XEQT Sector Breakdown: What Industries Your Money Is Actually In

I remember the first time someone asked me what industries I was invested in. I’d been buying XEQT for about a year at that point, feeling pretty smug about my “globally diversified portfolio.” But when they asked, “So how much of your money is in tech versus healthcare?” I just stared at them. I had absolutely no idea.

Most Canadian investors who buy XEQT know the headline pitch: you get exposure to over 9,000 stocks across 49 countries with a single purchase. That part is easy to understand. But when it comes to the industry breakdown – which sectors are actually driving your returns, which parts of the global economy your money is funding – things get hazier fast.

Here is the thing: when you buy a share of XEQT, you are not just buying “stocks.” You are buying a specific mix of industries. You are part-owner of semiconductor fabs and pharmaceutical labs. You own a slice of Canadian banks and German automakers. You hold energy companies and grocery chains and cloud computing platforms – all in precise proportions that reflect the global economy.

Understanding those proportions matters. Not because you need to tinker with them (you don’t), but because knowing what you own gives you the confidence to hold through the inevitable rough patches. When tech crashes, you will know exactly how much of your portfolio is affected. When Canadian banks have a rough quarter, you will know you are not overexposed.

Let me break down exactly where your money goes when you buy XEQT, sector by sector.

1. The Complete XEQT Sector Breakdown at a Glance

Before we dive into the details, here is the big picture. XEQT holds four underlying iShares ETFs – ITOT (US stocks, ~45%), XIC (Canadian stocks, ~25%), XEF (international developed, ~20%), and IEMG (emerging markets, ~10%). When you blend the sector weightings across all four, you get a composite allocation that looks roughly like this:

A few things jump out immediately. First, no single sector dominates. Information technology is the largest at roughly 22%, but it is far from a majority of your portfolio. Second, you own every major industry category – all 11 GICS (Global Industry Classification Standard) sectors are represented. Third, the weightings reflect economic reality: technology and financial services are the biggest industries in the world, and your portfolio mirrors that.

These numbers shift slightly quarter to quarter as stock prices move, but the broad structure stays remarkably stable. You do not need to memorize these weights. What matters is understanding the general shape of what you own.

2. Deep Dive: Information Technology (~22%)

Technology is your single largest sector exposure, and for good reason – it is the largest sector in the global stock market by market capitalization. Through XEQT, you own a comprehensive slice of the world’s most influential tech companies.

What you actually own: The US allocation (through ITOT) gives you the mega-caps everyone knows – Apple, Microsoft, NVIDIA, Broadcom, Meta, and Alphabet. But you also own hundreds of mid-cap and small-cap US tech companies that rarely make headlines: cybersecurity firms, enterprise software companies, semiconductor equipment makers, and IT services providers.

Through the Canadian allocation (XIC), you get Shopify, Constellation Software, CGI Group, and OpenText. From international markets (XEF), you hold ASML (the Dutch company that makes the machines that make cutting-edge chips), SAP, Tokyo Electron, and Samsung through the emerging markets allocation (IEMG). You even own Taiwan Semiconductor (TSMC), the company that fabricates chips for Apple and NVIDIA.

Why it is weighted at ~22%: This is not an arbitrary number. It reflects the fact that technology companies have grown to become the most valuable businesses on the planet. Apple alone is worth more than the entire Canadian stock market. Market-cap weighting means the biggest companies get the biggest slice, and tech companies are, collectively, the biggest.

The risk you should understand: Tech had a brutal 2022. The Nasdaq 100 dropped over 30%. If you held XEQT through that period, you felt some of that pain – but only about 22 cents of every dollar was affected by the tech-specific downturn. The other 78% of your portfolio – banks, healthcare, energy, industrials – helped cushion the blow. That is diversification doing its job.

3. Deep Dive: Financials (~18%)

Financials are your second-largest sector, and this is where XEQT’s Canadian tilt becomes most visible. If you are a Canadian investor, you are already swimming in financial sector exposure through your daily life – your mortgage is with a Big Five bank, your credit card is from one, your savings account is at one. Through XEQT, you own all of them as an investor too.

What you actually own: The Canadian allocation gives you heavy exposure to Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, CIBC, Manulife, Sun Life, and Brookfield. These are the anchors of the Canadian financial system, and they represent a significant chunk of XEQT’s total financial sector weight.

