Author Topic: Canadians: do you buy US-listed ETFs?  (Read 4280 times)

FrugalFan

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Canadians: do you buy US-listed ETFs?
« on: December 18, 2015, 10:45:50 AM »
I am in the process of transferring all of our investments from Edward Jones to Questrade. I had settled on a very basic couch potato portfolio of VAB, VCN, and VXC for simplicity. Now that the cash is in Questrade waiting to be put to work, I am wondering if I am making the right decision.

RichMoose

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Re: Canadians: do you buy US-listed ETFs?
« Reply #1 on: December 18, 2015, 11:38:44 AM »
You could, but I am assuming that your money is all in CAD right now? For simplicity sake I would leave it as such and invest in Canadian ETFs, unless your RRSP is worth several hundred thousand dollars. At that point it would be worthwhile to use Norberts Gambit to switch to USD and invest in VTI so you can get back the dividend withholding tax.

FrugalFan

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Re: Canadians: do you buy US-listed ETFs?
« Reply #2 on: December 18, 2015, 11:57:26 AM »
Thanks, that's what I was wondering. I don't want to leave too much money on the table but I'm not sure how to calculate the benefits of doing Norbert's Gambit (taking into account exchange rates, differences in MER, and the withholding tax). We currently have about 125 k total that would be slotted for VXC between his RRSP, my RRSP, and my TFSA.

RichMoose

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Re: Canadians: do you buy US-listed ETFs?
« Reply #3 on: December 18, 2015, 12:21:11 PM »
US withholding tax is 15% of the dividend. VTI current yields around 1.9%. So the withholding tax would be .285% of your investment value. On $100k that's $285/yr.

But don't forget, that's on the US portion only, which is about 50% of VXC. And it only applies to funds in the RRSP, not TFSA.

FrugalFan

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Re: Canadians: do you buy US-listed ETFs?
« Reply #4 on: December 18, 2015, 12:47:10 PM »
Thank you! For some reason I didn't realize it was just on the dividends. Probably means it's not worth it for now at least (roughly $100 per year).

Captain and Mrs Slow

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Re: Canadians: do you buy US-listed ETFs?
« Reply #5 on: December 18, 2015, 01:02:36 PM »
Also be aware of currency hedging, some ETFs do it others don't.

Hedging works when the dollar is gaining strengh and hurts when the dollar is weaking

I would also suggust hanging out over at Canadian money forum
« Last Edit: December 18, 2015, 01:04:19 PM by Captain and Mrs Slow »

Maybe Later

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Re: Canadians: do you buy US-listed ETFs?
« Reply #6 on: December 19, 2015, 06:35:25 AM »
I do, in RRSPs, but not RESPs or TFSAs.  Canadian Couch Potato has a very good white paper on the whys.

For me, the cost of entry seemed low because of close to spot rates at my brokerage.

Heckler

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Re: Canadians: do you buy US-listed ETFs?
« Reply #7 on: December 19, 2015, 06:55:17 AM »
You've already made a good plan , now it's time to prove to yourself you can stick with it.

Nothing has changed just because there's cash in your account now.

Mmm_Donuts

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Re: Canadians: do you buy US-listed ETFs?
« Reply #8 on: December 19, 2015, 07:01:54 AM »
I have some VTI in my USD RRSP. I haven't been contributing lately because of the exchange rate, but whenever my USD dividends add up to $1000 cash in the account, I buy a few more.

I also own about the same amount of VUN in my CAD RRSP. I'll probably keep adding to that with new contributions, until the dollar rebounds (though that could take a while!)

From what I've read on CCP, unless your contributions are significant (5 figures) and you can do Norbert's gambit, which I don't think my bank (TD) allows, then VUN isn't costing much more than VTI, and it's more convenient. So I'm sticking with the simplicity of VUN for now.

Retire-Canada

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Re: Canadians: do you buy US-listed ETFs?
« Reply #9 on: December 19, 2015, 09:45:51 AM »
I hold VUN instead of VTI. I can't be bothered to do Norbit's Gambit given that I am adding in small amounts every month.

Jon_Snow

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Re: Canadians: do you buy US-listed ETFs?
« Reply #10 on: December 19, 2015, 10:21:47 AM »
Just VTI. I prefer to concentrate on U.S. dividend paying stocks and putting them in our RRSP's.

My ETF holdings are mostly Canadian - in our TFSA's, and taxable accounts...the Canadian dividend tax credit 'yo. :)

Stasher

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Re: Canadians: do you buy US-listed ETFs?
« Reply #11 on: December 19, 2015, 12:14:37 PM »
My Scotia iTrade is following the recent update from Dan Bartolli for the CCP portfolio for ETF's like you outlined
25% VAB
25% VCN
50% VXC
I have this in both my RRSP and TFSA, I re-adjust the ratios yearly when I do my RRSP top up and when I get the extra yearly TFSA bump. I didn't bother messing with the US ones, just stuck with the Canadian Vanguards . Simplicity rules my life.

My work matched RRSP are through Sunlife and have limited choice but they have some great index funds.
My US holdings are in US properties via Market Exempt bond investment funds through a friend via RRSP.

AT the end of 2016 I will finally be at a point that I have maxed out all of my wife's and my tax advantaged accounts and then will need some real help finding the best account for my taxable savings. Although I hope to FIRE at the end of the year and my tax bracket will be so low and still having kids I should not have to worry too much on CRA.

EarthshipSandra

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Re: Canadians: do you buy US-listed ETFs?
« Reply #12 on: February 11, 2016, 04:36:03 PM »
Also be aware of currency hedging, some ETFs do it others don't.

Hedging works when the dollar is gaining strengh and hurts when the dollar is weaking

I would also suggust hanging out over at Canadian money forum

Where is this Canadian Money Forum of which you speak? We've just figured out our best tax situation and RRSP/TFSA contribution strategies in anticipation of tax time/RRSP deadlines and now we are taking a deep breath and doing lots of homework on investing. I search and search for threads for Canadians and investing but there are SO many threads here about all sorts of things that it becomes daunting...a point in the right direction for Canadian money/investing threads would be much appreciated!

Koogie

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Re: Canadians: do you buy US-listed ETFs?
« Reply #13 on: February 11, 2016, 05:28:35 PM »
I hold significant VTI and VXUS but I hold them in USD that are generated by my company.  I think they are worth holding but doing a Gambit generally only makes sense in the mid 5 figures.

Also, don't be afraid to branch out from the Vanguard family.  BMO and Ishares both have some interesting ETFs.  XAW is widely considered to be superior to VXC for instance.

Heckler

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Re: Canadians: do you buy US-listed ETFs?
« Reply #14 on: February 11, 2016, 05:56:00 PM »

Where is this Canadian Money Forum of which you speak? We've just figured out our best tax situation and RRSP/TFSA contribution strategies in anticipation of tax time/RRSP deadlines and now we are taking a deep breath and doing lots of homework on investing. I search and search for threads for Canadians and investing but there are SO many threads here about all sorts of things that it becomes daunting...a point in the right direction for Canadian money/investing threads would be much appreciated!

http://www.finiki.org/wiki/Main_Page

Thats a good start too.