Wealthsimple Managed vs XEQT
When it comes to investing in XEQT (iShares Core Equity ETF Portfolio), one of the most popular ETFs for Canadian investors, Wealthsimple offers two main options: Wealthsimple Managed Investing and Wealthsimple Self-Directed Investing.
Both options are tailored to different types of investors, so it’s important to understand which one is the best fit for your needs and goals. In this blog post, we’ll compare Wealthsimple Managed Investing to Wealthsimple Self-Directed Investing, focusing on how each works for investing in XEQT.
🎁 Open a Wealthsimple account and Get $25
What is XEQT?
Before diving into the comparison, let’s quickly recap what XEQT is.
XEQT is an all-in-one, globally diversified equity ETF designed for investors who want simplicity and long-term growth. It holds a mix of stocks from Canada, the U.S., international developed markets, and emerging markets, making it an excellent option for beginners and seasoned investors alike.
With its low management expense ratio (MER) of 0.20%, XEQT is a cost-effective choice for building a diversified portfolio.
Now, let’s explore how Wealthsimple’s Managed and Self-Directed platforms stack up when it comes to investing in XEQT.
Option 1: Wealthsimple Managed Investing
Wealthsimple Managed Investing is a robo-advisor service that builds and manages your portfolio for you. It’s designed for hands-off investors who prefer a more guided approach.
Key Features of Wealthsimple Managed Investing:
- Fully Managed Portfolios: Wealthsimple creates and rebalances a portfolio based on your goals and risk tolerance.
- Automatic Rebalancing: Portfolios are adjusted regularly to maintain the target asset allocation.
- Socially Responsible Investment (SRI) Options: Includes socially responsible ETFs for eco-conscious investors.
- Advisory Support: Access to financial advisors for personalized guidance.
- Fees: 0.40%–0.50% management fee on top of the MER of the ETFs in your portfolio.
How It Works for XEQT:
If you use Wealthsimple Managed Investing, XEQT is not directly available in their portfolios. Instead, Wealthsimple builds a diversified portfolio using ETFs similar to XEQT, such as equity and bond ETFs, tailored to your risk level.
This means that while you won’t be able to invest in XEQT specifically, you’ll still gain exposure to diversified global equities through a professionally managed portfolio.
Pros of Wealthsimple Managed for XEQT Investors:
- Hands-Off Approach: Wealthsimple takes care of everything, from rebalancing to selecting ETFs.
- Guided Experience: Ideal for new investors who prefer professional management.
- Tax-Loss Harvesting: Available for higher-tier accounts (Wealthsimple Black).
Cons of Wealthsimple Managed for XEQT Investors:
- Higher Fees: The 0.40%–0.50% management fee adds to the cost of investing.
- No Direct XEQT Investment: You won’t be able to buy XEQT directly in your portfolio.
Option 2: Wealthsimple Self-Directed Investing
Wealthsimple Self-Directed (formerly Wealthsimple Trade) is a DIY investing platform that allows you to buy and sell ETFs, stocks, and other securities on your own.
Key Features of Wealthsimple Self-Directed:
- Zero-Commission Trading: No trading fees when buying or selling XEQT or other securities.
- Fractional Shares: Invest as little as $1 in XEQT, even if you can’t afford a full share.
- Tax-Advantaged Accounts: Easily invest in XEQT through a TFSA, RRSP, or non-registered account.
- User-Friendly Interface: Simple app and web platform for quick and easy trades.
- No Minimum Balance: Start investing with as little as you want.
How It Works for XEQT:
Wealthsimple Self-Directed allows you to directly purchase XEQT on the platform. You control when and how much you buy, making it a great option for investors who prefer to manage their own portfolios.
Pros of Wealthsimple Self-Directed for XEQT Investors:
- Direct Access to XEQT: Easily buy and hold XEQT in your account.
- Low Costs: No trading fees and only the 0.20% MER for XEQT.
- Complete Control: Decide when to buy, sell, or hold.
- Dollar-Cost Averaging: Invest small amounts regularly without worrying about trading fees.
🎁 Get $25 of XEQT for free on Wealthsimple
Cons of Wealthsimple Self-Directed for XEQT Investors:
- No Professional Guidance: You’re responsible for managing your portfolio.
- No Automatic Rebalancing: Unlike Managed Investing, you’ll need to rebalance manually.
Comparing Wealthsimple Managed vs. Self-Directed
| Feature | Wealthsimple Managed Investing | Wealthsimple Self-Directed Investing |
|---|---|---|
| Access to XEQT | No | Yes |
| Management Style | Fully managed | DIY (self-managed) |
| Fees | 0.40%–0.50% + MER | MER only (0.20% for XEQT) |
| Hands-Off Investing | Yes | No |
| Automatic Rebalancing | Yes | No |
| Tax-Advantaged Accounts | Yes | Yes |
| Fractional Shares | No | Yes |
| Minimum Balance | None | None |
Which Option is Best for You?
The choice between Wealthsimple Managed and Self-Directed Investing comes down to your preferences and investing style.
Choose Wealthsimple Managed Investing if:
- You prefer a hands-off approach and want a professional to manage your portfolio.
- You don’t need direct access to XEQT and are okay with Wealthsimple selecting similar ETFs for you.
- You value features like automatic rebalancing and access to financial advisors.
Choose Wealthsimple Self-Directed Investing if:
- You want direct control over your portfolio and wish to invest in XEQT specifically.
- You’re comfortable managing your own investments and rebalancing when necessary.
- You’re looking to minimize fees by avoiding management fees (pay only the MER).
Final Thoughts
Wealthsimple offers two excellent options for Canadian investors, but the right choice depends on your goals and level of involvement.
If you’re looking for simplicity and professional management, Wealthsimple Managed Investing is a great option. However, if you want direct access to XEQT and the flexibility to manage your own portfolio, Wealthsimple Self-Directed Investing is the better choice.
With Wealthsimple’s intuitive platforms, either choice can help you build long-term wealth. Start by evaluating your financial goals, and choose the path that aligns best with your investing style.