From the US side, you own JPMorgan Chase (the largest bank in the US), Bank of America, Berkshire Hathaway (Warren Buffett’s conglomerate, which is classified as a financial), Goldman Sachs, Morgan Stanley, and Visa. Internationally, you hold HSBC, UBS, Allianz, AXA, and major Japanese banks.

Why financials punch above their weight in XEQT: Canada’s stock market is heavily concentrated in financials – roughly 31% of the TSX is financial companies. Since XEQT allocates about 25% of its assets to Canadian stocks, that overweight bleeds through into the overall portfolio. It is not necessarily a bad thing – Canadian banks are among the most stable in the world, having survived the 2008 financial crisis without a single bank failure – but it does mean you have a bit more financial sector exposure than a pure global market-cap weighted portfolio would give you.

The risk you should understand: Financial companies are sensitive to interest rates, housing markets, and economic cycles. During the 2008 global financial crisis, the financial sector was ground zero. US banks lost 80%+ of their value. Even Canadian banks dropped 40-50% before recovering. At 18% of your portfolio, a financial sector meltdown would sting, but it would not be catastrophic the way it would for someone who held only Canadian bank stocks.

4. Deep Dive: Healthcare (~10%)

Healthcare might be the single best argument for why Canadian investors need global diversification. Canada essentially has no large-cap pharmaceutical companies. Our healthcare system is publicly funded, and the private sector opportunities that spawned giants like Pfizer, Johnson & Johnson, and UnitedHealth simply do not exist here in the same way.

What you actually own: Through XEQT’s US allocation, you hold the biggest names in global healthcare – UnitedHealth Group, Eli Lilly (maker of the blockbuster GLP-1 weight loss drugs), Johnson & Johnson, AbbVie, Merck, and Pfizer. You own medical device companies like Medtronic and Abbott Labs. You own biotech firms developing next-generation therapies.

From international markets, you get Novo Nordisk (the Danish company behind Ozempic and Wegovy), Roche, AstraZeneca, Novartis, and Sanofi. These are some of the largest pharmaceutical companies in the world, and you would have zero exposure to them if you only held Canadian stocks.

Why it matters for your portfolio: Healthcare is considered a “defensive” sector. People need medicine, hospital visits, and medical devices regardless of whether the economy is booming or in recession. During market downturns, healthcare stocks tend to hold up better than cyclical sectors like tech or consumer discretionary. Having 10% of your portfolio in healthcare gives you a natural shock absorber.

The aging population story is real. In Canada, the percentage of people over 65 is expected to grow from roughly 19% today to over 25% by 2040. Globally, the same demographic trend is playing out. That is a structural tailwind for healthcare companies for decades to come.

5. Deep Dive: Industrials (~10%)

Industrials are the backbone companies – the ones that build the infrastructure, move the goods, and manufacture the equipment that every other industry depends on. This is a broad sector that spans everything from railways to defence contractors to electrical equipment manufacturers.

What you actually own: From Canada, you hold Canadian National Railway and Canadian Pacific Kansas City – two of the most important freight railways in North America. From the US, you own Caterpillar, Deere & Company, General Electric Aerospace, Honeywell, and Union Pacific. International holdings include Siemens, Airbus, Schneider Electric, and a deep bench of Japanese industrial conglomerates.

Why it matters: Industrials are a cyclical sector, meaning they tend to do well when the economy is growing and struggle during recessions. But they are also an essential part of long-term economic expansion. Every new factory, data center, warehouse, and transit system requires industrial companies. As governments worldwide invest in infrastructure – think AI data centers, renewable energy projects, and supply chain reshoring – industrials stand to benefit.

At 10% of XEQT, you have enough exposure to participate in industrial growth without being overly dependent on the economic cycle.

6. How XEQT’s Sector Mix Compares to the S&P 500

One of the most common questions I get is: “Why not just buy the S&P 500 instead?” Fair question. But when you compare the sector breakdowns side by side, you can see exactly why XEQT offers a fundamentally different kind of diversification.

Three key differences stand out:

Less tech concentration. The S&P 500 has roughly 31% in information technology, meaning almost a third of your money rides on the performance of a handful of mega-cap tech stocks. XEQT’s 22% tech weighting is still substantial, but it is meaningfully less concentrated. During the 2022 tech sell-off, that 9 percentage point difference translated into real protection.

