the r/JustBuyXEQT community on Reddit around a simple philosophy: buy XEQT, keep adding to it, and stop trying to outsmart the market. I 100% understand the appeal.
Most investors do not need to constantly pick stocks, predict which sector will outperform, or decide whether the United States, Canada, Europe, or emerging markets will lead next year. XEQT packages an entire global equity portfolio into a single Canadian-listed ETF.
For investors with a long time horizon and the risk tolerance for a 100% stock portfolio, I think that simplicity is one of its biggest strengths. here’s why I think XEQT ranks among the best Canadian ETFs.
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What is XEQT?
XEQT is an all-equity asset allocation ETF built from several underlying iShares index funds. Together, those funds give investors exposure to thousands of companies spanning Canada, the United States, international developed markets, and emerging markets.
The portfolio intentionally maintains some home-country bias toward Canadian stocks while still investing the majority of its assets internationally. That gives Canadians meaningful exposure to the domestic market without making their financial future dependent on it.
You also get diversification across sectors and company sizes. Technology, financials, energy, healthcare, industrials, consumer stocks, and numerous other industries are represented. Best of all, XEQT handles the maintenance internally.
As markets move and allocations drift, the ETF rebalances on your behalf. You do not have to determine when to sell U.S. stocks and buy Canadian stocks or whether emerging markets suddenly deserve a larger allocation. You buy one ETF and let the portfolio do the work.
The behavioural benefits matter too
I think one of XEQT’s most underrated advantages has nothing to do with its underlying holdings. It removes decisions.
Investors are constantly tempted to interfere with their portfolios. A technology stock rallies, so they chase it. A country underperforms for several years, so they sell it. Markets crash, so they move into cash. Then they have to figure out when to get back in.
Every additional decision creates another opportunity to make a mistake. XEQT gives you a much simpler framework. Keep contributing, reinvest the distributions, and hold through market cycles.
You will still experience volatility because this is a 100% equity ETF. During a severe bear market, XEQT can suffer substantial losses.
But if you have decades ahead of you and can tolerate those declines, owning thousands of businesses around the world can make it easier to stop obsessing over individual stocks and focus on the behaviour that matters most: staying invested.
