XEQT vs VFV: Which ETF Should Canadians Buy in 2026?

XEQT vs VFV: The Short Answer

If you are Canadian and want one ETF you can buy for decades without thinking too hard, XEQT is the better default.

If you specifically want to bet on the largest American companies and you understand that you are concentrating your portfolio in one country, VFV is excellent.

That is the whole debate.

XEQT is a globally diversified all equity ETF. It owns Canadian stocks, US stocks, international developed markets, and emerging markets.

VFV is a Canadian listed S&P 500 ETF. It owns roughly 500 large US companies.

Both are cheap. Both are useful. Both can make sense in a TFSA or RRSP.

They are not interchangeable.

Why This Question Is Everywhere Right Now

Canadian investors are comparing ETFs more than ever because the difference is visible now.

Open an ETF chart and VFV often looks like the obvious winner. The S&P 500 has had an incredible run. US tech stocks have dominated. Nvidia, Microsoft, Apple, Meta, Amazon, Alphabet, and the rest of the American mega cap machine have carried a huge amount of global market performance.

So people look at VFV and think: why would I buy anything else?

Fair question.

Then they look at XEQT and see something more boring. More Canada. More international stocks. More diversification. Less pure exposure to the American winners.

Boring is not the same as worse.

The ETF that performed best over the last five years is not automatically the ETF you should hold for the next thirty.

What VFV Actually Is

VFV is the Vanguard S&P 500 Index ETF.

It trades in Canadian dollars on the Toronto Stock Exchange. It gives Canadian investors exposure to the S&P 500 without needing to convert money to US dollars.

The appeal is obvious.

1. It is cheap, with a management expense ratio of about 0.09 percent.
2. It tracks one of the most famous stock indexes in the world.
3. It owns many of the strongest companies on earth.
4. It is easy to understand.
5. Its recent performance has been excellent.

If you bought VFV years ago and ignored it, you probably look like a genius today.

That does not mean VFV is magic. It means the US market has had a fantastic stretch.

VFV gives you exposure to US large cap stocks. That is powerful. It is also concentrated.

Not concentrated in one company. Not concentrated in one sector only. But concentrated in one country, one currency environment, and one market narrative.

The S&P 500 is not the global economy. It is the largest American public companies.

That distinction matters.

What XEQT Actually Is

XEQT is the iShares Core Equity ETF Portfolio.

It is an all in one ETF that holds thousands of stocks across the world. BlackRock describes it as a simple way to get broad regional diversification in one package, with a target allocation of 100 percent equities and automatic rebalancing.

In plain English: XEQT is a full stock portfolio hiding inside one ticker.

You buy XEQT and you get exposure to:

1. Canadian stocks
2. US stocks
3. International developed markets
4. Emerging markets

Its management fee is 0.17 percent, and the commonly quoted MER is about 0.20 percent.

That is more expensive than VFV, but still extremely cheap compared with bank mutual funds charging 2 percent or more.

XEQT is built for the investor who does not want to keep making decisions.

You buy it. You keep buying it. It rebalances itself. You move on with your life.

Underrated feature.

XEQT vs VFV: The Real Difference

The real difference is not fees.

VFV is cheaper, but both are cheap enough that fees should not drive the entire decision.

The real difference is what you are betting on.

With VFV, you are saying: I want the US market to be the engine of my portfolio.

With XEQT, you are saying: I want global capitalism to be the engine of my portfolio.

Those sound similar. They are not.

VFV is a sharper bet. XEQT is a broader bet.

A sharper bet can win harder. It can also disappoint harder if the world changes.

Why VFV Looks So Good on a Chart

VFV looks amazing because the S&P 500 has been amazing.

That is not sarcasm. It really has been.

US companies have been more profitable, more dominant, and more richly valued than almost anything else in the world. The best US companies are not just American businesses anymore. They are global platforms with American listings.

So yes, VFV has been a monster.

But every investing mistake starts with turning a backward looking chart into a forward looking prophecy.

Japanese stocks looked unbeatable in the late 1980s. Canadian energy looked unstoppable at different points. Emerging markets have had long periods where they looked like the obvious future.

Markets rotate. Leadership changes. Valuations matter eventually.

VFV may keep beating XEQT. It also may not.

Nobody knows.

That is why diversification exists.

The Case for VFV

VFV makes sense if you already know what you are choosing.

