XEQT vs Building Your Own DIY Multi-ETF Portfolio: Is 0.20% Worth the Convenience?

I spent the better part of 2021 convinced I was smarter than a single ETF. I had read enough Canadian Personal Finance Reddit threads to know that XEQT charges 0.20% in management fees, and that I could replicate the exact same portfolio by buying its four underlying ETFs for roughly 0.07% blended. On a $50,000 portfolio, that was about $65 per year I was “wasting” on convenience. So I did what any overconfident beginner does: I built my own four-ETF portfolio.

For about eight months, I tracked allocations in a spreadsheet, rebalanced quarterly, agonized over whether my Canadian allocation was 24.7% or 25.3%, and spent time on currency conversion math that I will never get back. Then one evening, after spending 45 minutes calculating how to deploy a $500 contribution across four funds, I asked myself a simple question: Is saving $65 a year really worth all of this?

The answer, for me, was no. I sold everything and bought XEQT. I have not looked back.

But that does not mean DIY is wrong for everyone. This guide will break down exactly what XEQT holds under the hood, how much you could save by replicating it yourself, and – most importantly – who should actually bother.

1. What XEQT Actually Holds Under the Hood

XEQT (iShares Core Equity ETF Portfolio) is a “fund of funds.” When you buy one share of XEQT, BlackRock takes your money and distributes it across four underlying iShares ETFs. You get instant exposure to over 9,000 stocks across 49 countries, but you are really just holding four building blocks:

These weights shift slightly over time as BlackRock rebalances, but the general structure has been remarkably stable since XEQT launched in 2019.

The total MER of XEQT is 0.20%. But notice something interesting: the weighted average MER of those four underlying ETFs is only about 0.05-0.07%. The difference – roughly 0.13-0.15% – is what you pay BlackRock for the service of packaging, rebalancing, and managing the wrapper fund.

That gap is the entire debate in one number. Is that wrapper fee worth it? Let us dig in.

2. The DIY Approach: Building Your Own XEQT

If you wanted to replicate XEQT yourself, here is exactly what you would buy:

On a $100,000 portfolio, the difference is roughly $150 per year. That is $12.50 per month, or about the cost of a couple of fancy coffees.

On a $50,000 portfolio, the difference drops to about $75 per year. On $25,000, it is under $40 per year – less than a dollar a week.

These are small numbers in absolute terms, but they compound. Over 25 years, on a $100,000 portfolio growing at 7% annually, the MER difference would cost you roughly $5,000-$7,000 in total foregone returns. That is real money. But as we will see, the raw MER comparison tells only part of the story.

3. XEQT vs DIY: The Full Comparison

Raw MER is the number everyone fixates on, but it is not the only factor. Here is how XEQT and DIY stack up across every dimension that actually matters:

Looking at this table, XEQT wins on convenience and behavior, while DIY wins on cost and flexibility. The question is which set of advantages matters more to you.

4. The Hidden Costs of DIY (That Nobody Talks About)

The MER savings from a DIY portfolio look great in a spreadsheet. But spreadsheets do not account for human behavior, and human behavior is where most investment returns are lost.

The Rebalancing Tax

Every time you contribute money to your DIY portfolio, you need to calculate the current allocation, figure out which fund is underweight, and distribute your contribution accordingly. If you invest monthly, that is 12 times per year you are doing portfolio math.

Sure, it only takes 10-15 minutes each time. But multiply that by 12 months and you are spending 2-3 hours per year on a task that XEQT handles for you automatically. What is your time worth? If you value your time at even $30/hour, the “free” DIY approach is costing you $60-90 in time alone – which nearly wipes out the MER savings on a $100K portfolio.

Currency Conversion Costs

ITOT and IEFA are US-listed ETFs that trade in USD. If you buy them on a Canadian brokerage, you are paying currency conversion fees. On Wealthsimple, the standard USD conversion fee is 1.5% each way (unless you have a Premium or Generation plan). On Questrade, you pay the bid-ask spread on the conversion.

Even if you use Norbert’s Gambit (the classic workaround to convert CAD to USD cheaply through DLR/DLR.U), you are spending extra time and effort on each transaction. And if you are not using Norbert’s Gambit, the currency conversion costs alone could easily exceed the MER savings.

With XEQT, BlackRock handles all the currency conversion internally at institutional rates that are far better than anything retail investors can access. This is a genuine, underappreciated advantage.

