XEQT vs QQQ: Should Canadian Investors Add a NASDAQ ETF?

A buddy of mine — let’s call him Preet — texted me last September with a screenshot of his brokerage account. He had a single line item: QQQ. His entire TFSA was in the Invesco QQQ Trust, the ETF that tracks the NASDAQ-100 index. “Look at these returns,” he wrote, with three fire emojis for emphasis.

And honestly? The returns were impressive. QQQ had been on an absolute tear. Over the previous decade, it had roughly tripled the performance of a globally diversified portfolio. Preet felt like a genius. He was convinced the NASDAQ-100 was the only index worth owning.

Six months later, when the tech sector pulled back hard — AI stocks correcting by 25% in a few weeks — Preet went quiet. No more screenshots. No more fire emojis. When I finally asked him about it, he admitted he had panic-sold near the bottom and locked in a significant loss.

This story is not unusual. The NASDAQ-100 is one of the most popular indexes in the world, and QQQ is one of the most traded ETFs on the planet. It is also one of the most misunderstood — especially by Canadian investors who see the headline returns and want a piece of the action.

So let’s break this down properly. What exactly is QQQ? How does it compare to XEQT? Should you add a NASDAQ ETF to your portfolio, replace XEQT with one, or just stick with what you have? I’m going to give you the honest answer, with real data, and let you decide.

1. What Is QQQ (and What Are the Canadian Alternatives)?

QQQ — officially the Invesco QQQ Trust — tracks the NASDAQ-100 index, which consists of the 100 largest non-financial companies listed on the NASDAQ stock exchange. Despite the name, this is not a broad market index. It is overwhelmingly tilted toward technology and growth stocks.

The top holdings in QQQ read like a who’s-who of Big Tech: Apple, Microsoft, NVIDIA, Amazon, Meta, Alphabet (Google), Broadcom, and Tesla. Together, the top 10 holdings typically make up more than 50% of the entire fund. That is an extraordinary level of concentration.

Key QQQ Facts

Canadian-Listed NASDAQ ETF Alternatives

If you are a Canadian investor, buying QQQ directly means buying a US-listed ETF in US dollars. That introduces currency conversion costs and potential tax complications. Several Canadian-listed alternatives exist:

These Canadian-listed options solve the currency conversion problem, but they come with slightly higher MERs than the original QQQ. For most Canadian investors, ZNQ or QQC are the most straightforward choices if you want NASDAQ-100 exposure in Canadian dollars.

2. What Is XEQT (Quick Refresher)?

XEQT is iShares’ all-in-one global equity ETF. One purchase gives you exposure to over 9,000 stocks across four geographic regions:

XEQT is 100% equities, has an MER of 0.20%, and automatically rebalances across its underlying funds. It is designed to be the only equity ETF you ever need to buy.

The critical thing to understand for this comparison: XEQT already holds a significant amount of the same companies that dominate QQQ. Apple, Microsoft, NVIDIA, Amazon — they are all inside XEQT through its US equity allocation. The difference is that in XEQT, those companies are a smaller percentage of the overall portfolio because they are diluted by thousands of other stocks from around the world.

3. XEQT vs QQQ: The Head-to-Head Comparison

Let’s put these two side by side.

The fundamental difference comes down to diversification versus concentration. XEQT spreads your money across the entire investable world. QQQ concentrates it in 100 large US technology-adjacent companies. Both approaches have merits, but they carry very different risk profiles.

4. Historical Returns: QQQ Looks Amazing (Until It Doesn’t)

Let me be upfront: over the past 10-15 years, QQQ has dramatically outperformed globally diversified portfolios like XEQT. This is not debatable — the numbers are what they are.

Approximate Annualized Returns (as of early 2026)

Looking at those numbers, you might wonder why anyone would own anything other than QQQ. But that table is missing critical context.

The Decades QQQ Investors Don’t Talk About

The NASDAQ-100 has not always been a rocket ship. If you zoom out beyond the most recent US tech boom, the picture changes dramatically:

• 2000-2002 (Dot-com crash): QQQ fell approximately 83% from peak to trough. An investor who put $100,000 into QQQ at its March 2000 peak watched it drop to roughly $17,000. It took 15 years — until 2015 — for QQQ to fully recover to its 2000 highs in real (inflation-adjusted) terms.

• 2008-2009 (Financial crisis): QQQ dropped approximately 50%. A globally diversified portfolio dropped about 35-40%.

