You Own XEQT and Want to Add an S&P 500 Fund. Don't.

By Knight Sukthaworn, CFA

So you bought XEQT. Good call. For most Canadian DIY investors, you could stop reading right here and just keep buying it for the next thirty years.

But you're still reading. Which means you've got the itch.

Maybe you read that the US is the only market that matters. Maybe a coworker is bragging about his latest space stocks going to the moon. Maybe you just feel like you want to express a view. So you start eyeing a second ETF to bolt on.

If you're eyeing VFV, ZSP, or XUS to "tilt toward the US," stop. Here's why, and what to do instead if you've got the itch.

XEQT is already ~45% US stocks

XEQT already holds roughly 45% US, dominated by Google, Nvidia, Broadcom. Big Tech and AI names are already a big slice of your XEQT, today. When you add VFV on top, you are just buying more of the same.

Why that's a bad trade

Two reasons: First, you get less diversification as you are now extra-heavy on US tech. Second, you take on more volatility for marginal increase in returns.

In fact, I've run a simulation using Backtest Studio with 80% XEQT and 20% VFV. See the result for yourself. TLDR: Larger max drawdown (-20.1% vs -19.6%). And if you don't panic sell during the drawdown, very little extra returns (0.6% annualized).

If you actually want to tilt, go where XEQT isn't

A tilt should add something you don't already own. XEQT is broad and cap-weighted. A tilt to concentrated themes like semiconductors, uranium, energy infrastructure, copper can matter since XEQT holds bits of these as rounding errors. A focused theme ETF turns a rounding error into an actual position.

But be honest with yourself: a theme tilt is a bet, and the cost is volatility.

XEQT vs. XEQT + HURA (Uranium tilt) (buy-and-hold)

As you can see, the return can look exciting over a well-chosen window, but higher return comes with higher risk. That 20% HURA sleeve is what drives the bigger drawdown. On its own, HURA slid 43% from its 2024 peak to its bottom in April 2025 — your 80% XEQT base is the only reason the blended portfolio's drawdown lands around 20% instead. This table assumes you held through that. Most people don't.

The straight answer

• "I just want to do something." Don't. Keep buying XEQT. The itch isn't a strategy.

• "I have real conviction in a theme." Tilt into the theme, not another index fund. Size it like a bet. Big enough to matter if you're right, small enough that being wrong doesn't wreck your core.

Before you trade: drop XEQT and your potential pick into Compare ETFs to see your real overlap, then run the combo in Backtest Studio across every horizon. Read the drawdown, not just the return.