Is XEQT stock a buy?

Investors may want to check out this ETF while it’s still below its all-time highs. It’s the iShares Core Equity ETF Portfolio (iShares Core Equity ETF Portfolio Stock Quote, Charts, News, Analysts, Financials TSX:XEQT), which is an exchange traded fund on the Toronto Stock Exchange.

A multi-asset ETF, XEQT is a fund of funds and one which gives investors broad exposure to the market, all in one stock. How broad? There are literally thousands of stocks in the four ETF’s contained in XEQT, covering the S&P 500, the international market beyond North America and the Canadian market through the S&P/TSX Composite.

It’s basically your one-stop shop for investing in stocks. And as one would expect with an asset allocation ETF with such broad coverage, XEQT has had its ups and downs over the past few years, just like the market in general. Since its inception in 2019, the stock has generated a return of about 28 per cent, while over the past 12 months, XEQT is up about six per cent and year-to-date the stock is up the same six per cent.

Managed by Blackrock Canada, one of the world’s largest asset management firms, XEQT currently has net assets of $1.7 billion and a distribution yield of 1.37 per cent. There are 65.1 million shares outstanding in XEQT and its underlying holdings stand at a whopping 9274, giving investors a full scope of the market in the one stock.

“[You’re] getting about 50 per cent US, 25 per cent Canada and then 22 per cent international developed markets, with the rest in emerging markets. Canada is however three per cent of the global index. It is overweight Canada. If you think Canadian banks and energy will lead, then it is okay. Value is far more in the international markets than US large caps,” said portfolio manager Larry Berman in a comment on the stock.

And since asset allocation ETF’s like XEQT come with no need for investors to personally manage a number of stocks at the same time – nor do they have the high management expense ratios of, say, a mutual fund – investing in the market becomes pretty painless.

“The rise of asset allocation ETFs is one of the greatest advancements for individual investors of the past five years,” said Rob Carrick, investment reporter for the Globe and Mail in an April column. “But while investors have put billions of dollars into these products, they’re still underutilized. A lot of money sitting in individual ETFs, and stocks as well, would be better off invested in a cheap, well-diversified asset allocation ETF.”