Tracking Error and Allocation Drift

In theory, you are going to maintain a perfect 45/25/25/5 split. In practice, market movements constantly throw your allocation off. After a strong US market quarter, your ITOT position might drift to 48% while your XIC drops to 23%. Do you rebalance? Do you wait? How far do you let it drift before acting?

With XEQT, BlackRock rebalances for you using cash flows and internal trades. Your allocation stays on target without you lifting a finger.

The Tinkering Tax

This is the big one. When you hold four separate ETFs, you are constantly tempted to “optimize.” Maybe you read an article about how emerging markets are poised for a breakout, so you bump IEMG from 5% to 10%. Maybe the US market is looking expensive, so you trim ITOT to 40%. Maybe you decide Canada is overweighted and drop XIC to 20%.

Each of these tweaks feels rational in the moment. But collectively, they turn your disciplined index portfolio into an actively managed mess. Studies consistently show that the more investors trade and tinker, the worse their returns.

XEQT removes the temptation entirely. You cannot adjust the allocation. You just buy it and move on with your life. For most people, this behavioral guardrail is worth far more than 0.13% per year.

The Motivation Cliff

When investing is complicated, it is easy to procrastinate. I have seen people delay contributions for weeks because they “did not have time to figure out the right split.” With XEQT, there is no friction. Money comes in, you buy XEQT. Done. That consistency – buying regularly without excuses – matters far more than saving a fraction of a percent on fees.

5. When DIY Actually Makes Sense

I have spent a lot of words defending XEQT, so let me be fair: there are genuine scenarios where building your own portfolio is the smarter move.

Large Portfolios ($500K+)

At $500,000, the MER difference between XEQT and DIY is roughly $650-750 per year. At $1 million, it is $1,300-1,500 per year. These are no longer “couple of coffees” numbers. For large portfolios, the annual savings become meaningful enough to justify the extra work.

If you are disciplined, enjoy the process, and have a portfolio north of $500K, DIY is a legitimate option that will save you real money over time.

RRSP Tax Optimization

Here is a nuance that matters for larger RRSP accounts. When you hold US-listed ETFs like ITOT directly in an RRSP, you avoid the 15% US withholding tax on dividends thanks to the Canada-US tax treaty. XEQT holds ITOT indirectly through a Canadian wrapper, which means there is an extra layer that may reduce the treaty benefit.

The impact is small – roughly 0.15-0.25% of the US dividend yield, which works out to maybe 0.03-0.05% drag on your total portfolio. But for very large RRSP accounts, this adds up.

Specific Allocation Preferences

Maybe you want 60% US and only 15% Canadian instead of XEQT’s 45/25 split. Or maybe you want more emerging markets exposure. If you have strong, well-reasoned views about geographic allocation, DIY lets you express them.

Just be honest with yourself about whether your views are “well-reasoned” or just “I read a Reddit thread last week.”

You Genuinely Enjoy It

Some people find portfolio management genuinely interesting. If tracking allocations, running spreadsheets, and executing quarterly rebalances is a hobby you look forward to – go for it. Saving money while doing something you enjoy is a win-win.

6. The Dollar Cost of Convenience: Real Numbers

Let us put concrete numbers on the debate. Assume a 7% average annual return before fees, and compare XEQT (0.20% MER) vs DIY (0.07% blended MER) over different portfolio sizes and time horizons.

On a $100,000 Portfolio

On a $50,000 Portfolio

On a $500,000 Portfolio

The pattern is clear: on smaller portfolios, the difference is negligible. On larger portfolios, it starts to add up. But even on a $500K portfolio over 25 years, the total difference is about $47K – which sounds like a lot until you realize the portfolio itself grew by nearly $2 million. That $47K represents about 1.9% of the total ending value.

