-
BMO S&P 500 Index ETF (ZSP)
-
Horizons S&P 500 Index ETF (HXS)
-
Horizons NASDAQ-100 Index ETF (HXQ)
-
BMO Nasdaq 100 Equity Index ETF (ZNQ)
Q: For tax efficiency in a non registered account do you recommend HXS and HXQ over ZSP and ZNQ. For US dollars do you like HXS.U and HXQ.U.
For a long term hold what are your thought of HXT in this account?
Thanks
For a long term hold what are your thought of HXT in this account?
Thanks
5i Research Answer:
Generally speaking, total return (no distributions) funds will be far more tax effective for most investors, though the benefit can vary depending on an investor's total tax rate. The net benefit should be higher for US investments for most investors as there is no benefit from the Canadian dividend tax credit. Certainly keeping currency the same using the 'U' versions makes sense, to limit f/x charges. HXT will also provide tax benefits to most investors. However, for low incomes, the dividend tax credit can be very beneficial. The benefit of marginal capital gains tax rates does not beat dividends until income is about $106,000 (using Ontario rates).