It is a great ETF for someone who wants simple US equity exposure in Canadian dollars.

It can make sense if:

1. You already have Canadian exposure somewhere else.
2. You intentionally want more US exposure.
3. You are comfortable with higher concentration.
4. You believe US companies will continue to outperform.
5. You can hold through long periods where that belief looks wrong.

That last point matters most.

It is easy to want VFV after US stocks have gone up. It is harder to keep wanting VFV after international stocks outperform for seven years and every comment section tells you the US trade is dead.

If you are buying VFV, buy it because you understand the exposure. Do not buy it because the five year chart made your brain release dopamine.

The Case for XEQT

XEQT is the better default because defaults should protect you from yourself.

Most investors do not need the theoretically perfect ETF. They need an ETF they can keep buying when the market gets weird.

XEQT is boring in exactly the right way.

It gives you global diversification. It includes the US, but does not make the US the entire portfolio. It includes Canada, which matters because your expenses, taxes, salary, housing, and retirement are probably in Canadian dollars. It includes international markets because the future does not have to look exactly like the last decade.

This is why XEQT works so well inside a TFSA or RRSP.

You do not need to rebalance between Canadian, US, and international funds. You do not need to decide when to trim the S&P 500. You do not need to pretend you know which region wins next.

XEQT quietly admits the truth.

You do not know.

Then it builds a portfolio around that humility.

Should You Hold Both XEQT and VFV?

You can, but be honest about what you are doing.

XEQT already owns a lot of US stocks. If you add VFV beside XEQT, you are not adding a totally new asset class. You are increasing your US weighting.

That is not automatically bad. It is just not as diversified as it feels.

For example, a portfolio that is 80 percent XEQT and 20 percent VFV is basically a globally diversified portfolio with a US tilt.

That is reasonable.

A portfolio that is 50 percent XEQT and 50 percent VFV is a much bigger US bet.

Also reasonable if intentional.

The problem is when people hold both because they could not decide. That is not a strategy. That is indecision with extra steps.

Pick your actual goal.

If you want simplicity, buy XEQT.

If you want US concentration, buy VFV.

If you want global diversification with a US tilt, buy mostly XEQT and add some VFV.

TFSA or RRSP: Where Should You Hold Them?

For most Canadians, either ETF can work inside a TFSA or RRSP.

The bigger question is not XEQT versus VFV. The bigger question is whether you are actually investing your registered account instead of leaving it in cash.

A TFSA is not a savings account. It is a tax shelter. Holding long term investments inside it can be incredibly powerful because the growth is tax free.

An RRSP can also be powerful, especially if you are in a higher tax bracket today and expect a lower tax rate in retirement.

If you are still deciding which account to fill first, read the RRSP versus TFSA guide. If you already know the account and you are picking the ETF, this article is the simpler question.

Inside a TFSA, Canadian listed ETFs like XEQT and VFV are straightforward. You avoid currency conversion friction and keep the process simple.

Inside an RRSP, advanced investors sometimes prefer US listed ETFs like VOO because of withholding tax treatment. That can matter at large portfolio sizes. But for most people, the behavioral benefit of a simple Canadian listed ETF is worth more than a tiny tax optimization they may never execute properly.

Do not let tax trivia stop you from investing.

What I Would Do

If I were starting from zero as a Canadian investor and wanted one ETF for long term investing, I would buy XEQT.

Not because VFV is bad.

VFV is excellent.

I would choose XEQT because I do not want my entire portfolio answer to depend on one country continuing to dominate forever.

I want the US in my portfolio. A lot of it. XEQT already gives me that.

I also want Canada, international developed markets, and emerging markets. Not because they are guaranteed to outperform, but because I do not need to guess.

That is the point.

Investing is one of the few areas where admitting you cannot predict the future is an advantage.

Bottom Line

VFV is the better ETF if you want concentrated US stock market exposure.

XEQT is the better ETF if you want one globally diversified portfolio.

For most Canadians, XEQT is the better default.

If you want to compare how they have performed recently, use the Canadian ETF Comparator and look at XEQT, VFV, VEQT, XIC, and ZSP side by side.

Then remember the annoying truth.

The best ETF is not the one with the prettiest past performance chart.

The best ETF is the one you can keep buying for decades without turning every market wobble into a referendum on your intelligence.

For most people, that is XEQT.