The History of Index Investing in Canada: How We Got to XEQT

Last month I bought $500 of XEQT on my phone while waiting in line at Tim Hortons. The whole thing took about ninety seconds. I opened Wealthsimple, tapped “Buy,” confirmed the order, and put my phone away. Zero commissions. Zero thinking. By the time I had my double-double in hand, I owned a slice of more than 9,000 companies across 49 countries, automatically diversified and rebalanced for me, at a cost of 0.20% per year.

I didn’t think much of it at the time. But later that evening, I fell down a rabbit hole reading about the history of index investing, and I realized something that genuinely surprised me: the fact that I can do what I just described – buy the entire global stock market for basically nothing, on my phone, in under two minutes – is the product of roughly fifty years of financial innovation, academic breakthroughs, regulatory battles, and one very stubborn man from Pennsylvania who was told his idea was “un-American.”

What feels effortless today was once considered radical. Even impossible. The story of how we got from there to here is one of the most important stories in personal finance, and if you invest in XEQT, you should know it. Because understanding where this investment came from makes you a more confident, more patient, and ultimately more successful investor.

Disclosure: I may receive a referral bonus if you sign up through links on this page.

1. The Beginning: Jack Bogle and the Index Fund Revolution (1975-1990)

The story starts with a man named John Clifton Bogle, and it starts with a failure.

In 1974, Bogle was fired as chairman of Wellington Management after a disastrous merger he had championed. Most people in his position would have retreated quietly. Instead, Bogle used the firing as an opportunity to start something entirely new. He founded a company called Vanguard in 1975, and in 1976, he launched the First Index Investment Trust – the world’s first index mutual fund available to regular retail investors.

The idea was deceptively simple: instead of paying a team of analysts and portfolio managers to pick stocks, the fund would simply buy every stock in the S&P 500 index, hold them in proportion to their market weight, and charge investors almost nothing for the privilege. No stock picking. No market timing. No genius required.

Wall Street absolutely hated it.

They called it “Bogle’s Folly.” They called it “un-American.” One competitor ran a poster featuring Uncle Sam with the message: “Help Stamp Out Index Funds.” The logic, from Wall Street’s perspective, was straightforward: why would anyone settle for average returns when they could hire a smart fund manager to beat the market?

Bogle’s answer was rooted in a piece of arithmetic so simple it’s almost embarrassing: before costs, the return of the average investor must equal the return of the market, because all investors collectively are the market. After costs – management fees, trading commissions, taxes on turnover – the average investor must, by mathematical necessity, earn less than the market return.

The implication was devastating for the fund management industry. If the average actively managed dollar underperforms the average passively managed dollar by the amount of the cost difference, then most active managers will lose to a simple index fund over time. Not because they are stupid, but because arithmetic is undefeated.

The initial public offering for the First Index Investment Trust targeted $150 million. It raised just $11 million. It was considered a flop by every conceivable metric.

But Bogle kept it alive. And the data kept proving him right. Year after year, decade after decade, the index fund quietly outperformed the majority of its actively managed competitors. Not because it was brilliant. Because it was cheap.

For Canadian investors, though, there was a problem. Bogle’s fund was a US mutual fund tracking a US index. If you were sitting in Calgary or Halifax in 1985, you could not easily buy it. The index fund revolution was real, but it was happening in another country. Canada would have to wait.

2. Index Investing Comes to Canada (1990-2005)

The 1990s brought two critical innovations that would eventually transform investing for Canadians: the birth of the exchange-traded fund (ETF) and the arrival of low-cost index mutual funds on Canadian soil.

In 1990, Canada actually beat the United States to the punch. The Toronto 35 Index Participation Fund (TIPs) launched on the Toronto Stock Exchange, becoming one of the world’s first ETFs. It tracked the TSE 35 index and could be bought and sold like a stock throughout the trading day. This was a genuinely Canadian innovation, though it never achieved mass popularity.

A few years later, in 1993, the now-famous SPDR S&P 500 ETF (SPY) launched in the US and popularized the ETF structure globally. Then, in 1999, Barclays Global Investors launched XIU – the iShares S&P/TSX 60 Index ETF – which became Canada’s first widely traded ETF and remains one of the largest to this day.

Around the same time, TD launched its e-Series index mutual funds in 1999-2000, offering Canadian investors a way to build a low-cost, globally diversified portfolio using mutual funds with MERs well below the 2%+ charged by the big banks’ actively managed funds. The e-Series funds became a cult favourite among savvy Canadian investors who hung out on personal finance forums.

