Investment Q&A

Q: Hi 5i.
Thanks for your continuing great service.

I am trying to find a way to hold US stocks without being subject to US Estate Tax or the need for T1135 tracking.

Are CDRs on US stocks subject to US Estate Tax?

Are CDRs on US stocks subject to T1135 reporting?

Are there other vehicles, besides selected Canadian- company-managed ETFs, that enable ownership of US stocks without exposure to US Estate Tax or T1135 exposure?

Which Canadian companies managing US stock EFTs are not subject to these issues?

Are the Canadian branches of US companies that manage US stock EFTs deemed by CRA to be US or Canadian?

Any additional comments or suggestions that you may have on these topics would be greatly appreciated.

Please deduct as many question credits as appropriate.

Many thanks !

Q: Are there any US total return value ETFs that you like that do not pay distributions (similar to HXS except value based) that makes sense to hold in a TFSA to save the dividend withholding tax? Can be hedged or unhedged to the Canadian dollar.

Q: Hello,
I will be switching to an indexing strategy in the near future and have a few ETFs that I would like your comparisons/advice/opinions. All ETFs will be held in TFSAs or RRSPs over a long term.

1)S&P/TSX: XIU, XIC, HXT*

2)S&P 500: ZSP, HXS*

3)Emerging Markets: ZEM, XEC*

*denotes commission free trades.

4) In registered accounts, is there a long term advantage to having capital gains vs dividends distributions as is the case for HXT and HXS? I would reinvest any potential dividends in other ETFs.

Thank you.

Q: My wife has set up a small non registered account. She has chosen the above ETF's. She would like to add an ETF that covers the Dow Jones. Long term hold. Your suggestions. Thanks

Q: Good day team,

Please excuse me if this question has been asked before but is there an international focused etf I can contribute to in my tfsa where I don't have to pay withholding taxes? If so, can you list a few please?

Cheers

Q: I would like to hold a S and P 500 ETF for a long term hold in a non registered account

Between HXS AND VFV

1. Are there any tax advantages one over the other.
2. VFV seems to hold the American ETF NOT THE stocks themselves. What impact does this have for me?
3. please confirm for each their respective MER, AUM and daily trading volumes.
4. if either is held in a TFSA does it change anything?

thanks
Ernie

Q: Hi,
I have the above ETF in my TFSA and have been doing very well for quite some time. I noticed that it is now at a loss of 34% overnight! I noted that there has been talk of a consolidation taken place. Should that have had a negative impact on the ETF? Your feedback and advise if mostly appreciated.

Q: What % or range would you recommend for theses Horizon products in a portfolio?
Thanks for your service

Q: How do you think the European markets will do vs the US markets going forward 5+ years? Do you think the US market will outperform Europe or would you be in both markets? If so, what would the % split be?
Thanks for your service?

Q: Do you have a preference between HXS.CA vs HXS.U and HXQ.CA vs HXQ.U and could you comment on HXX - would it be the same as the others with the exception of the focus on Europe?
Thanks for your service

Q: I follow the conservative portfolio from the ETF Newsletter because I prefer a total return to interest and dividend income.Please suggest some tweaking to this portfolio to reduce the volatility, but still maintain the equity/income ratio. As an alternative how would you tweak the ETF Newsletter income portfolio to less interest and dividend income and more total return while keeping the overall volatility somewhat in check. Thank you

Q: Thanks for all your good advice.
I have set up In Trust Accounts for my grandchildren invested equally in HXS and HXT - to avoid tax implications to me. However, due to the swap change introduced Nov 2019 and effective in 2020 - I have been issued T5008 slips seemingly indicating capital gains as a result of the swaps. Is this just for record purposes or is there a need to account for this at tax time?
Thanks

Q: Up until now I've only invested in canadian dividend stocks and ETFS in my non registered to take advantage of the favourable taxes on dividends. My RRSP and TFSA are balanced across all asset classes. But now that my non-registered account is growing, I'm thinking about adding the other asset classes in. Are there any kind of bond etfs that are more tax favourable for a non-registered? And what about US and Intl etfs... any that are more tax favourable?

Q: I currently have HXS and a large holding in Apple stock, All in a registered account. Thinking about adding QQQ-Q, for additional exposure to FANG stocks. Your thoughts thanks

Q: I do not believe ZSP.U would be exempt from US withholding tax. Could you confirm this? If not what ETF's would be exempt from US withholding tax for a Canadian investor? ZSP is subject to US tax and worth about .24% and on a larger account significant. Thanks for your help.

Q: Hi 5i Team. Other than Horizon with HXT, HXS and HBB what other ETF providers (Canadian or US listed ETF's ) offer or have in their portfolio mix, Total Return ETF's that use swaps to reinvest dividends instead of paying them out. I'm looking for some tax efficiency with capital gains instead of payment's from dividends. Thx Steve.

Q: I'm hoping you can help me understand something.

On yahoo finance if I pull up a 6 month chat of HXS.TO and compare it to the S&P 500 index, HXS is underperforming by a significant amount (up 28% vs. 38%).  However if I add HXS.U.TO (the US dollar version of HXS) it tracks the index much closer.  Do you know why these two etfs track the index so differently?

In my RSP I buy HXS.TO weekly and journal the shares over to the US side a couple times throughout the year to buy US listed ETFs.  When I journal the HXS shares over do my gains magically increase?

Thanks for your help!

Q: I always avoided HXS because I thought it didn't hold stocks and just had an agreement with NA to deliver the total returns equivalent to S&P500 so there was a significant counterparty risk. The risk may not be much but didn't want to tolerate this risk just to avoid 15% Dividend Tax Withholding. Recently I got to know that HXS has changed its structure from Total Returns Swap to Corporate Class. Does it mean that it now holds stocks (like ZSP or SPY) .. is HXS still any more risky than ZSP or SPY.

Q: Looking to add BAM.A and SHOP to the porffolio, which would you add first for a youngish investor in a TFSA? Is BAM.A going to be in the dog house for years to come? Does SHOP still have a long runway or have new investors largely missed the boat? Should one wait for a pull back on SHOP before stepping in? Also, considering the added cost of currency conversion, is there any reason to choose QQQ over HXS for in a TFSA? HXS is smaller, but is that much of an issue for retail investors? Please deduct credits as you see fit.
Thanks

Q: Dear 5i,
Do you think the CRA will have any concerns with Horizons change from a Total Return Swap structure to a Total Return Corporate Class structure implemented in Nov. 2019?
I understand that Horizons changed all their Total Return Swap ETF's to this new structure late last year. I would like to avoid any future CRA tax issues if I purchase one of these Total Return Corporate Class ETF's. Your thoughts would be appreciated. Thanks