XEQT vs ZGRO: All-Equity vs Balanced Growth ETF for Canadian Investors in 2026

When I was choosing between all-equity and balanced ETFs, the decision came down to one question: how would I react to a 30% drop?

Not hypothetically. I mean genuinely – sitting at my desk, watching my portfolio shed five figures in a week, knowing I would not need the money for twenty years but feeling every instinct scream at me to sell. I had already been through a few rough patches with XEQT and learned that I could stomach the volatility. But I have friends who could not. One of them switched to a balanced growth ETF after the 2022 drawdown and has been sleeping better ever since.

That is the heart of the XEQT vs ZGRO debate. XEQT is iShares’ all-equity juggernaut – 100% stocks, maximum growth potential, and all the turbulence that comes with it. ZGRO is BMO’s balanced growth ETF – roughly 80% equities and 20% bonds, designed to give you most of the growth with a meaningful cushion when markets fall apart. Same MER. Different philosophies. And if you are a Canadian investor trying to decide between them, this guide will walk you through everything you need to know.

1. XEQT vs ZGRO at a Glance

Let’s start with the side-by-side numbers. This table covers the key differences and similarities between these two all-in-one ETFs.

The biggest difference is right there in the middle of the table: XEQT is 100% equities, ZGRO is roughly 80/20. Everything else – the MER, the geographic allocation on the equity side, the rebalancing approach – is remarkably similar. The 20% bond allocation is what separates these two funds, and it is the single decision that matters most.

2. What’s Inside XEQT

If you have read XEQT holdings: what you actually own, you know the drill. XEQT is a fund of funds – it holds four underlying iShares ETFs that together give you exposure to over 9,000 stocks across the globe.

Here is how the four building blocks break down:

That is it. No bonds. No cash. No alternatives. Every dollar you put into XEQT goes to work in the global stock market. The US gets the largest slice because that is where the bulk of global market capitalization sits. Canada gets a home-country tilt that benefits from the dividend tax credit. International developed and emerging markets round out the diversification.

The beauty of XEQT is its simplicity. You buy one ticker and you own a piece of almost every publicly traded company on the planet. iShares handles the rebalancing quarterly, so you never have to worry about your allocations drifting. For a deeper look at how XEQT works for new investors, check out the XEQT for beginners guide.

3. What’s Inside ZGRO

ZGRO takes a different approach. It is also a fund of funds, but instead of going 100% equity, BMO builds in a fixed income layer that absorbs some of the shock during market downturns.

Equity portion (~80%)

ZGRO’s equity sleeve uses multiple BMO ETFs to cover the same global markets that XEQT targets:

• US equities (~36% of total fund): Broad US market exposure through BMO’s S&P 500 and total market ETFs
• Canadian equities (~20% of total fund): BMO S&P/TSX Capped Composite ETF and related Canadian equity funds
• International developed (~16% of total fund): European, Japanese, and other developed market equities
• Emerging markets (~8% of total fund): China, India, Brazil, and other developing economies

Fixed income portion (~20%)

This is the part that makes ZGRO fundamentally different from XEQT:

• Canadian government bonds: Federal and provincial bonds for stability
• Canadian corporate bonds: Investment-grade corporate debt for slightly higher yield
• Short-term bonds: Lower duration bonds that are less sensitive to interest rate changes

The 20% bond allocation is not there to generate returns – it is there to reduce volatility. When stocks drop 30%, bonds typically hold steady or even rise. That means ZGRO’s portfolio does not fall as far during crashes, which makes it psychologically easier to hold through rough markets.

Why 80/20?

The 80/20 split is the “growth” allocation in the all-in-one ETF world. BMO offers a full lineup:

• ZEQT: 100% equity (similar to XEQT)
• ZGRO: 80% equity / 20% bonds (the one we are discussing)
• ZBAL: 60% equity / 40% bonds
• ZCON: 40% equity / 60% bonds

If you have already read our XEQT vs ZEQT comparison, you know that XEQT and ZEQT are nearly identical. ZGRO is where BMO starts to diverge meaningfully from XEQT, and that 20% bond sleeve is the reason.

4. Performance Comparison: How They’ve Done So Far

Here is where things get interesting. Both ETFs launched in 2019, which gives us a reasonably long track record that includes a bull market, a pandemic crash, a bear market, and a strong recovery. That is exactly the kind of range you want when comparing an all-equity fund against a balanced growth fund.

The general pattern

XEQT has historically delivered higher total returns over full calendar years, which is exactly what you would expect from a 100% equity portfolio compared to one that holds 20% bonds. Stocks outperform bonds over the long run. That is not a controversial statement – it is the foundational assumption behind equity investing.

But the story changes when you zoom into the bad years. In 2022, when global equities sold off sharply and bond markets also struggled, ZGRO still held up somewhat better than XEQT. The bond allocation did not provide as much cushion as it normally would – 2022 was unusual in that both stocks and bonds fell together – but ZGRO’s drawdown was still shallower than XEQT’s.

