I've been wanting to add some US stocks to my portfolio, within my RRSp. I was leaning towards a Vanguard ETF that tracks the S&P 500. Then I came across this articles from the Globe and Mail: U.S. ETFs: Top picks for Canadian investors (http://www.theglobeandmail.com/globe-investor/funds-and-etfs/etfs/us-etfs-top-picks-for-canadian-investors/article6115956/
The article compares Vanguard S&P 500 ETF (VFV) to NYSE-listed version of the Vanguard S&P 500 Index ETF (VOO):
"Why not buy VOO at 0.05 per cent instead of VFV at 0.17 per cent? In fact, thereís a tax-related argument for doing just that, if youíre investing in a registered retirement account. According to Vanguard, $1 in dividends paid by VOO would turn up in retirement accounts as $1. You can thank a Canada-U.S. tax treaty for that.
The same courtesy does not apply to VFV in registered accounts, though. Itís structured in such a way that the U.S. withholding tax eats 15 cents of every $1 paid in dividends, and thereís no way for investors to recover that money. In non-registered accounts, VOO and VFV are all treated equally. Investors lose 15 cents of every $1 in dividends to withholding taxes, but they can claim credit for this amount when filing their income tax returns.
The big reason to consider VFV over VOO has to do with currency conversion. If you were to buy VOO, your brokerís markup on the conversion of Canadian dollars into American could range from 0.5 to 1.85 per cent. When you buy VFV instead of VOO, you can regard the extra 0.12 of a percentage point in fees as the cost of currency conversion and various portfolio management functions."
My difficulty is that I'm not sure I've really understood the implications of the above. Can anyone shed any further light? Or share what they've decided to hold in their own portfolios and why?
I was planning on holding my US stocks or stock indexes in my RRSP (as opposed to TFSA or unregistered) because of the tax treatment of dividends within RRSPs but this is making me re-consider. I'm just now sure what the better move is... though having US exposure seems like a good idea...