Q: I am thinking of adding some HSUV.U to my cash account to earn interest on some U.S. cash that I hold. Do you think that this is a good time to purchase this fund, or is it selling at a premium now, and would it be better to wait? Also can you confirm that the gains are taxed as capital gains in Canada, and is there U.S. withholding tax on the gains? Also, can you suggest a better option with better tax treatment?
5i Research Answer:
The timing question depends on the prospects for the US dollar and the premium. We would be fine buying this today as we do expect the US dollar to stay stronger than the C$ for a period of time. The premium is fairly low right now. From the Horizon website: NAV is $107.81 and market price is $107.94. It is taxed as capital gains (no distributions) and there is no withholding tax. For a US dollar tax efficient fund this would be our choice.