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Global X USD Cash Maximizer Corporate Class ETF (HSUV.U $116.75)
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Global X 0-3 Month U.S. T-Bill ETF (UBIL.U $50.09)
Q: Hello 5i Team
I purchased UBIL.U (Global X TSX traded ETF holding US Treasury Bills) in my RRSP as a holding vehicle for my 5 % cash allocation. My purchase price is US$50.01 (resulting from ETF commission) per unit.
I understand UBIL.U trades between US$50.00 and ~ US$50.20 based on interest rates on a monthly basis
In December 2024 Global X declared at non-cash distribution of US$0.70807 per unit. The units were consolidated and now my average cost basis is ~US$50.72.
Therefore when I sell the units of UBIL.U in my RRSP I am incurring a capital loss of between US$0.50 and US$0.70 which I cannot recover (or apply against other capital gains) as the units are held in my RRSP.
Questions
1 - Will other US$ Cash ETFS incur the same non-cash distributions?
2- I could in theory purchase US $ Treasury Bills through my broker (RBCDI), however their fixed income product selection is not great. Any other fixed income suggestions.
3 - Are there are any other products which will not incur the non-cash distributions?
Thanks for all the great services that 5i provides
I purchased UBIL.U (Global X TSX traded ETF holding US Treasury Bills) in my RRSP as a holding vehicle for my 5 % cash allocation. My purchase price is US$50.01 (resulting from ETF commission) per unit.
I understand UBIL.U trades between US$50.00 and ~ US$50.20 based on interest rates on a monthly basis
In December 2024 Global X declared at non-cash distribution of US$0.70807 per unit. The units were consolidated and now my average cost basis is ~US$50.72.
Therefore when I sell the units of UBIL.U in my RRSP I am incurring a capital loss of between US$0.50 and US$0.70 which I cannot recover (or apply against other capital gains) as the units are held in my RRSP.
Questions
1 - Will other US$ Cash ETFS incur the same non-cash distributions?
2- I could in theory purchase US $ Treasury Bills through my broker (RBCDI), however their fixed income product selection is not great. Any other fixed income suggestions.
3 - Are there are any other products which will not incur the non-cash distributions?
Thanks for all the great services that 5i provides
5i Research Answer:
1) These are 'phantom distributions', and are typically associated with mutual funds and not ETFs. But others can declare them, depending on what happens during a financial year and what they trade.
2) Money Market funds are available in US dollars at nearly every broker. We would consider this a solid alternative.
3) It really depends on the product. One option is HSUV.U which pays no distributions at all so this problem does not exist. One year return is 4.13% but no monthly income is paid out and it is taxed as capital gains.