XEQT MER: What 0.20% Actually Costs You
The fee sounds tiny. The compounding effect of saving it versus paying 2% is anything but. We ran the numbers.
What is an MER?
The Management Expense Ratio (MER) is the all-in annual cost of owning a fund, expressed as a percentage of your invested amount. It is deducted automatically from the fund's assets: you never write a cheque: which is precisely why it is so easy to ignore.
XEQT's MER is 0.20%. In December 2025, BlackRock reduced the management fee from 0.18% to 0.17%, and the MER should settle around 0.19 to 0.20% once the full fiscal year reflects the cut. For our calculations, we use 0.20% as the current reported figure. If you are new to XEQT, the complete XEQT guide covers the full fund structure.
That means for every $10,000 in XEQT, you pay $20 per year. For $100,000, it is $200. Remarkably cheap. Now compare that to what most Canadians are actually paying.
What Canadian mutual funds charge
The average MER across actively managed Canadian equity mutual funds sold through banks and advisors runs between 1.5% and 2.5% annually. A commonly cited benchmark is 2.0%. Embedded within that fee is a "trailing commission" paid to the advisor or bank that sold you the fund, typically 1% per year, regardless of whether the fund performs well or poorly. This is also why Canadian target date funds are hard to recommend compared to XEQT.
On $10,000 invested, a 2% MER costs you $200 per year. That is ten times XEQT's cost. But the money you lose to fees is not just the fee itself. You also lose every dollar of compounded growth that fee would have generated over decades.
A 2% MER does not just take $200 from your $10,000 in year one. It also takes the compounded growth that $200 would have generated over the next 29 years. At 7% returns, that single year's fee costs you roughly $1,520 in total wealth over 30 years from just that one year's charge.
The 30-year comparison
Let us run a concrete scenario: $500 per month invested over a working career at 7% gross annual return. Four cost levels compared.
| Fund Type | MER | 30-Year Value | Fees Paid | vs. XEQT |
|---|---|---|---|---|
| XEQT | 0.20% | $574,000 | ~$11,000 | Baseline |
| Low-cost fund | 0.80% | $510,000 | ~$43,000 | -$64,000 |
| Typical advisor | 1.80% | $427,000 | ~$108,000 | -$147,000 |
| High-cost bank fund | 2.50% | $376,000 | ~$155,000 | -$198,000 |
The high-fee investor spent the equivalent of a full year's salary extra in fees and received a substantially smaller nest egg. There is no evidence that actively managed Canadian mutual funds consistently outperform their benchmarks after fees over long periods to justify this cost.
Portfolio milestones
Here is how the $500 per month XEQT investor's balance grows decade by decade, at 6.8% net annual return (7% gross minus 0.20% MER):
MER vs tracking difference
The MER is what BlackRock discloses. Some investors ask whether there are additional hidden costs. The honest answer: there are small ones, but genuinely tiny for XEQT.
The tracking difference measures how closely the fund's actual return matches its target benchmark after all costs, including trading friction, foreign withholding taxes, and cash drag. For XEQT, the tracking difference has historically been close to neutral or slightly positive. This is the hallmark of a well-run, large, liquid ETF.
There is also the bid-ask spread: the small difference between the buy price and the price at which you could immediately sell. For XEQT (which trades millions of dollars per day), this spread is typically a few cents. For a long-term investor holding for years, it is inconsequential.
Are you double-charged on underlying ETF fees?
No. This is a common misconception. XEQT is a fund of funds: it holds XIC, ITOT/XTOT, XEF, and XEC. Those underlying ETFs each carry their own fees (ranging from 0.03% for ITOT to 0.22% for XIC). BlackRock's 0.20% MER for XEQT already includes those underlying fees. This is explicitly stated in XEQT's fund documents. You pay 0.20% total. Period.
XEQT's 0.20% MER is the all-in cost. No advisor trailing commission buried inside. No hidden layer. The fund's net return is the market return minus 0.20%. That is an exceptionally competitive offer for globally diversified, automatically rebalanced equity exposure.
Will the MER go lower?
It already has, once. BlackRock cut the management fee from 0.18% to 0.17% in December 2025, which should reduce the MER to roughly 0.19% once the fiscal year fully reflects the change. Vanguard made a similar cut to VEQT around the same time.
This fee compression is healthy. As Canadian ETFs grow in size, economies of scale allow fund companies to reduce costs. XEQT now manages over $14 billion in assets, and at that scale, further cuts are possible. The direction of travel has been firmly downward since the product launched in 2019, and there is no reason to expect that trend to reverse.
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