• 2022 (Rate hike cycle): QQQ dropped approximately 33% in a single year. XEQT dropped around 11%.

The lesson is straightforward: QQQ’s outperformance in the good years comes at the cost of dramatically worse drawdowns in the bad years. The NASDAQ-100 is a high-beta index. It goes up faster and comes down harder. If you owned QQQ through 2000-2015, you experienced a lost decade and a half. Meanwhile, a globally diversified investor was compounding through that entire period.

Recency Bias Is the Real Risk

The past 15 years have been historically unusual. US large-cap tech stocks have dominated global markets to a degree not seen since the late 1990s. This has made QQQ look invincible. But investing based on what just happened is one of the most common psychological traps in investing.

Every period of extreme concentration has eventually reverted. Japanese stocks dominated in the 1980s. European stocks outperformed in the 2000s. Emerging markets led in the mid-2000s. US tech has led since 2010. Betting that this continues forever is a prediction, not a strategy.

5. Sector Concentration: Why QQQ Is Riskier Than You Think

Here is the sector breakdown that most QQQ fans overlook:

QQQ Sector Allocation (Approximate)

XEQT Sector Allocation (Approximate)

The difference is stark. QQQ puts roughly 65% of your money into technology and tech-adjacent sectors. XEQT spreads it across every sector of the global economy. When tech is booming, QQQ will outperform. When tech is struggling — as it did in 2000-2002, 2022, and periodically throughout history — QQQ gets hit disproportionately hard.

XEQT’s sector balance means that when tech falters, your financials, energy, healthcare, and industrial holdings can pick up the slack. You give up the highest highs in exchange for avoiding the lowest lows. Over a full market cycle, this tends to produce more consistent compounding.

6. The Tax and Currency Complications for Canadians

This is where the comparison gets more nuanced for Canadian investors specifically.

Currency Risk

QQQ is priced in US dollars. If you buy it directly, you need to convert your Canadian dollars to US dollars, which means paying a currency conversion fee (typically 1.5% at most brokerages, or you can use Norbert’s Gambit to reduce this).

More importantly, your returns are affected by the CAD/USD exchange rate. If the Canadian dollar strengthens against the US dollar, your QQQ returns get reduced when converted back to CAD — even if QQQ itself did well in USD terms. If the Canadian dollar weakens, you get a currency tailwind.

XEQT is listed in Canadian dollars and handles currency exposure internally. You never need to think about it.

Withholding Tax

QQQ’s dividends (small as they are) face US withholding tax of 15% in a TFSA. In an RRSP, this withholding tax is waived due to the Canada-US tax treaty. In a non-registered account, you can claim a foreign tax credit.

XEQT has its own withholding tax layers, but because it is a Canadian-domiciled fund, the structure is slightly different and the RRSP treaty benefit only partially applies (since XEQT holds Canadian-listed underlying ETFs that then hold US stocks — creating a second layer).

For most retail investors, the tax differences are minor and should not drive your decision. But if you are optimizing at the margin, holding QQQ directly in an RRSP is slightly more tax-efficient than holding XEQT’s US equity portion in the same account.

7. Should You Add QQQ to an XEQT Portfolio?

This is the question I get asked most often. “I love XEQT for the diversification. But shouldn’t I add some QQQ on the side to boost my returns?”

Here is my honest take: for most Canadian investors, no.

Why Adding QQQ Undermines the XEQT Philosophy

The entire point of XEQT is that you are betting on the global economy, not any single country, sector, or theme. When you add QQQ on top, you are making an active bet that US tech stocks will continue to outperform the rest of the world. That is a legitimate investment thesis, but it is a prediction — and predictions have a way of aging poorly.

If you put 80% in XEQT and 20% in QQQ, you are effectively:

• Increasing your US allocation from ~45% to ~55%
• Increasing your technology allocation from ~17% to ~25%
• Concentrating more of your wealth in about 10 mega-cap companies
• Reducing your exposure to Canada, international, and emerging markets

You have gone from “I own the whole world” to “I own the whole world but I think Silicon Valley will keep winning.” That might work out. It also might not. And the whole beauty of XEQT is that you don’t have to make that call.

When Adding QQQ Might Make Sense

I’m not going to pretend there’s zero scenario where this makes sense. Here are the situations where adding a small QQQ allocation could be defensible:

1. You have a very long time horizon (20+ years) and high risk tolerance. If you are in your early 20s and can genuinely stomach a 40%+ drawdown in your tech allocation without selling, a small tilt is less dangerous.

