Is XEQT Canadian? Everything You Need to Know About XEQT's Canadian Focus

If you’re a Canadian investor looking to build a globally diversified portfolio, you’ve probably heard about XEQT (iShares Core Equity ETF Portfolio). But you might be wondering: Is XEQT Canadian?

The short answer is yes - XEQT is designed specifically for Canadian investors, but it’s much more than just a Canadian ETF. It’s a globally diversified fund with a Canadian focus that gives you the best of both worlds.

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In this comprehensive guide, we’ll explore what makes XEQT Canadian, why this matters for Canadian investors, and how it compares to other investment options.

What Makes XEQT Canadian?

1. Canadian Provider and Management

XEQT is managed by iShares Canada, a subsidiary of BlackRock Canada. This means:

• Canadian regulatory oversight: Subject to Canadian securities regulations
• Canadian tax reporting: Provides Canadian tax documents (T3, T5 slips)
• Canadian dollar trading: Trades in CAD on Canadian exchanges
• Canadian investor protection: Covered by Canadian investor protection funds

2. Canadian Market Allocation

XEQT gives Canadian investors a home country bias by allocating approximately 25% to Canadian equities. This is higher than Canada’s global market weight (~3-4%), which is intentional and beneficial for Canadian investors.

XEQT’s Geographic Allocation:

• Canada: ~25% (home country bias)
• United States: ~45%
• International Developed: ~25%
• Emerging Markets: ~5%

3. Canadian Tax Advantages

XEQT is designed to be tax-efficient for Canadian investors:

• Dividend tax credit: Canadian dividends qualify for the dividend tax credit
• Foreign withholding tax optimization: Minimizes foreign tax drag
• Tax-loss harvesting: Can be paired with other Canadian ETFs
• Registered account friendly: Works well in TFSAs and RRSPs

Why XEQT’s Canadian Focus Matters

1. Currency Risk Management

Since XEQT trades in Canadian dollars, you avoid:

• Currency conversion fees
• Exchange rate fluctuations on your principal
• Complex foreign exchange reporting

2. Tax Efficiency

Canadian investors benefit from:

• Canadian dividend tax credit on the ~25% Canadian allocation
• Optimized foreign withholding tax structure
• Simplified tax reporting (no foreign tax forms needed)

3. Familiarity and Comfort

Canadian investors often prefer:

• Canadian companies they know and understand
• Canadian regulatory framework they’re familiar with
• Canadian customer service and support

XEQT vs. Other Canadian Investment Options

XEQT vs. Canadian-Only ETFs

Winner: XEQT for diversification, XIC for pure Canadian exposure

XEQT vs. US-Listed Global ETFs

Winner: XEQT for Canadian investors

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The Canadian Home Country Bias Explained

Why XEQT Overweights Canada

Canada’s Global Market Weight: ~3-4%
XEQT’s Canadian Allocation: ~25%

This home country bias is intentional and beneficial because:

1. Reduced Currency Risk

• Less exposure to foreign currency fluctuations
• More stable returns in Canadian dollars
• Easier to plan for Canadian-dollar expenses

2. Tax Advantages

• Canadian dividends qualify for dividend tax credit
• Lower effective tax rate on Canadian portion
• Simplified tax reporting

3. Familiarity and Understanding

• Canadian investors understand Canadian companies
• Easier to research and follow Canadian holdings
• Comfort with Canadian regulatory environment

4. Economic Alignment

• Canadian allocation aligns with Canadian economic exposure
• Natural hedge against Canadian inflation
• Correlation with Canadian cost of living

Canadian Companies in XEQT

XEQT’s Canadian allocation includes major Canadian companies like:

Financial Sector (~35% of Canadian allocation):

• Royal Bank of Canada (RY)
• Toronto-Dominion Bank (TD)
• Bank of Nova Scotia (BNS)
• Bank of Montreal (BMO)

Energy Sector (~15% of Canadian allocation):

• Canadian Natural Resources (CNQ)
• Suncor Energy (SU)
• Enbridge (ENB)

Technology Sector (~10% of Canadian allocation):

• Shopify (SHOP)
• Constellation Software (CSU)
• OpenText (OTEX)

