XQQ vs ZQQ vs HXQ 2026: Which Canadian Nasdaq-100 ETF Should You Buy?
XQQ, ZQQ, and HXQ all track the same 100 US tech-heavy names, but one hedges with iShares, one hedges with BMO, and the third uses a swap that pays zero taxable distributions. That single structural choice has moved after-tax returns by hundreds of basis points over the last decade. Here is how to pick the right Canadian Nasdaq-100 ETF for your account and your 2026 outlook.
What each ETF actually holds
XQQ (iShares NASDAQ 100 Index ETF, CAD-Hedged) owns the 100 largest non-financial companies on the Nasdaq exchange - Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, Tesla, Broadcom, and the rest - and layers monthly currency forwards on top that cancel the CAD/USD move. You trade it in Canadian dollars on the TSX and your return is close to the index in US dollar terms, minus MER and hedging friction.
ZQQ (BMO Nasdaq 100 Equity Hedged to CAD Index ETF) does essentially the same thing. BMO's wrapper, iShares's wrapper - both target the Nasdaq-100 Index, both hedge monthly, both trade on the TSX in CAD. The practical differences are MER, size, and the broker's bid-ask spread, not the underlying bet.
HXQ (Global X NASDAQ-100 Index Corporate Class ETF) is the odd one. Instead of owning the 100 stocks, HXQ enters a total-return swap with a counterparty bank that pays the fund the Nasdaq-100's total return (including dividends) in exchange for interest. The fund never actually receives a dividend, which means it never passes one out. Zero distributions reach your T3 slip. The index exposure is still unhedged US dollars.
Head-to-head: fees, size, and tax
| Metric | XQQ | ZQQ | HXQ |
|---|---|---|---|
| Issuer | iShares (BlackRock) | BMO | Global X (formerly Horizons) |
| Underlying index | Nasdaq-100 CAD-Hedged | Nasdaq-100 CAD-Hedged | Nasdaq-100 (unhedged) |
| Management fee | 0.35% | 0.35% | 0.25% |
| MER (all-in) | ~0.39% | ~0.39% | ~0.28% |
| Replication method | Physical (holds stocks) | Physical (holds stocks) | Total-return swap |
| Currency exposure | CAD (hedged) | CAD (hedged) | USD (unhedged) |
| Distribution yield | ~0.5% | ~0.5% | 0% (reinvested in NAV) |
| Distribution frequency | Annual | Quarterly | None |
| AUM (approx) | $3.5B+ | $3.0B+ | $1.8B+ |
| Trades in | CAD on TSX | CAD on TSX | CAD on TSX |
| Inception | 2011 | 2010 | 2016 |
HXQ is the cheapest on paper and the cleanest on tax, but there is a counterparty catch. The swap exposes the fund to the credit of the bank on the other side. Global X spreads this across multiple Canadian Schedule I banks and marks-to-market daily, so the practical risk is small, but it is not zero and it is why some advisors refuse to use swap-based ETFs.
What actually happened: 10-year numbers
Over the ten years ending December 2025, HXQ returned roughly 18.5 percent annualized while XQQ and ZQQ returned roughly 15.8 percent and 15.9 percent respectively. Almost all of that 270 basis point gap is explained by two things: HXQ was unhedged while the US dollar strengthened against CAD, and HXQ compounded internally while the hedged ETFs leaked a small annual distribution that triggered tax drag in non-registered accounts. Inside a TFSA or RRSP the tax component disappears, but the currency piece still worked in HXQ's favour over the decade.
The structural case for each choice
Hedged (XQQ or ZQQ)
- Lower year-to-year volatility of CAD returns
- Clean read on the Nasdaq-100 index in CAD
- Simple T3 slip, annual Canadian dividend distribution
- Costs 20-40 bps per year in hedging friction
- Underperforms when USD strengthens vs CAD
Unhedged swap (HXQ)
- Lowest MER of the three (0.28% all-in)
- Zero distributions, zero annual tax bill in taxable accounts
- USD exposure acts as a safe-haven hedge
- Counterparty exposure to Canadian bank swap desks
- Punishing in a sharp CAD rally year
Where to hold each one (account placement)
- Non-registered (taxable): HXQ wins by a wide margin. Zero annual distributions means you only pay tax when you sell, and the gain is 50 percent capital-gains inclusion rather than fully taxable interest or eligible dividend.
- TFSA: HXQ still edges ahead on MER and compounding mechanics, but the gap is small. Any of the three works - pick based on your view on CAD/USD.