More financials. XEQT carries about 5% more in financials than the S&P 500, primarily because of Canada’s bank-heavy stock market. This gives you more exposure to Canadian financial stability and dividends, but also more sensitivity to Canadian economic conditions, particularly the housing market.

More energy and materials. XEQT has higher exposure to natural resources, again reflecting the Canadian allocation. This is not trivial – Canada is one of the world’s largest energy and mining economies, and that exposure has provided meaningful returns during commodity booms (like 2021-2022 when energy stocks surged while tech was falling).

The bottom line: the S&P 500 is increasingly a bet on US tech dominance. XEQT is a bet on the global economy. Both can work, but they carry fundamentally different risks.

For a deeper comparison, check out XEQT vs the S&P 500.

7. Why Sector Diversification Matters: Lessons From History

Sector diversification is not just an academic concept. It has saved real investors real money during some of the worst market events in recent history. Let me walk you through three examples that show why owning all sectors matters.

The 2022 Tech Crash

In 2022, the Nasdaq 100 (which is about 60% technology) dropped over 33%. The S&P 500, with its 30% tech weighting, dropped about 19%. An investor who was 100% in tech stocks had a genuinely awful year.

XEQT? It dropped too – about 11% in CAD terms – but the damage was significantly contained. Why? Because while tech was cratering, energy stocks surged over 50% that same year. Financials, while choppy, did not suffer the same drawdowns as tech. Healthcare held up reasonably well. Consumer staples were relatively flat. The non-tech 78% of XEQT acted as a genuine buffer.

The 2008 Financial Crisis

Financials were the epicenter. US financial stocks lost over 80% of their value from peak to trough. Canadian banks dropped 40-50% before staging a remarkable recovery. If your portfolio was concentrated in financial stocks – as many Canadian-only investors were – you experienced a terrifying decline.

A globally diversified portfolio like XEQT (had it existed in 2008) would have still lost money – every sector fell during the GFC. But healthcare, consumer staples, and utilities fell far less than financials. Sector diversification did not eliminate losses, but it prevented the kind of catastrophic, concentrated damage that wiped out investors who were all-in on banks.

The 2020 Energy Collapse

When oil prices briefly went negative in April 2020, energy stocks were devastated. Canadian energy companies, which make up about 17% of the TSX, dragged down the entire Canadian market. Investors who held only Canadian stocks felt every bit of that pain.

In a globally diversified portfolio, energy is only about 5% of the total. The 2020 energy collapse barely registered against the massive tech rally that was happening simultaneously. Amazon, Microsoft, and Apple were booming while Suncor and Canadian Natural Resources were struggling. The portfolio absorbed the hit and kept moving.

The lesson is always the same: every sector has its moment of crisis. Tech in 2022. Financials in 2008. Energy in 2020. Real estate in 2008-2009. The whole point of diversification is that you are never overexposed to any single sector’s worst day. With XEQT, the most any single sector can hurt you is roughly 22 cents on the dollar – and that is the biggest sector.

8. The Canadian Tilt: How XEQT Differs From a Pure Global Index

XEQT is not a pure global market-cap weighted index fund. It has a deliberate “home country bias” – allocating roughly 25% to Canadian stocks, even though Canada represents only about 3% of global stock market capitalization.

This Canadian tilt has a meaningful impact on your sector exposure:

Why does XEQT have a Canadian tilt? A few practical reasons. Canadian investors have Canadian-dollar liabilities – your mortgage, groceries, and taxes are all in CAD. Holding more Canadian stocks provides a natural currency hedge because those stocks are priced in Canadian dollars. There are also tax advantages: Canadian dividends from XIC receive the dividend tax credit in non-registered accounts, which makes them more tax-efficient than foreign dividends.

The tilt also reflects investor preferences. Most Canadians are more comfortable holding a meaningful allocation to their home market. iShares designed XEQT to be a practical all-in-one solution, not a textbook-pure global index.

Is the Canadian tilt a problem? Not really. The overweight in financials and energy is modest – a few percentage points above what you would get in a pure global portfolio. Canadian banks are among the most stable in the world, and the energy exposure gives you commodity upside that can be valuable during inflationary periods. If anything, the tilt provides a useful counterbalance to the tech-heavy US market.

That said, if you want to understand the home country bias trade-off in more detail, I wrote about it in what is XEQT.

9. How XEQT’s Sectors Shift Over Time

One thing that catches new investors off guard is that XEQT’s sector weights are not fixed. They change constantly as stock prices move, because XEQT uses market-cap weighting.

