Author Topic: ETFs: Hedge back into Canadian dollars?  (Read 1700 times)


  • 5 O'Clock Shadow
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  • Posts: 6
  • Location: Canada
ETFs: Hedge back into Canadian dollars?
« on: March 20, 2012, 06:10:36 PM »
I'm a Canadian and will likely retire in Canada. My portfolio is currently in Canadian dollars. I don't intend to do much trading of the portfolio holdings, aside from the occasional rebalancing, and perhaps selling off some gains to finance my retirement.

In the case of an ETF that covers the U.S. market, should I prefer an ETF that is hedged back into Canadian dollars?

Thanks for your input.


  • 5 O'Clock Shadow
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  • Posts: 13
  • Age: 44
  • Location: Canada
Re: ETFs: Hedge back into Canadian dollars?
« Reply #1 on: March 21, 2012, 08:20:54 AM »
From the sound of it your portfolio is exposed to significant currency risk (as it is in purely Canadian dollars).  This might not be strictly true if your portfolio contains companies that have foreign earnings of course, but it is something you should consider when planning vs. risks.  Right now the CAD$ is doing fantastic against other currencies but there is no guarantee of that continuing and from what I've heard that is more an expression of lack of faith in other world currencies (esp. euro & USD).  Personally I choose Canadian funds that invest in foreign companies over directly owning foreign funds.

If you do go with directly owning a foreign fund though, don't forget about factoring in exchange rate costs to your contributions.  I believe my bank of choice charges about 4% to convert even to a "standard" currency like USD.  It's even worse for other currencies - I remember getting brutalized on the exchange rate when I bought some rupees way back when.