7. Who Should Choose What: A Decision Framework

Stop agonizing and use this framework to make your decision:

Choose XEQT If:

• Your portfolio is under $250K – the MER savings from DIY are not worth the hassle
• You invest on a regular schedule (weekly, biweekly, or monthly) – XEQT means one trade per contribution instead of four
• You are a beginner – simplicity prevents costly mistakes
• You know you are a tinkerer – if you would be tempted to adjust allocations based on market news, XEQT removes that option
• You value your time – even 15 minutes per month of portfolio management adds up
• You use a TFSA or FHSA – there is no tax advantage to holding US-listed ETFs in these accounts, so the RRSP withholding tax argument does not apply
• You want to automate – Wealthsimple’s recurring buy feature works perfectly with a single ETF
• You invest in multiple accounts – managing four ETFs across a TFSA, RRSP, and FHSA is a headache you do not need

Choose DIY If:

• Your portfolio is over $500K – the annual savings become meaningful
• You have a large RRSP and want to hold US-listed ETFs directly for withholding tax efficiency
• You genuinely enjoy portfolio management – it is a hobby, not a chore
• You have a specific allocation preference that differs from XEQT’s weights
• You are highly disciplined and will not tinker with allocations based on market sentiment
• You have a Premium or Generation Wealthsimple plan (or use Norbert’s Gambit) so currency conversion is not a cost issue
• You invest in lump sums rather than frequent small contributions, so the per-trade overhead is lower

The Middle Ground: Start with XEQT, Graduate to DIY

Here is what I actually recommend for most people: start with XEQT and reconsider once your portfolio crosses $500K.

When you are building your portfolio from $0 to $250K, your energy is better spent increasing your savings rate, growing your income, and staying invested during downturns. The fee difference is noise at this stage. Once your portfolio is large enough that the savings become meaningful, you will also have enough experience to manage four ETFs without making emotional mistakes.

This is exactly what I did. Those eight months of DIY taught me a lot, but the most important lesson was this: the best portfolio is the one you will actually stick with.

8. Common Questions About XEQT vs DIY

“Can I use different ETFs for my DIY portfolio?”

Absolutely. You do not have to use the exact same underlying ETFs as XEQT. Some popular alternatives:

• VUN (Vanguard U.S. Total Market) instead of ITOT – trades in CAD, so no currency conversion needed
• XUU (iShares Core S&P U.S. Total Market) – another CAD-listed US market ETF
• VIU (Vanguard FTSE Developed All Cap ex North America) instead of IEFA
• XEC (iShares Core MSCI Emerging Markets) instead of IEMG – CAD-listed version

Using CAD-listed alternatives eliminates the currency conversion issue but comes with slightly higher MERs (VUN is 0.16% vs ITOT’s 0.03%). This narrows the cost gap with XEQT significantly.

“What about VEQT instead of XEQT?”

VEQT (Vanguard’s all-equity ETF) holds a similar global equity portfolio with a 0.24% MER. Everything in this article applies to VEQT as well – you could replicate VEQT with its underlying Vanguard ETFs for a lower cost. The same convenience vs cost trade-off exists.

“Does it matter which account I use?”

For TFSAs, FHSAs, and non-registered accounts, the XEQT vs DIY decision is primarily about convenience and MER. For RRSPs, there is an additional withholding tax consideration that slightly favors holding US-listed ETFs directly. But for most people with RRSP balances under $200K, the tax difference is minimal.

“What if I hold XEQT now and want to switch to DIY later?”

In a registered account (TFSA, RRSP, FHSA), you can sell XEQT and buy the underlying ETFs with no tax consequences. In a non-registered account, selling XEQT triggers a capital gain (or loss), so you would want to factor that into your timing.

A smoother transition is to keep your existing XEQT and start directing new contributions to the individual ETFs. Over time, the DIY portion will grow to dominate your portfolio.

9. My Honest Take

I have been on both sides of this debate. I have run the spreadsheets, calculated the savings, and done the rebalancing. Here is what I believe after several years of investing:

For 90% of Canadian investors, XEQT is the right choice. The MER difference is small in dollar terms, the convenience is enormous, and the behavioral benefits are invaluable. Every hour you spend managing a four-ETF portfolio is an hour you could spend earning money, enjoying life, or simply not thinking about your investments.

The people who benefit from DIY are those with large portfolios, genuine interest in the process, and the discipline to stick to their plan without tinkering. If that describes you, go build your four-ETF portfolio and enjoy the savings. You have earned it.

But if you are reading this article trying to decide whether to start investing, here is my advice: stop optimizing and start investing. Buy XEQT today. Set up automatic contributions. Revisit the DIY question in five years when your portfolio is larger and you have more experience.

The difference between investing in XEQT at 0.20% and not investing at all is infinitely larger than the difference between 0.20% and 0.07%. Do not let the perfect be the enemy of the good.