Q: BMO has a series of ETFs called "BMO SPDR Select Sector Index ETFs". These invest in various sectors of the US market but are domiciled in Canada and trade in $CDN. Therefore no direct currency conversion costs, no US tax exposure. Available in currency-hedged and unhedged versions. Please discuss the overall strategy and logic behind this approach. Are the MERS charged by BMO reasonable for the perceived advantages? Seems to me that intelligent use of these products could eliminate the need for a Canadian investor to maintain a separate $US brokerage account (except perhaps to trade International equities/funds). Additional thoughts/comments about these products would be welcome.
Thank you,
IslandJohn
Thank you,
IslandJohn
5i Research Answer:
It should be noted that these are NOT exempt from withholding taxes, as they hold US securities. This was a somewhat recent rollout of ETFs by BMO with a specific sector focus. We like the suite of these ETFs for investors looking for specific sector exposures and the fees are reasonable on these names and helps avoid currency conversion for the end investor if that is something they are adverse to. We don't really have much to pick on with these ETFs.