2. You understand you are making an active bet. If you can articulate specifically why you believe US tech will continue to outperform for the next 20 years, and you accept you might be wrong, at least you are making an informed choice.

3. You keep it small. A 5-10% allocation to QQQ alongside a 90-95% XEQT portfolio won’t dramatically change your risk profile. It satisfies the itch to “do something” without wrecking your diversification.

4. You use a Canadian-listed alternative. ZNQ, QQC, or HXQ are simpler for Canadians and avoid currency conversion hassles.

My Recommendation

If you are tempted by QQQ, ask yourself this: would you have bought NASDAQ-100 exposure in 2009, when tech was in the dumps and everyone thought the sector was finished? If the honest answer is no — if you are drawn to QQQ primarily because of its recent performance — then you are performance-chasing, not investing. And performance-chasing is one of the most reliable ways to underperform over time.

Stick with XEQT. Let it do the work. You already own Apple, Microsoft, NVIDIA, and the rest of Big Tech — you just also own the other 8,900 companies that might outperform them over the next two decades.

8. A Real-World Portfolio Comparison

Let me show you what these different approaches would have looked like using approximate historical data.

$50,000 Invested in January 2020 (Approximate Values by Early 2026)

QQQ clearly “won” over this specific period. But notice the max drawdown column. The all-QQQ investor experienced a 33% drop along the way — which, on a $100,000+ portfolio, means watching more than $33,000 evaporate temporarily. Many investors cannot handle that psychologically and sell at the wrong time, locking in losses and missing the recovery.

The XEQT investor slept better, stayed invested, and still earned a very respectable 64% return over six years. Compound that over 30 years at XEQT’s historical rate and you are building serious wealth.

$500/Month DCA Since January 2020

Same story. QQQ won this particular race. But this particular race was during one of the greatest US tech bull markets in history. Run the same comparison from 2000-2010, and QQQ would have been a disaster while a globally diversified portfolio would have done just fine.

9. The Concentration Trap: Lessons from Japan and Nortel

I want to close with two historical examples that illustrate why concentration — even in “obviously” great companies or markets — is risky.

Japan in the 1980s

In the late 1980s, Japan’s stock market was the undisputed champion of the world. The Nikkei 225 had been compounding at extraordinary rates. Japanese real estate was worth more than all the real estate in the United States combined. Investors worldwide were piling into Japanese stocks, convinced the country would dominate the 21st century.

The Nikkei peaked in December 1989 at around 39,000. It then crashed and did not recover to that level until 2024 — thirty-five years later. An investor who concentrated in Japanese stocks in 1989 waited a generation to break even.

Nortel in Canada

In 2000, Nortel Networks made up over 30% of the TSX Composite Index. It was the crown jewel of Canadian tech. Its stock price had gone from $10 to over $120 in a few years. Then it crashed. By 2002, it was trading under $1. By 2009, the company was bankrupt.

Canadians who had concentrated their portfolios in Nortel — many of whom were Nortel employees with company stock — lost everything.

The parallel to QQQ’s current concentration in a handful of tech giants should be obvious. I am not saying Apple or NVIDIA will go bankrupt. I am saying that no company and no sector remains on top forever, and building your portfolio around that assumption is a risk that XEQT eliminates entirely.

10. The Bottom Line

Here is the simplest way I can put it:

• QQQ is a bet on US technology. It has been an incredible bet for the past 15 years. It was a catastrophic bet from 2000-2015.
• XEQT is a bet on the global economy. It will never be the top performer in any given year. It will also never be the worst performer. Over decades, it has a strong track record of building wealth.
• Adding QQQ to XEQT is an active decision to overweight US tech. If you do this, keep it to 10% or less and accept you might underperform a pure XEQT portfolio for extended periods.

For most Canadians — especially those in the early and middle stages of wealth-building — XEQT alone is sufficient. You already own every company in the NASDAQ-100 through XEQT. You just also own the other 8,900 companies that give you true global diversification and let you sleep at night.

My friend Preet? He eventually rebuilt his portfolio — this time with XEQT as the core. He still keeps a small position in ZNQ for the tech exposure he wants. But he no longer puts all his eggs in one basket. And he has not panic-sold since.

Disclosure: I may receive a referral bonus if you sign up through links on this page. All opinions are my own. XEQT returns are approximate and based on historical data — past performance does not guarantee future results.