But here is the thing that is easy to forget now: even with these tools, building a globally diversified portfolio was still complicated. You needed to pick and maintain multiple funds. A typical setup looked something like this:

The Classic Canadian Couch Potato Portfolio (circa 2005)

This was considered revolutionary at the time. Four funds, low fees, broad diversification. But it came with real friction:

• You had to choose the right combination of funds
• You had to calculate how much of each to buy every time you invested
• You had to rebalance periodically when one allocation drifted too far from your target
• You had to deal with currency conversion if you held US-listed ETFs
• Every purchase incurred a trading commission of $10-$30 per trade

For a do-it-yourself investor making monthly contributions, that friction added up. It was better than paying 2.3% to a mutual fund manager, but it was still a lot of work.

This was the era that gave rise to one of the most important voices in Canadian personal finance: Dan Bortolotti, who launched the Canadian Couch Potato blog. Bortolotti tirelessly advocated for simple, low-cost index investing and provided model portfolios that thousands of Canadians followed. His work – along with personal finance writers like Andrew Hallam, the Millionaire Teacher – helped build the foundation for everything that followed. If you are a Canadian index investor today, you owe these people a debt.

But even the Couch Potato approach required effort. You still had to be your own portfolio manager. For a lot of Canadians, that was one step too many.

3. The ETF Explosion (2005-2019)

The period from 2005 to 2019 was defined by two conflicting forces: fees kept falling, but complexity kept rising.

The biggest catalyst was Vanguard’s entry into Canada in 2011. When Vanguard opened its Canadian operation and began offering ETFs directly on the TSX, it forced every other provider to compete on cost. The fee war was on.

BMO launched its own suite of low-cost ETFs. iShares (now owned by BlackRock after they acquired Barclays Global Investors) slashed fees on many of its core products. New players entered the market. By the late 2010s, you could buy a broad Canadian equity ETF for less than 0.10% per year. The transformation was remarkable.

ETF Fee Compression in Canada

But here is the paradox nobody anticipated: more ETFs made investing harder, not easier.

By 2019, there were over 800 ETFs listed on the TSX. Thematic ETFs, sector ETFs, factor ETFs, currency-hedged ETFs, covered-call ETFs, leveraged ETFs, ESG ETFs. An investor trying to build a simple portfolio was suddenly confronted with an overwhelming wall of choice.

This was the paradox of choice in action. When you walk into a store with three options, you pick one and feel good about it. When you walk into a store with three hundred options, you freeze. You research endlessly. You second-guess yourself. You read Reddit threads at midnight trying to figure out whether you should hedge your currency exposure or overweight small-cap value or tilt toward emerging markets.

I know this because I lived it. Before I found XEQT, I spent months building elaborate spreadsheets comparing different ETF combinations. I agonized over whether to hold four ETFs or five. I recalculated my target allocations every few months. I was investing, technically, but I was also spending hours doing unpaid portfolio management work that a professional would charge for.

The tools were cheap. The knowledge was freely available. But the execution was still harder than it needed to be. What Canadian investors needed was not more ETFs. What they needed was fewer. Ideally, one.

4. The All-in-One Revolution: XEQT Arrives (2019-Present)

In August 2019, iShares (BlackRock Canada) did something that changed everything. They launched a suite of asset allocation ETFs – pre-built, globally diversified portfolios wrapped inside a single ticker. Among them was XEQT, the iShares Core Equity ETF Portfolio: 100% equities, four underlying ETFs covering Canada, the US, international developed markets, and emerging markets, all automatically rebalanced. One ticker. Done.

Vanguard had actually launched its equivalent products – including VEQT – slightly earlier in 2018. BMO followed with ZEQT. But the concept was the same across all of them: take the multi-ETF portfolio that the Couch Potato community had been painstakingly building by hand for fifteen years and package it into a single, automatically managed product.

The concept was not complicated. But it was revolutionary in its implications.

Old Way vs. New Way

Yes, XEQT’s MER of 0.20% is slightly higher than the blended cost of holding the four underlying ETFs individually. You pay a small premium – roughly 0.05-0.08% – for the convenience of automatic rebalancing and one-ticker simplicity. For the vast majority of investors, that is a bargain. The time saved, the decisions eliminated, and the behavioral mistakes avoided are worth far more than a few basis points.

The market clearly agrees. XEQT’s assets under management have grown from nothing at launch to billions of dollars in just a few years. As of 2026, it is one of the most popular ETFs in Canada. VEQT has seen similar growth. Together, the all-in-one ETFs have attracted a generation of Canadian investors who might never have started investing without them.

What Jack Bogle started with $11 million and a dream in 1976 has become a multi-billion-dollar movement that lets a 22-year-old in Winnipeg build a globally diversified portfolio on their lunch break. That is not a small thing.

5. The Commission-Free Catalyst: Wealthsimple and Zero-Cost Buying

The all-in-one ETF solved the complexity problem. But there was one last barrier standing between Canadians and truly frictionless investing: trading commissions.

