XEQT vs XGRO: Which iShares All-in-One ETF Should You Own in 2026?
XEQT and XGRO are the two most popular iShares one-ticker portfolios in Canada, and the choice between them decides whether your account behaves like a growth engine or a smoother ride. This guide breaks down the fees, holdings, historical performance, and the single question that actually settles the debate for most investors.
The 30-second answer
XEQT is 100% global equity. XGRO is 80% equity plus 20% bonds. Both charge 0.20% MER, both auto-rebalance inside the fund, and both trade on the TSX in Canadian dollars. The right pick comes down to how much of a drawdown you can watch without selling: if a 30-35% paper loss during a bad year would rattle you, XGRO's bond sleeve is worth the small expected-return giveup.
What each ETF actually holds
Both funds are built out of the same iShares building blocks - they just mix them differently. XEQT stacks four equity ETFs to cover roughly the entire investable world. XGRO takes that same equity portfolio, dials it back to 80%, and fills the remaining 20% with a mix of Canadian and US investment-grade bonds.
| Sleeve | XEQT weight | XGRO weight |
|---|---|---|
| ITOT - US total market | ~45% | ~36% |
| XIC - Canadian equity | ~25% | ~20% |
| IEFA - Developed ex-NA equity | ~25% | ~20% |
| IEMG - Emerging markets equity | ~5% | ~4% |
| Canadian aggregate bonds (XBB / ZAG-style) | 0% | ~12% |
| US treasuries and short bonds | 0% | ~8% |
The equity mix is essentially identical - only the equity share shrinks in XGRO to make room for the bond sleeve. That is a deliberate design choice by BlackRock so investors can move between the two without changing their geographic exposure, only their overall risk level.
Fees, distributions, and structure
XEQT
- MER: 0.20%
- 100% equity, 9,000+ underlying holdings
- Quarterly distributions
- Yield: ~1.7% (mostly Canadian and international dividends)
- Auto-rebalanced inside the fund - zero effort
- TSX ticker, trades in CAD
XGRO
- MER: 0.20%
- 80% equity / 20% bonds, 10,000+ underlying holdings
- Quarterly distributions
- Yield: ~2.1% (dividends plus bond coupons)
- Auto-rebalanced inside the fund - zero effort
- TSX ticker, trades in CAD
The bond sleeve gives XGRO a slightly higher headline yield, but that yield is fully taxable interest, not tax-preferred Canadian dividends. In a taxable account this is a real drawback (more on that below). Inside a TFSA or RRSP the difference disappears.
Historical performance and drawdowns
Because XEQT and XGRO both launched in 2019, we do not yet have a full market cycle for either, but their underlying components have decades of data. Backtesting a synthetic 80/20 global portfolio against a 100% global equity portfolio over the last 25 years gives a useful picture:
| Metric (2000-2025 backtest) | XEQT equivalent | XGRO equivalent |
|---|---|---|
| Compound annual return | ~7.8% | ~7.2% |
| Worst single year | -32% | -24% |
| Max peak-to-trough drawdown | -45% (2008-09) | -34% (2008-09) |
| Best single year | +38% | +29% |
| Standard deviation | ~15% | ~12% |
Tax treatment: where you hold each ETF matters
Because XGRO holds bonds and XEQT does not, they behave differently in a non-registered (taxable) account:
- TFSA: Both are effectively identical - all distributions are tax-free. Pick based on risk tolerance, not tax.
- RRSP / RRIF: Both grow tax-deferred. Note that XEQT holds ~45% US equities via ITOT, so a small foreign withholding tax (FWT) applies. XGRO has the same drag on its US equity sleeve. Neither is a clean fix - if you want to avoid US FWT in an RRSP, holding a US-listed ETF like VTI directly is the standard solution.
- Non-registered (taxable): XEQT wins on tax efficiency because it distributes mostly eligible Canadian dividends and capital gains. XGRO's bond distributions are fully taxable interest at your marginal rate, which can hurt in a high-income year.
- FHSA: Both work. FHSA is functionally identical to a TFSA for tax purposes, so treat it the same way.
