XEQT vs ZEQT (BMO): Which All-Equity ETF Wins in 2025?

The battle of the all-equity ETFs continues in 2025! XEQT vs ZEQT (BMO) - two heavyweights in the Canadian ETF space, both offering 100% equity exposure to global markets. But which one should you choose for your portfolio?

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Quick Overview: XEQT vs ZEQT

What is XEQT?

XEQT (iShares Core Equity ETF Portfolio) is the OG all-equity ETF in Canada, launched in 2019 by BlackRock. It’s become the go-to choice for Canadian investors seeking global equity exposure with a simple, one-ticket solution.

XEQT Holdings Breakdown:

• US Equity: ~45%
• Canadian Equity: ~25%
• International Developed: ~25%
• Emerging Markets: ~5%

What is ZEQT?

ZEQT (BMO All-Equity ETF) is BMO’s answer to XEQT, launched in 2021. It’s designed to compete directly with XEQT while offering BMO’s own take on global equity allocation.

ZEQT Holdings Breakdown:

• US Equity: ~45%
• Canadian Equity: ~25%
• International Developed: ~25%
• Emerging Markets: ~5%

Key Differences: XEQT vs ZEQT

1. Underlying Indexes

XEQT uses:

• US: MSCI USA IMI Index
• Canada: MSCI Canada IMI Index
• International: MSCI EAFE IMI Index
• Emerging: MSCI Emerging Markets IMI Index

ZEQT uses:

• US: MSCI USA IMI Index
• Canada: MSCI Canada IMI Index
• International: MSCI EAFE IMI Index
• Emerging: MSCI Emerging Markets IMI Index

Wait, that’s identical! Yes, both ETFs use the exact same underlying indexes, which means their performance should be nearly identical.

2. Currency Hedging

Both ETFs are unhedged, meaning they don’t protect against currency fluctuations. This is generally preferred for long-term investors as currency movements tend to average out over time.

3. Rebalancing Frequency

• XEQT: Quarterly rebalancing
• ZEQT: Quarterly rebalancing

Again, identical approaches.

4. Trading Volume & Liquidity

• XEQT: Higher trading volume, more liquid
• ZEQT: Lower trading volume, but still liquid enough for most investors

Performance Comparison: XEQT vs ZEQT

Since ZEQT launched in 2021, let’s look at how they’ve performed:

The performance difference is minimal - just 0.3% over 3+ years. This is exactly what you’d expect when two ETFs track the same underlying indexes.

Why the Tiny Performance Difference?

The small performance gap comes from:

• Slight tracking error differences
• Different rebalancing dates (even though both are quarterly)
• Minor variations in how each provider handles corporate actions

This is normal and expected in the ETF world.

Trading & Costs: XEQT vs ZEQT

Trading Costs

Both ETFs trade commission-free on most Canadian platforms, including Wealthsimple.

Bid-Ask Spreads

• XEQT: Tighter spreads due to higher volume
• ZEQT: Slightly wider spreads, but still reasonable

MER (Management Expense Ratio)

Both charge 0.20% annually - identical costs.

Which ETF Should You Choose?

Choose XEQT if:

• You want the most established all-equity ETF
• Higher liquidity is important to you
• You prefer BlackRock’s reputation and track record
• You want the largest AUM for peace of mind

Choose ZEQT if:

• You prefer BMO’s brand and customer service
• You want to support Canadian financial institutions
• You’re comfortable with slightly lower liquidity
• You like having options in the market

My Recommendation: XEQT Wins

XEQT gets my vote for these reasons:

1. Proven Track Record: 5+ years of successful operation
2. Superior Liquidity: Easier to buy/sell large amounts
3. Larger AUM: More established and trusted
4. Identical Performance: Same underlying indexes and allocation
5. Identical Costs: Same 0.20% MER

Since both ETFs are essentially identical in composition and performance, the tiebreaker goes to the more established, liquid option.

How to Buy Either ETF

🎁 Get $25 free when you sign up with my referral link

Step 1: Open Your Account

Wealthsimple offers commission-free trading on both XEQT and ZEQT.

Step 2: Fund Your Account

• Link your bank account
• Transfer funds (1-2 business days)
• Start with as little as $1

Step 3: Search and Buy

• Type “XEQT” or “ZEQT” in the search bar
• Click on your chosen ETF
• Enter the amount you want to invest
• Click “Buy” - that’s it!

Portfolio Strategy Considerations

Dollar-Cost Averaging

Both ETFs are perfect for regular investing:

• Set up automatic purchases every week/month
• Take advantage of market dips
• Build wealth over time

Tax Efficiency

Both ETFs are tax-efficient in non-registered accounts:

• Low turnover reduces capital gains distributions
• Dividend income is eligible for dividend tax credit
• Foreign withholding taxes are minimized

Rebalancing

Since both are 100% equity, you don’t need to rebalance between them. However, you might want to:

• Add bonds as you age (consider XBAL or ZBAL)
• Include other asset classes for diversification
• Adjust based on your risk tolerance

Common Questions About XEQT vs ZEQT

“Can I own both ETFs?”

Technically yes, but it’s unnecessary. They’re essentially the same investment, so owning both just adds complexity without benefits.

“Which one has better dividends?”

Both have identical dividend yields since they hold the same underlying companies. The difference is minimal.

“What about tax-loss harvesting?”

If you own XEQT and want to harvest losses, you could temporarily switch to ZEQT (or vice versa) since they’re not considered “substantially identical” for tax purposes.

“Which one is better for beginners?”

Both are equally beginner-friendly. XEQT might have a slight edge due to more educational resources and community discussion.

Alternatives to Consider

If you want something different from these all-equity ETFs:

XGRO/ZGRO (80% Equity, 20% Bonds)

• More conservative
• Better for risk-averse investors
• Still globally diversified

VFV (S&P 500 Only)

• US-focused
• Higher potential returns (and risk)
• Less diversification

XIC (Canadian Equity Only)

• Canada-focused
• Higher dividend yield
• Less global exposure

Final Verdict: XEQT is the Winner

XEQT wins the XEQT vs ZEQT battle for 2025 because:

✅ Identical performance to ZEQT
✅ Better liquidity and trading volume
✅ Longer track record and larger AUM
✅ Same low costs (0.20% MER)
✅ Proven reliability over 5+ years

Ready to Start Investing?

🎁 Open your Wealthsimple account today and get $25 free

Whether you choose XEQT or ZEQT, you’re making a smart choice for long-term wealth building. Both ETFs offer excellent global diversification at rock-bottom costs.

The key is to start investing early and stay consistent. With either ETF, you’re getting exposure to thousands of companies worldwide for just 0.20% annually.

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this doesn’t affect my honest assessment. I genuinely believe both XEQT and ZEQT are excellent choices for Canadian investors.