What this means in practice

Over a decade or more, XEQT’s higher equity allocation should produce meaningfully higher total returns. Over any given one- to three-year period, though, ZGRO may actually come out ahead if markets are flat or declining. That is the trade-off.

If you want to see how this same dynamic plays out with iShares’ own balanced fund, the XEQT vs XBAL comparison covers the 60/40 version of this debate.

5. Risk and Volatility: The Real Difference

Performance gets all the attention, but risk is where the XEQT vs ZGRO decision actually lives. The right ETF for you is not the one with the highest expected return – it is the one you will actually hold through a market crash without panic-selling.

Maximum drawdowns

In the 2020 COVID crash:

• XEQT dropped approximately 30% from peak to trough over a few terrifying weeks
• ZGRO dropped approximately 22-24% over the same period

That 6-8% difference might not sound like much, but on a $100,000 portfolio it is the difference between watching $70,000 on your screen and watching $76,000. Both hurt. But one hurts less, and that margin can be the difference between holding steady and selling at the worst possible time.

Volatility (standard deviation)

• XEQT: Annual standard deviation around 16-18%, which means daily swings of 1-3% are normal
• ZGRO: Annual standard deviation around 12-14%, with more muted daily movements

Lower volatility does not just mean smaller losses during crashes. It also means a smoother overall experience – fewer days where you open your brokerage app and feel your stomach drop. For some investors, that smoothness is worth the trade-off in long-term returns. For others, it is not.

The behavioral angle

Here is the thing nobody likes to admit: the mathematically optimal portfolio is worthless if you cannot stick with it. If XEQT’s volatility causes you to panic-sell during a crash, you would have been better off in ZGRO the entire time. A 7% average return that you actually earn beats an 8-9% average return that you bail out of halfway through.

This is the most important section in this entire post. Be honest with yourself about how you handled the 2022 drawdown, or the 2020 crash, or whatever the next crisis turns out to be. Your answer determines which ETF is right for you more than any performance chart ever could.

For a deeper dive into whether you even need bonds at all, read do you need bonds in your 20s and 30s.

6. Who Should Buy XEQT

XEQT is the right choice for investors who want maximum long-term growth and can tolerate significant short-term volatility. Here is the profile:

You are a good fit for XEQT if:

• Your time horizon is 10+ years – ideally 15-20+ years. The longer your timeline, the more time you have to recover from crashes and benefit from equity compounding.
• You are comfortable with volatility. Not in theory – in practice. You have been through a 20-30% drawdown and you did not sell. Or you are genuinely confident you would not.
• You are a younger investor (20s, 30s, or even early 40s) with decades of earning and investing ahead of you.
• You have a stable income and emergency fund. You are not going to need this money for at least a decade, and you have 3-6 months of expenses in a savings account for true emergencies.
• You want simplicity. One ticker, global diversification, automatic rebalancing. Done.
• You invest in a TFSA or RRSP. In tax-sheltered accounts, XEQT’s all-equity structure is highly tax-efficient because there is no bond interest to worry about.
• You prioritize long-term wealth over short-term comfort. You understand that higher returns come with higher volatility and you accept that trade-off.

If most of those bullet points describe you, XEQT is probably the better pick. The extra growth from 100% equity exposure compounds dramatically over 20-30 years.

7. Who Should Buy ZGRO

ZGRO is the right choice for investors who want strong growth but need a smoother ride to get there. Here is the profile:

You are a good fit for ZGRO if:

• Your time horizon is 5-10 years – still long enough for equities to work in your favor, but short enough that a major crash could derail your plans.
• You want growth but need some stability. You do not want to be in a conservative fund, but you also do not want the full rollercoaster of 100% equities.
• You are closer to retirement (late 40s, 50s) and a large drawdown could materially affect when you can stop working.
• You are a newer investor who has never lived through a bear market and is not sure how you would react to a 30% drop.
• You have lower risk tolerance. Not everyone can watch their portfolio lose a third of its value and keep buying. That is completely fine – it is not a character flaw, it is a preference.
• You want a one-fund solution that includes bonds. You do not want to manage separate equity and bond ETFs. ZGRO handles the allocation and rebalancing for you.
• You are investing in a non-registered account. While XEQT is more tax-efficient for non-registered accounts (no bond interest), some investors prefer the lower volatility of ZGRO and accept the slightly higher tax drag.

ZGRO gives you roughly 80% of XEQT’s growth potential with meaningfully less volatility. For many Canadians, that is the sweet spot.

8. Can You Hold Both?

I get this question a lot, so let me be direct: holding both XEQT and ZGRO in the same account generally does not make much sense.

