XEQT vs VUN: Should You Just Buy the US Market Instead?

My uncle retired from Air Canada in 2018, and when he finally sat down to consolidate his savings into “something simple,” his golf buddy had one piece of advice: “Just buy VUN. The US market always wins.”

On the surface, the logic seemed bulletproof. Over the previous decade, the US stock market had crushed everything else. The S&P 500 had returned something like 14% per year while Canadian stocks limped along and international markets barely kept up with inflation. Why would you own anything other than America?

I tried to explain why XEQT – a globally diversified all-equity ETF – might be a better choice. He didn’t buy it. He put everything in VUN. And for the next few years, honestly, his returns looked better than mine.

But that’s the trap. The last decade’s winner isn’t always the next decade’s winner. And the question of XEQT vs VUN isn’t really about which one has higher returns this year or next – it’s about what kind of bet you want to make with your retirement money.

Let me explain.

1. What Is VUN?

VUN (Vanguard US Total Market Index ETF) is one of the most popular ETFs in Canada. It tracks the CRSP US Total Market Index, giving you exposure to virtually every publicly traded stock in the United States – roughly 4,000 companies from mega-caps like Apple and Microsoft down to small-cap stocks most people have never heard of.

Key details:

• MER: 0.16%
• Holdings: ~4,000 US stocks
• Index: CRSP US Total Market
• Currency: CAD-listed, but holds USD assets (unhedged)
• Provider: Vanguard Canada
• AUM: ~$7 billion

VUN is essentially a Canadian-listed wrapper around Vanguard’s massive US-domiciled VTI fund. It gives you the entire US stock market in a single purchase, with no commission on platforms like Wealthsimple.

2. What Is XEQT?

XEQT (iShares Core Equity ETF Portfolio) is BlackRock Canada’s all-in-one, 100% equity ETF. Rather than focusing on a single country, it gives you the entire global stock market in one ticker:

• US equities: ~45%
• Canadian equities: ~25%
• International developed (Europe, Japan, Australia, etc.): ~25%
• Emerging markets (China, India, Brazil, etc.): ~5%

That’s roughly 12,000+ stocks across 49 countries. The MER is 0.20%, and it rebalances automatically.

3. The Head-to-Head Comparison

The fee difference is small – 0.04% – and essentially irrelevant on any normal portfolio size. The real difference is what you own: the whole world, or just the US.

4. The Bull Case for VUN (Why US-Only Investing Is Tempting)

Let’s be honest about why VUN is tempting. The numbers don’t lie:

• 2010-2024: The S&P 500 returned roughly 13-14% annualized in CAD terms
• Same period, international developed markets: roughly 7-9% annualized
• Same period, Canadian market: roughly 7-8% annualized
• Same period, emerging markets: roughly 4-6% annualized

If you had put everything in VUN fifteen years ago and ignored the rest of the world, you’d have significantly more money today than someone who diversified globally. That’s just a fact.

The US economy has several structural advantages that bulls point to:

• Technology dominance: The world’s largest tech companies (Apple, Microsoft, Google, Amazon, Nvidia, Meta) are all American
• Deep capital markets: The US attracts capital and talent from around the world
• Innovation culture: Silicon Valley, biotech, AI – the US leads in high-growth sectors
• Demographic advantages: Compared to Europe and Japan, the US has more favorable demographics
• Reserve currency: The USD’s status as the world’s reserve currency provides unique tailwinds

It’s a compelling case. But it’s not the whole story.

5. The Problem With US-Only Investing

Here’s where things get uncomfortable for the VUN faithful.

The Decade That US Investors Want to Forget

From 2000 to 2009 – an entire decade – the S&P 500 delivered a negative total return. That’s right: if you invested $10,000 in the US market at the start of 2000, you had less than $10,000 ten years later. This period is sometimes called the “lost decade” for US stocks.

During that same decade:

• International developed markets returned roughly +30% cumulative
• Emerging markets returned roughly +150% cumulative
• Canadian stocks returned roughly +80% cumulative

If you were 100% in the US during the 2000s, you suffered mightily while the rest of the world did fine. The investors who were diversified globally – the XEQT approach, essentially – came out far ahead.

Concentration Risk

Going 100% VUN means you are making a bet that the US will continue to outperform every other country on Earth, indefinitely. That’s a concentrated position in a single economy, a single currency, and a single regulatory environment.

The US is roughly 60% of global stock market capitalization. XEQT gives you about 45% US exposure. VUN takes you to 100%. That’s a meaningful overweight – a bet, not diversification.

Currency Risk

As a Canadian, owning VUN means you are 100% exposed to the USD/CAD exchange rate. When the US dollar strengthens against the Canadian dollar, your VUN returns get a boost. When the Canadian dollar strengthens, your returns get dragged down – even if the underlying US stocks did fine.

XEQT spreads this currency exposure across USD, EUR, GBP, JPY, AUD, and many others. You’re still mostly in USD (because the US is the largest market), but you’re not putting all your currency eggs in one basket.

Recency Bias

The most dangerous phrase in investing is “this time is different.” US outperformance over the past 15 years has been extraordinary – and it has convinced an entire generation of investors that it will continue forever. That’s recency bias in action.

Nobody knows which country or region will deliver the best returns over the next 15 years. If you’re confident it’s the US, buy VUN. If you’re honest about the uncertainty – and most of us should be – XEQT is the more intellectually honest position.

6. But XEQT Already Gives You Plenty of US Exposure

This is the point that VUN enthusiasts often miss. XEQT is already ~45% US stocks. When you buy XEQT, you are getting massive exposure to Apple, Microsoft, Amazon, Google, and every other US company. You’re just also getting:

• The Canadian banks and resource companies that make up the TSX
• Nestle, ASML, LVMH, Toyota, Samsung, and thousands of other international blue chips
• Exposure to high-growth emerging markets like India, Brazil, and Vietnam

XEQT isn’t anti-US. It’s pro-everything. It says: “I want to own the companies that are winning today AND the companies that might be winning tomorrow.”