As recently as 2018, buying an ETF at most Canadian brokerages cost $5 to $10 per trade. If you were making monthly contributions and buying even a single ETF, that was $60 to $120 per year in commissions alone. For someone investing $200 a month, a $10 commission meant 5% of their contribution was eaten up before the money even hit the market.

Then Wealthsimple Trade launched in 2019, offering commission-free trading on Canadian-listed stocks and ETFs. No per-trade fees. No account minimums. No catch. Other brokerages eventually followed suit or reduced their own commissions, but Wealthsimple was the catalyst that forced the change.

The impact was transformative. Combined with the all-in-one ETF, commission-free trading meant that the total cost of investing in a globally diversified portfolio dropped to effectively the MER and nothing else. Compare that to what the previous generation paid:

That bottom line is staggering. What used to cost over a thousand dollars a year in fees now costs about a hundred. And you get better diversification, automatic rebalancing, and zero effort.

Wealthsimple also introduced features like auto-invest and recurring buys, which let you set up automatic purchases of XEQT on a schedule. You pick the amount, pick the frequency, and forget about it. Your money flows into a globally diversified portfolio every payday without you lifting a finger.

This is what frictionless investing actually looks like. No spreadsheets. No rebalancing calculations. No commission anxiety. No annual meetings with an advisor who charges 1% to tell you to stay the course. Just money moving into the market, automatically, forever.

6. What It All Means: Standing on the Shoulders of Giants

Here is a timeline of what had to happen for you to be able to buy XEQT on your phone today:

• 1952: Harry Markowitz publishes Modern Portfolio Theory, proving mathematically that diversification reduces risk without sacrificing returns.
• 1964: William Sharpe develops the Capital Asset Pricing Model, laying the groundwork for understanding market returns.
• 1965: Eugene Fama publishes his efficient market hypothesis, arguing that stock prices reflect all available information – meaning most stock pickers cannot consistently beat the market.
• 1975: John Bogle founds Vanguard.
• 1976: The First Index Investment Trust launches with $11 million. Wall Street calls it a folly.
• 1990: Canada launches one of the world’s first ETFs (TIPs) on the Toronto Stock Exchange.
• 1993: SPY launches in the US, popularizing the ETF structure globally.
• 1999: XIU launches as Canada’s first widely traded ETF. TD launches e-Series index funds.
• 2000s: The Canadian Couch Potato movement teaches thousands of Canadians to build DIY index portfolios.
• 2007-2009: The financial crisis exposes the failure of active management to protect investors. The shift to passive accelerates.
• 2011: Vanguard enters Canada, igniting a fee war that slashes ETF costs.
• 2018-2019: Vanguard launches VEQT. iShares launches XEQT. The all-in-one ETF era begins.
• 2019: Wealthsimple Trade launches commission-free investing in Canada.
• 2020s: All-in-one ETFs become the default choice for a new generation of Canadian investors.

Every single step on that timeline was necessary. Without Markowitz, there is no mathematical framework for diversification. Without Fama, there is no academic case against stock picking. Without Bogle, there is no low-cost index fund. Without the Canadian Couch Potato community, there is no demand for simpler products. Without the fee war, costs do not drop low enough. Without commission-free brokerages, the last barrier does not fall.

You are standing on the shoulders of giants. And the view from up here is pretty good.

When Bogle passed away in January 2019 – just months before XEQT launched – he left behind an industry that had gone from mocking his idea to copying it wholesale. He spent his career arguing that investing should be simple, cheap, and accessible to everyone. XEQT is everything he fought for: a single, low-cost, globally diversified fund that anyone can buy with a few taps on their phone.

I think he would have loved it.

The Best Time in History to Be a Canadian Investor

I want to leave you with this thought.

If you are a Canadian in your twenties or thirties right now, starting your investing journey with XEQT, you have access to tools that previous generations could not have imagined. You can build a portfolio that is more diversified than what most professional fund managers offered ten years ago. You can do it for a fraction of the cost. You can do it without talking to a single person. You can do it from a coffee shop line on a Tuesday morning.

That is not normal. That is the culmination of half a century of financial innovation, academic research, regulatory change, and competitive pressure. It is the result of stubborn people fighting for a better deal for ordinary investors. And you get to benefit from all of it simply by opening an account and buying one ETF.

The debate is over. The tools exist. The fees are negligible. The barriers are gone.

All that is left is for you to start.

Related Reading

• What Is XEQT? – The complete beginner’s guide to Canada’s most popular all-in-one ETF
• How BlackRock Builds XEQT: Index Methodology Explained – The engineering behind XEQT’s index construction
• Passive Investing Has Won – The data proving that passive beats active in Canada
• Efficient Market Hypothesis and XEQT – Why stock prices already reflect available information
• XEQT Holdings: What You Actually Own – A deep dive into the 9,000+ companies inside XEQT
• How ETFs Actually Work – The hidden mechanics behind creation, redemption, and arbitrage