Here is why:

• ZGRO already contains equities. If you hold both, you are essentially creating a custom allocation that you could achieve more simply by choosing one fund.
• The math gets muddy. If you hold 50% XEQT and 50% ZGRO, you end up with a portfolio that is roughly 90% equity and 10% bonds. That is fine as an allocation, but you could achieve almost the same thing with a single fund like XGRO or even by just holding XEQT and adding a small bond ETF.
• It adds complexity for no real benefit. The whole point of all-in-one ETFs is simplicity. Mixing two of them defeats the purpose.

The exception

Some investors hold different funds in different accounts for strategic reasons:

• XEQT in the TFSA (long-term, all growth, tax-free compounding)
• ZGRO in the RRSP (slightly more conservative, tax-deferred, closer to when you will need it)

This can make sense if your TFSA is your long-term growth bucket and your RRSP is your “retire in 10-15 years” bucket. But even then, many investors find it simpler to pick one fund and use it everywhere.

My recommendation: pick whichever fund matches your risk tolerance and timeline, and use it across all your accounts. Simplicity wins.

9. The Tax Angle: XEQT vs ZGRO

This does not come up often in comparisons, but it matters – especially if you are investing in a non-registered (taxable) account.

TFSA and RRSP

In registered accounts, both XEQT and ZGRO are equally efficient. All growth is either tax-free (TFSA) or tax-deferred (RRSP), so the bond interest in ZGRO does not create any extra tax drag. Choose based on your risk tolerance, not tax considerations.

Non-registered accounts

This is where XEQT has an edge:

• XEQT: 100% equity distributions are a mix of Canadian-eligible dividends (which get favorable tax treatment) and foreign income. No bond interest.
• ZGRO: The 20% bond allocation generates interest income, which is taxed at your full marginal rate – the least favorable tax treatment in Canada.

On a $100,000 investment, the tax difference is not enormous, but it adds up over decades. If you are investing primarily in a non-registered account, XEQT’s all-equity structure is more tax-efficient.

That said, if you would panic-sell XEQT during a crash and you would not panic-sell ZGRO, the tax efficiency argument is irrelevant. Behavioral stability always trumps marginal tax optimization.

10. The Bottom Line: Which One Should You Buy?

After everything we have covered – the holdings, the performance, the risk, the tax implications – here is how I think about the XEQT vs ZGRO decision.

Choose XEQT if:

• You have 10+ years before you need the money
• You can genuinely handle 30%+ drawdowns without selling
• You are in your 20s, 30s, or early 40s and want maximum long-term growth
• You want the most tax-efficient option for non-registered accounts
• You have already lived through a market crash and held firm

Choose ZGRO if:

• You have 5-10 years before you need the money
• You want strong growth but with a meaningful cushion during downturns
• You are in your late 40s or 50s and want to reduce risk without going full conservative
• You are a newer investor who has not been tested by a bear market yet
• You value sleeping well over squeezing out an extra percent of return

The honest answer

For most young Canadian investors with a long timeline and steady income, XEQT is the better mathematical choice. The extra growth from 100% equity exposure compounds powerfully over two or three decades, and the volatility – while uncomfortable – is something you can ride out when you have time on your side.

But ZGRO is not the “wrong” choice. It is the “different priorities” choice. If ZGRO’s smoother ride means you invest consistently, stay the course during crashes, and never panic-sell, then ZGRO might actually deliver better real-world results for you – even if XEQT looks better on a spreadsheet.

The worst outcome is not choosing ZGRO when XEQT would have returned more. The worst outcome is choosing XEQT, panicking during a crash, selling at the bottom, and missing the recovery. If there is any chance of that happening, ZGRO is the smarter pick for you.

One more thing

If you are already invested in XEQT vs VGRO and wondering how ZGRO fits in – VGRO and ZGRO are very similar. Both are 80/20 balanced growth funds. The main difference is the provider (Vanguard vs BMO) and the specific underlying ETFs. Either is a solid choice. Do not overthink it.

Whatever you decide, the most important thing is to start investing, stay consistent, and let compound growth do its work. Whether you pick XEQT or ZGRO, you are making a smart decision that puts you ahead of the vast majority of Canadians who are still sitting in cash or paying 2%+ MERs on actively managed funds.

Related Reading

• What is XEQT? A Comprehensive Guide
• XEQT Holdings: What You Actually Own
• XEQT vs ZEQT (BMO): Which All-Equity ETF Wins?
• XEQT vs VGRO: Which ETF is Right for You?
• XEQT vs XBAL: Which iShares ETF is Right for You?
• XEQT vs Bond ETFs: Do You Need Bonds?
• XEQT for Beginners

Disclosure: This post contains referral links. I may receive compensation if you sign up through these links, but this does not affect my honest assessment. Both XEQT and ZGRO are excellent choices – your decision should be based on your personal risk tolerance and investment timeline.