If the US continues to dominate, your 45% US allocation in XEQT will benefit enormously. If international markets have their turn (as they did in the 2000s), you’ll benefit from that too. You are covered either way.

7. What the “Lost Decade” Actually Looked Like

I keep referencing the 2000-2009 period because it’s the most powerful counterargument to US-only investing, and most younger investors have never experienced anything like it.

Here’s what happened: the dot-com bubble burst in 2000. The S&P 500 lost nearly 50% from its 2000 peak to its 2002 trough. It spent years recovering. Then, just as US stocks had crawled back to near their previous highs, the 2008 financial crisis hit and the market lost another 57% from peak to trough.

If you had invested $10,000 in the S&P 500 at the start of 2000, by the end of 2009 you would have had roughly $9,100 – a loss over an entire decade. Ten years of your investing life, and you had less money than when you started.

Meanwhile, during that same decade:

• Canadian stocks (S&P/TSX Composite) returned roughly +5.6% per year – partially thanks to a commodity boom
• International developed markets returned roughly +1.6% per year – modest, but positive
• Emerging markets returned roughly +9.8% per year – a massive boom driven by China, India, and Brazil

An investor holding a globally diversified portfolio similar to XEQT would have generated positive returns through the decade. Not spectacular returns, but positive. The diversification across geographies didn’t just reduce risk – it was the difference between making money and losing money over a ten-year period.

Could this happen again? Nobody knows. But the fact that it happened once – and within most of our lifetimes – should give anyone pause before concentrating 100% of their wealth in a single country’s stock market.

8. The Valuation Argument: Is the US Market Overpriced?

One concern worth mentioning is valuation. As of mid-2026, the US stock market trades at a significantly higher price-to-earnings ratio than international markets.

The S&P 500’s forward P/E ratio is roughly 20-22x earnings, depending on the day. International developed markets trade at roughly 14-16x. Emerging markets trade at roughly 12-14x.

Higher valuations don’t necessarily mean lower future returns. But historically, starting valuations have been one of the best predictors of long-term returns. Markets with lower starting valuations tend to produce higher subsequent returns over 10+ year periods, and vice versa.

This doesn’t mean the US market is “expensive” in some absolute sense – tech companies arguably deserve premium valuations due to their growth profiles. But it does mean that much of the US market’s future growth may already be “priced in.” Buying VUN at today’s valuations means you need US earnings growth to continue at an exceptional pace just to match the average historical return.

XEQT hedges against this by also owning cheaper international and emerging markets, where expectations are lower and the potential for upside surprises is greater.

9. What About Pairing XEQT and VUN?

Some investors try to get the best of both worlds by holding XEQT and VUN. The idea is to get geographic diversification through XEQT while tilting heavier toward the US with extra VUN.

This can work, but you need to understand what you’re actually doing:

• XEQT + VUN = Overweighting the US relative to global market cap
• If you’re 70% XEQT and 30% VUN, your US exposure jumps from ~45% to roughly ~62%
• You’re also underweighting Canada, international developed, and emerging markets relative to XEQT alone

There’s nothing inherently wrong with this approach if it’s a deliberate choice. But if you’re adding VUN because you feel like XEQT isn’t “enough” US exposure, you might be chasing recent performance – and that rarely ends well.

For most investors, XEQT alone is all you need. It already gives you a globally diversified, market-cap-weighted portfolio. Adding VUN on top is a tactical bet, not a necessity.

10. Who Should Buy VUN Instead of XEQT?

VUN makes sense if:

• You have a strong conviction that US outperformance will continue and you’re comfortable with the concentrated risk
• You already have significant Canadian and international exposure in other parts of your portfolio (pension, real estate, other funds) and want to tilt toward the US
• You want the lowest possible MER and the 0.04% difference matters to you (it probably shouldn’t on most portfolio sizes)
• You’re building a multi-ETF portfolio where VUN is one piece alongside XIC (Canadian), XEF (international), and XEC (emerging markets)

For a comparison of XEQT vs a US-focused approach, see our XEQT vs S&P 500 breakdown.

11. Who Should Buy XEQT Instead of VUN?

XEQT makes sense if:

• You want true global diversification without making a bet on any single country
• You value simplicity – one ticker, automatic rebalancing, done
• You are honest about uncertainty – you don’t know which country will win next, and you don’t want your retirement riding on that guess
• You are a beginning or intermediate investor who doesn’t want to manage multiple ETFs
• You want to set it and forget it with recurring buys on Wealthsimple

This describes most Canadian investors. And it’s why XEQT has become the default recommendation across nearly every Canadian personal finance community.

12. The Bottom Line

Let me put this bluntly:

Buying VUN is a bet. It’s a bet that the United States will continue to outperform the rest of the world for the duration of your investing career. It might be a good bet. The US has a lot going for it. But it is still a bet on a single country.

Buying XEQT is a hedge. It says: “I don’t know what’s going to happen, so I’m going to own everything.” If the US keeps winning, you benefit (it’s 45% of your portfolio). If international markets have their decade in the sun, you benefit from that too. You are diversified against the unknown.

My uncle, the one who went all-in on VUN in 2018? He’s done well. The US market has been on a tear. But he sweats every time there’s a headline about US political instability, trade wars, or tech stock valuations. He’s got everything riding on one horse.

I sleep better at night owning XEQT. The whole world is in my portfolio. Whatever happens next, I’ve got a piece of it.

For most Canadian investors, that’s the right approach.