Here is a rough illustration of how sector weights have shifted over recent years:

A few trends are worth noting:

Technology grew significantly from 2020 to 2024, driven by the AI boom and the massive run-up in mega-cap tech stocks like NVIDIA, Microsoft, and Apple. But it pulled back slightly from its 2024 peak as the market broadened out.

Energy swung wildly. It was barely 3% in late 2020 when oil prices were in the gutter. By 2022, after the post-pandemic commodity surge and the Russia-Ukraine conflict, it had doubled to about 6%. It has since settled around 5%.

Healthcare has gradually declined as a share of the global market, not because healthcare companies are struggling, but because tech has grown so much faster. This is a relative decline, not an absolute one.

This is all automatic. You do not need to rebalance. You do not need to decide that tech is overvalued and sell some to buy more energy. XEQT’s underlying index funds adjust continuously as market caps change. The sector weights you see today reflect the current collective judgment of millions of investors worldwide about the relative value of each industry.

This is one of the most underappreciated features of XEQT. Active sector rotation – trying to guess which industries will outperform – is one of the hardest things to do in investing. With XEQT, you sidestep that problem entirely.

10. Why You Should Not Try to Pick Sectors Yourself

I know the temptation. You read that AI is the future and think, “Why not go 50% tech?” Or you hear that Canadian banks are bulletproof and think, “I’ll just load up on XFN.” Or oil prices spike and you think, “I should have been in energy all along.”

Here is why sector picking almost never works for individual investors:

You are always reacting to the past. By the time a sector’s outperformance makes headlines, the easy gains are usually over. Everyone who piled into energy stocks in late 2022 was buying near the top of the commodity cycle. Everyone who loaded up on tech in late 2021 was buying just before the crash. The sectors that will lead over the next decade are probably not the ones that led over the last decade.

The data is brutal. Research from S&P Dow Jones Indices consistently shows that sector rotation strategies underperform buy-and-hold approaches over long periods. Even professional fund managers who specialize in sector picking fail to beat their benchmarks most of the time. The SPIVA Canada Scorecard regularly shows that 80-90% of actively managed Canadian funds underperform their benchmark index over 10-year periods.

You introduce behavioral risk. Sector picking turns investing into a series of stressful decisions. Should I sell my tech and buy energy? Is healthcare about to break out? What if I’m wrong? Every decision is an opportunity to let fear or greed override logic. With XEQT, there are no decisions to make. You buy and hold. The end.

You create tax drag. Every time you sell one sector ETF to buy another, you trigger capital gains taxes (in non-registered accounts). Those taxes erode your returns over time. XEQT’s internal rebalancing does not trigger taxable events for you.

The boring truth is that the best sector allocation is the one you get by owning the whole market. XEQT gives you exactly that. It is not exciting, but it works.

11. What This Means for Your Portfolio

If you have read this far, here is what I want you to take away:

You are already diversified across the entire global economy. Every major industry, from cloud computing to copper mining, from heart surgery drugs to hydrogen fuel cells – you own a piece of it. You do not need to add sector-specific ETFs “for diversification.” You already have it.

No single sector can sink your portfolio. The biggest sector (tech) is about 22% of your holdings. Even a 50% crash in tech – which would be historically extreme – would translate to roughly an 11% portfolio-level decline. Painful, yes. Portfolio-destroying, no. And the other 78% of your portfolio would likely offset some of that damage.

Your portfolio reflects economic reality. Technology is the biggest sector because tech companies are the most valuable companies in the world right now. If that changes – if energy or healthcare or some new industry takes the lead – XEQT will automatically adjust. You do not need to predict the future.

The Canadian tilt is a feature, not a bug. Yes, you have slightly more exposure to Canadian banks and energy companies than a pure global investor would. But you also get currency alignment, tax advantages on Canadian dividends, and exposure to one of the most stable banking systems in the world. For a Canadian investor, that trade-off makes sense.

Your only job is to keep buying. Understanding sectors is useful for building conviction and staying calm during volatility. But it should not change your behavior. The right move with XEQT is always the same: buy regularly, hold indefinitely, and let the global economy do its thing.

I check XEQT’s sector breakdown once a year, mostly out of curiosity. It has never once caused me to change my strategy. And that, honestly, is the whole point. When you own everything, you do not need to worry about anything.

For a detailed look at the specific companies inside XEQT, check out XEQT holdings.