Beat The iShares Core Equity ETF Portfolio (XEQT) With These Two ETFs

The iShares Core Equity ETF Portfolio (XEQT) is widely regarded as the one of the most aggressive all-in-one option for Canadian investors. It offers a globally diversified mix of roughly 45% U.S., 25% Canadian, 20% developed international, and 5% emerging markets, all for a low 0.20% MER.

To outperform it, you generally have two paths. The first is to tilt toward factors like quality, value, or size, an approach used by fund families such as Dimensional and Avantis. The second is to employ leverage, traditionally done through margin accounts.

However, investors now have a more efficient alternative when it comes to the later. Several Canadian ETF issuers have introduced lightly leveraged ETFs, typically offering 1.25x to 1.33x exposure.

Unlike the daily resetting 2x or 3x leveraged products that rely on swaps, these funds borrow internally at institutional rates, making them suitable for long-term holding and margin-eligible accounts.

While many of these funds focus on single sectors such as 1.25x Canadian banks or 1.25x Nasdaq 100 ETFs, there are now a few broad-based total portfolio solutions designed for diversified growth.

Here are two standout examples from Global X Canada and Hamilton ETFs that, in my view, have a reasonable chance of outperforming XEQT over time, provided you are comfortable with a bit more volatility and higher fees.

Global X Enhanced All-Equity Asset Allocation ETF (HEQL)

HEQL holds the Global X All-Equity Asset Allocation ETF (HEQT) and borrows an additional 25% of its net asset value for a total exposure of 125%, or 1.25x leverage.

HEQT itself has a composition similar to XEQT, though with a stronger tilt toward large-cap U.S. growth stocks. Its current mix includes roughly 34% U.S. large caps, 26% developed international, 21% Canadian, 8% emerging markets, 7% Nasdaq 100, and 4% U.S. small caps.

The management expense ratio comes in at 1.46%, which may appear high at first glance, but this figure already includes the cost of borrowing. The borrowing occurs at institutional rates that are typically much lower than what retail investors pay through brokerage margin. There is also a 0.05% trading expense ratio.

Although HEQL’s assets under management remain modest at $9.5 million, that is not a major concern since its underlying fund, HEQT, is well-capitalized with approximately $290 million in assets. Unlike XEQT, HEQL distributes income monthly and currently yields about 1.89% on an annualized basis.

Hamilton Enhanced Mixed Asset ETF (MIX)

MIX is one of the most innovative balanced ETFs in Canada, applying the best of modern portfolio theory in a simple, efficient way. Modern portfolio theory suggests that by combining uncorrelated but volatile assets, investors can enhance risk-adjusted returns.

MIX’s base allocation consists of 60% S&P 500, 20% long-term U.S. Treasurys, and 20% gold, all implemented through low-cost ETFs. The fund then applies 1.25x leverage, resulting in an effective exposure of 75% equities, 25% Treasurys, and 25% gold.

When you leverage such a portfolio modestly, you can potentially achieve equity-like returns with less overall volatility than a 100% stock portfolio. MIX handles both the allocation and leverage on the back end, which makes it very retail friendly.

Since MIX is less than one year old, there’s no published MER yet. The management fee is 0% until April 30, 2026, after which it’s slated to be 0.35%; interest/borrowing costs will also apply, likely in a range similar to HEQL’s embedded financing costs.

Will These ETFs Outperform XEQT?

I think both MIX and HEQL could outperform XEQT over a sufficiently long time horizon, provided two key conditions hold true:

• Equity markets continue to rise over the long term, supported not just by multiple expansion but by sustained earnings growth and shareholder yield through dividends and buybacks.
• Interest rates trend lower, easing borrowing costs and reducing the drag from leverage on both MIX and HEQL.

Between the two, I think MIX is the more balanced option, as its inclusion of gold and long-term Treasurys introduces diversification across assets driven by different structural forces—gold tends to perform well in inflationary or geopolitical stress, while Treasurys often rally during risk-off periods.

HEQL, by contrast, is pure leveraged equity exposure, which may boost returns but also heightens drawdown risk when markets turn.

That said, these are high-risk strategies. Many investors struggle with the volatility of a 100% equity portfolio, and 125% exposure amplifies that even further.