Fidelity’s FEQT has quickly become one of Canada’s fastest-growing all-equity ETFs—but it’s very different from traditional asset allocation ETFs like XEQT, VEQT, and ZEQT.
In this video, I break down exactly how FEQT is constructed, including:
• How Fidelity selects its stocks
• Why it tilts toward value, momentum, quality and low volatility
• How sector weights are adjusted
• Why large companies are added back into the portfolio
• The role of Bitcoin and active small-cap management
• Whether the higher MER is justified
• Diversification and tax considerations
• What the historical backtests really tell us
• A factor regression analysis showing what has actually driven returns
Rather than asking whether FEQT has outperformed in the past, we’ll look under the hood to understand why it has behaved the way it has—and whether investors should expect that to continue.
If you enjoy these deep dives, let me know what ETF you’d like me to analyze next. I’m already working on a similar breakdown of CAGE.
Thanks for watching!
Timestamps
0:00 Introduction
0:43 What is FEQT?
1:01 FEQT’s performance vs XEQT, VEQT, and ZEQT
1:34 FEQT’s underlying holdings
2:09 FEQT’s fees vs XEQT, VEQT, and ZEQT
2:40 Regional weights of FEQT vs XEQT
3:11 Bitcoin performance attribution
3:38 Active global small-cap allocation
4:10 How Fidelity builds its factor ETFs
4:41 Composite factor scores explained
5:50 Sector stock selection
7:31 Removing the unintended size tilt
8:37 Sector tilts
9:36 Diversification
10:14 Tax efficiency
10:50 Backtested performance
11:42 Regression analysis
13:31 Final thoughts
Good piece. My read is that FEQT clears the “real factor intent” bar, but the harder question is whether it is the best implementation of that global factor-tilted idea once you compare it with the alternatives (Avantis most notably).
On my framework (verifiedbeta.com; free project for public benefit), FEQT maps reasonably well to AQR Global (HML FF), but if that is the factor-tilted global equity exposure you want, I would still start by looking at the stronger Avantis and DFA implementations even if they are US-listed. First, the FEQT reference here: https://staging.verifiedbeta.pages.dev/etf/ca/FEQT/
The two Avantis pages I would point people to first are AVGV on the global value side and AVGE on the broader factor-tilted side:
https://verifiedbeta.com/etf/us/AVGV/
https://verifiedbeta.com/etf/us/AVGE/
AVGV in particular looks like the cleaner fit if the goal is to access the global value/factor story with stronger implementation. DFAW is also a very credible global alternative:
https://verifiedbeta.com/etf/us/DFAW/
From a Canadian perspective, this is getting more interesting, not less. As you’ve discussed, the CIBC/Avantis lineup began launching on February 20, 2026, and the broader 2026 rollout should increasingly give Canadians local wrappers that mirror the stronger US Avantis menu. But the ideas are the same. So my instinct is: FEQT is worth understanding, but it does not align with the research-proven factors. The more important destination — at least ETF-wise — is the Avantis family, and you might simply have to go to US-listed products. There are some tax issues, yes, but those can be managed around (I wrote a post on RR Community about the tax advantages of holding the US-listed Avantis funds, in spite of the Canadian equivalents now in existence.) Happy to answer further questions about this, if helpful.
It’s not easy to create and run a market cap weighted index fund, but to create and run a well designed factor fund is more difficult yet. If you’re going to put your money in a factor fund, the people behind the fund play a critical role, about whether your expectations will be met or not. My perception is in the US, Fidelity does not have a reputation for factor investing excellence. DFA and its offspring, Avantis, do. If there is a comparable product from either DFA or Avantis, I would use it in preference to a Fidelity product.
Great vidéo :)
Can’t wait to see about CAGE :)
@JF – Thanks so much! I’m also looking forward to releasing the CAGE video :)
Excellent discussion. Yes I look forward to more of these. How about covering the GlobalX/Horizon tax advantaged strategy?
@Al N – Great idea – I’ll add it to the list :)
I started with CCP’s earlier Model Portfolios, and initially used those to rebalance every year or three. Some years later, now aiming to withdraw a portion from one and rebalance all. I see those have been replaced by “one fund” options (which sound great!). Wondering how to rebalance within the old models (i.e. what even were those original Models / allocations?), or do I sell everything that is in the “old model” setup and put everything back into one of these new ones? Thank you!!
@Cindy – it would depend on your personal tax implications of making the changes. But you don’t need to blindly follow any small changes we make to the model portfolios (the overall investment philosophy hasn’t changed).
Great video! Fidelity’s selection methodology was a bit of a mystery to me and I appreciate how much time you spend explaining all the steps involved. I feel more comfortable and confident continuing to hold the Fidelity factor ETFs I already own.
@James Ferguson – I’m so glad you found the FEQT video helpful :)