- RRSP (CAD-denominated): All three are fine. Note that XQQ, ZQQ, and HXQ all suffer the 15 percent US withholding tax on dividends inside the fund (RRSP exemption only applies to a US-listed ETF like QQQ held directly in USD).
- RRSP (USD-denominated, Norbert's Gambit converted): Skip all three and buy QQQ or QQQM on the Nasdaq. QQQM charges 0.15 percent MER, no hedging drag, and your US dividends are RRSP-exempt from withholding under the Canada-US treaty.
- FHSA: Nasdaq-100 is probably too volatile for a 3 to 5 year home-purchase horizon. If you still want tech exposure in an FHSA, use a smaller slice (10 to 20 percent) and lean HXQ for the compounding.
PICK IN 60 SECONDS
- You want the lowest-cost Canadian Nasdaq ETF for a non-registered account, and you are comfortable with swap-based structures: HXQ.
- You want simple physical replication and plan to hold inside a TFSA or RRSP: XQQ or ZQQ (they are near-identical, pick whichever your broker charges a tighter spread on).
- You already hold USD and the account is RRSP: skip all three and buy QQQM on the Nasdaq for 0.15 percent MER with no CAD/USD friction.
- You cannot stomach counterparty risk at all, even against a Canadian Schedule I bank: avoid HXQ, default to XQQ or ZQQ.
- You want tech exposure but not single-country concentration: these three are the wrong tool. Look at XIT (Canadian tech) alongside a broader US fund, or a world ex-Canada ETF like XAW or VXC.
The hidden risk: Nasdaq-100 is not diversified
The top 10 names in the Nasdaq-100 make up roughly 55 percent of the index by weight. That is more concentration than the S&P 500 (which the same 10 names dominate at a lower weight because of the broader universe) and far more than a world-index ETF. In practice, owning XQQ, ZQQ, or HXQ as a core position means you are heavily betting on Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, Broadcom, Tesla, Costco, and Netflix. If any of those names falters materially, your ETF's return reflects it directly.
Frequently asked questions
Is XQQ or ZQQ better?
They are essentially the same product. Both charge a 0.35% management fee, both hedge the Nasdaq-100 to Canadian dollars, both are physically replicated. XQQ is slightly larger (iShares) and pays its distribution annually; ZQQ (BMO) pays quarterly. Pick based on which your broker shows a tighter bid-ask spread on at your typical trade size.
Why is HXQ cheaper than XQQ and ZQQ?
HXQ uses a total-return swap instead of physically owning the stocks, which lets Global X run a leaner operation (no proxy voting, no dividend collection, no quarterly rebalance costs). It also sits inside a corporate-class structure that eliminates annual distributions, which lowers the operational overhead. The trade-off is counterparty exposure to the swap bank and slightly more complexity if the swap desk ever got into trouble.
Does HXQ really pay zero distributions?
Yes. Since inception in 2016, HXQ has not paid a single distribution. The index's dividend yield is reinvested inside the swap and shows up as capital appreciation in the ETF's NAV. You only owe tax when you sell, and that gain is treated as a capital gain (50% inclusion rate for individuals), not as a dividend or interest.
What is the counterparty risk with HXQ?
HXQ's swap counterparties are large Canadian banks. The exposure is marked to market daily and settled frequently, so the fund's loss in a sudden counterparty default is capped to one day of index moves. Global X also diversifies across multiple counterparties. The practical risk is low but not zero, and it is the main reason some portfolio managers avoid swap-based ETFs.
Should I hold the Canadian Nasdaq-100 ETF or buy QQQ on the US exchange directly?
If you already have USD and the account is an RRSP, buy QQQ (0.20% MER) or QQQM (0.15% MER) directly. You avoid hedging friction and inside an RRSP you also avoid the 15% US dividend withholding tax under the Canada-US treaty. If you only have CAD, the Norbert's Gambit cost to convert plus the FX spread may not be worth it for small amounts; XQQ, ZQQ, or HXQ is simpler.
How much of my portfolio should be in Nasdaq-100?
There is no universally correct answer, but a common range for a satellite tech position is 10% to 25% of your total equity sleeve. Remember that a global index fund already includes the Nasdaq-100 names at their market weight (roughly 15-18% of the global index is already Apple-plus-Microsoft-plus-Nvidia-plus-Alphabet-plus-Amazon-plus-Meta). Doubling up with a dedicated Nasdaq-100 ETF is a concentration bet, not a diversification one.