Other Sectors:

• Utilities, telecommunications, materials, and consumer goods

Tax Implications for Canadian Investors

Registered Accounts (TFSA/RRSP)

In TFSA:

• All growth is tax-free
• No dividend tax credit (but also no tax on dividends)
• No foreign withholding tax on Canadian portion

In RRSP:

• Tax-deferred growth
• Dividend tax credit not applicable
• Foreign withholding tax reduced on US portion

Non-Registered Accounts

Canadian Portion (~25%):

• Dividends qualify for dividend tax credit
• Capital gains taxed at 50% inclusion rate
• No foreign withholding tax

Foreign Portions (~75%):

• Foreign withholding tax applies
• Capital gains taxed at 50% inclusion rate
• Foreign tax credit may be available

How to Buy XEQT as a Canadian Investor

Step 1: Choose a Canadian Brokerage

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Wealthsimple Trade is perfect for Canadian XEQT investors:

• Zero commission trading
• Canadian dollar accounts
• TFSA and RRSP support
• Fractional shares available

Step 2: Set Up Your Account

Account Types Available:

• TFSA: Tax-free growth (if you have contribution room)
• RRSP: Tax-deferred growth with contribution deductions
• Non-registered: For additional investing beyond registered accounts

Step 3: Fund Your Account

• Link your Canadian bank account
• Transfer funds (usually 1-2 business days)
• Start with any amount (even $1 with fractional shares)

Step 4: Buy XEQT

• Search for “XEQT” on your platform
• Enter the amount you want to invest
• Place your order - that’s it!

Common Questions About XEQT’s Canadian Nature

“Is XEQT only for Canadian investors?”

While XEQT is designed for Canadian investors, anyone can buy it. However, non-Canadians won’t benefit from the Canadian tax advantages and may face currency conversion costs.

“Why does XEQT have so much Canadian exposure?”

The 25% Canadian allocation provides a home country bias that reduces currency risk and provides tax advantages for Canadian investors.

“Can I buy XEQT in my RRSP?”

Yes! XEQT is perfect for RRSPs, TFSAs, and non-registered accounts.

“Is XEQT better than buying individual Canadian stocks?”

For most investors, yes. XEQT provides instant diversification across thousands of companies globally, including Canadian ones, with professional management and low costs.

“How does XEQT compare to Canadian mutual funds?”

XEQT typically has much lower fees (0.20% MER) compared to Canadian mutual funds (often 2%+ MER) while providing similar diversification.

Building a Canadian-Focused Portfolio with XEQT

Conservative Approach (More Canadian Focus):

• 70% XEQT (25% Canadian + 45% US + 30% International)
• 30% XIC (Additional Canadian exposure)

Balanced Approach (XEQT Only):

• 100% XEQT (25% Canadian + 75% International)

Growth Approach (Less Canadian Focus):

• 80% XEQT (25% Canadian + 55% International)
• 20% VFV (Additional US exposure)

The Bottom Line: XEQT is Perfectly Canadian

Yes, XEQT is Canadian in all the ways that matter for Canadian investors:

✅ Canadian provider (iShares Canada)
✅ Canadian dollar trading
✅ Canadian tax optimization
✅ Canadian regulatory oversight
✅ 25% Canadian allocation (home country bias)
✅ Canadian dividend tax credit eligibility
✅ Perfect for Canadian accounts (TFSA, RRSP)

Why This Matters:

• Simplified investing: One ETF for global diversification with Canadian focus
• Tax efficiency: Optimized for Canadian tax system
• Currency stability: No foreign exchange risk
• Familiarity: Canadian companies you know and understand

Ready to Start Your Canadian XEQT Journey?

🎁 Get $25 of XEQT for free on Wealthsimple

XEQT gives Canadian investors the perfect balance of global diversification and Canadian focus. It’s designed specifically for Canadian investors who want:

• Global diversification without currency risk
• Canadian tax advantages
• Simple, low-cost investing
• Professional management

Start building your Canadian-focused global portfolio today with XEQT!

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 XEQT is an excellent choice for Canadian investors seeking global diversification with a home country bias.