TD All-Equity ETF Portfolio (TEQT): A Better Mousetrap Than The iShares Core Equity ETF Portfolio (XEQT)
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Better late than never—TD Asset Management has finally rolled out a 100% equity option in its lineup of asset allocation ETFs.
The new TD All-Equity ETF Portfolio (TEQT) is the latest entrant in a growing category and is designed to compete directly with more established products like the iShares Core Equity ETF Portfolio (XEQT).
I get why some Canadian investors may be hesitant to try a newer ETF, especially one with relatively low assets under management and limited trading volume. But in this case, there’s no need for concern. TEQT is built from highly liquid, well-capitalized underlying TD ETFs, so the mechanics are sound.
And as you’ll see in the breakdown below, there’s a lot to like about this fund, enough that I now personally prefer it over XEQT as a core all-equity holding.
TEQT Breakdown
TEQT is designed to provide broad global market exposure using a composite benchmark built from three underlying indices: the Solactive Canada Broad Market Index, the Solactive US Large Cap CAD Index, and the Solactive GBS Developed Markets ex. North America Large & Mid Cap CAD Index.
These benchmarks are allocated at 25%, 55%, and 20% respectively, and are rebalanced periodically. What you’re getting is exposure to Canadian and U.S. equities, along with international developed markets including countries like Japan, the United Kingdom, Germany, and Australia.
To implement this, TEQT holds three underlying TD ETFs: the TD U.S. Equity Index ETF (TPU), the TD Canadian Equity Index ETF (TTP), and the TD International Equity Index ETF (TPE). All three are straightforward, low-cost index funds that track their respective regions, and each comes with a rock-bottom fee and strong liquidity.
Why I Like It More Than XEQT
Right off the bat, TEQT is cheaper than XEQT. It has a management fee of 0.15% compared to XEQT’s 0.18%. Since TEQT is a newer fund, it hasn’t published its full management expense ratio (MER) yet—that only becomes available after one year of operation.
But based on the other TD asset allocation ETFs, I expect it to land around 0.17%. XEQT, on the other hand, charges 0.20%. The difference might seem small, but over time, even a few basis points in fees can add up, especially in a long-term, passive portfolio.
I also appreciate TEQT’s decision to exclude emerging markets. XEQT allocates about 5% of its portfolio to emerging markets, but I don’t think the trade-off is worth it. Yes, you’re technically giving up a bit of diversification, but emerging markets tend to come with more currency risk, withholding tax drag, and higher volatility. In my view, the added complexity hasn’t delivered consistent rewards.
Lastly, in today’s climate of renewed tariff threats and “51st state” rhetoric from Donald Trump, some Canadian investors might simply feel more comfortable holding an ETF built by a Canadian firm like TD, rather than relying on a U.S.-based asset manager like iShares. It’s a small detail, but in a politically sensitive environment, sometimes those details matter.