Who should own XEQT
XEQT makes sense if all three of the following are true: your investing horizon is at least 15 years, you have never sold during a market drop before, and you actively want the highest expected long-term return with zero fixed income. It is also the natural pick for accumulators still 20-40 years from retirement, where the bond sleeve is more drag than benefit.
Who should own XGRO
XGRO fits investors who want the same one-ticker convenience but with some ballast. That includes people 10-15 years from a specific goal (early retirement, tuition, home purchase), retirees in the accumulation-to-decumulation transition, and anyone who knows from experience that watching a 40% drop makes them want to move to cash. The 20% bond sleeve historically cuts the worst drawdown by roughly a third, which is the entire point.
Switching from XEQT to XGRO (or vice versa) later
Inside a TFSA or RRSP you can swap between them freely - no tax event, no capital gains realization. In a non-registered account, selling XEQT to buy XGRO triggers capital gains on any embedded profit, so if you plan to change your asset allocation later, doing it in a registered account is much cleaner. This is one of the most under-appreciated reasons to hold your all-in-one ETF in a TFSA rather than a taxable account.
HOW TO CHOOSE IN UNDER A MINUTE
- Horizon 15+ years and you have never panic-sold: XEQT.
- Horizon 5-15 years or you know a big drop would rattle you: XGRO.
- You already own VGRO / VEQT / ZGRO / ZEQT and are shopping to switch: stay put unless the MER difference is meaningful (it is not, in this case).
- You want a custom mix without picking bonds yourself: blend XEQT and XGRO in the ratio that gives you the equity share you want.
- You are within 5 years of retirement: XGRO or even more conservative options like XCNS are worth considering over XEQT.
XEQT and XGRO in a Wealth Rebalancer portfolio
Because both funds already handle geographic rebalancing internally, you only need to track them as single line items. Wealth Rebalancer treats each one as one holding with a target percentage, so if you hold XEQT in a TFSA and XGRO in an RRSP, the app shows both accounts side by side and only prompts you to rebalance when your combined split drifts from the target you set.
Frequently asked questions
Is XEQT or XGRO better for a TFSA in 2026?
Neither is objectively better - it depends on how long you plan to leave the money in the TFSA and how you react to volatility. For a 20-year TFSA horizon, XEQT's slightly higher expected return compounds meaningfully. For a 5-10 year horizon or if you have panic-sold in the past, XGRO's smaller drawdowns are worth the small giveup. Tax treatment is identical in a TFSA.
What is the MER of XEQT vs XGRO?
Both charge 0.20% MER, which is competitive with Vanguard's VEQT and VGRO (0.24%) and BMO's ZEQT and ZGRO (0.20%). The MER difference between XEQT and XGRO is zero, so cost does not decide between them.
Does XEQT or XGRO pay a higher dividend?
XGRO pays a slightly higher yield (around 2.1%) because it includes bond interest, while XEQT yields around 1.7% from equity dividends only. Higher yield is not the same as higher total return - XEQT historically delivers more total return through capital appreciation.
Can I hold XEQT and XGRO together in the same account?
Yes, and some investors do exactly this to build a custom equity-bond split. For example, 50% XEQT + 50% XGRO gives you an effective 90% equity / 10% bond portfolio - a middle ground the iShares lineup does not offer as a single ticker.
Is XEQT good for retirement?
XEQT is generally too aggressive for retirees who need to withdraw money in the next few years, because a large equity drawdown right at the start of retirement can permanently damage the portfolio (sequence-of-returns risk). Most retirees are better served by XGRO or a more conservative asset allocation ETF like XCNS or XINC. XEQT still fits retirees with large enough portfolios that they never need to sell into a downturn.
Should I buy XEQT or XGRO through Wealthsimple or Questrade?
Both brokerages offer commission-free ETF purchases, so trading cost is a non-issue. Wealthsimple is simpler if you want to set up recurring monthly buys with fractional shares. Questrade offers slightly more account types and better tax-reporting exports if you also hold non-registered assets.