Investment Q&A

Q: Gentlemen,
Can you please explain the swap fee on HXS (no more than 0.30%), in which situation this fee will be added.
Thanks
Best regards

Q: As small investors, we are constantly urged (John DeGoey even pleads) that we diversify out of Canada via ETF/mutual funds but far less is said about the tax implications on investment return of the recommendations. Let's say one wants to invest new funds in mutual/ETF funds that are tax efficient. Because of contribution limit rules on TFSA/RSP/RIF, someone wants to add to their regular Canadian trading account instead. I understand at least one fund co. uses swaps so you postpone tax until you sell thereby avoiding annual dividend and unpredictable capital distributions. At least you then have some control over tax exposure timing and amount. Realize this not the forum for comprehensive answer (designing such a portfolio good topic for one of your newsletters), but can you advise of of some high quality fund managers/funds that offer tax advantaged products? Thank you.

Q: Are there tax implications with holding HXS in a TFSA given that the dividends are not distributed? I have no US holdings, and in my (latish) retirement, I've decided I could use some US exposure. Would it be a suitable single ETF to hold? I could hold it in my non registered account if that would be better, or if you can suggest another suitable ETF that could go in the TFSA, that'd be great. Many thanks.

Q: I was thinking of a position in HXS as a stable long term gainer for my RRSP. It has outperformed the SMP500 handsomely over the last few years - except in the last few months. Is that simply because the CAD I rising against the US and would this make it a good entry point?

Q: I have plenty of dividend income and am now interested in adding stocks or ETFs which pay distributions as RoC. Would you have a list of tax effective equities? And what are your views of using stocks/ETFs with a high Return of Capital as a means of improving the tax effectiveness of portfolios? I have heard experts on BNN who are not in favor of RoC but I tend not to agree since my biggest expense is tax.

Q: Do you have an opinion of ETF's structure. Specifically Horizons using derivatives and reflecting dividends in the share price vs. more conventional ETF's. If you could comment on the downside and upside of either structure. Thank-you and Merry Christmas.

Q: I am thinking of investing in U.S. large cap companies more specifically an ETF. Are you better off to invest in a fund like SPY (U.S. dollars) or in the other canadian fund base companies like HXS,VUN or XUS. I noticed that the ytd. return is approx. 14% for SPY versus the others at %7% for this current year.

Q: I have just recieved some new money to invest and woukd like to increase my expsosure outside Canada. Im thinking of a US index fund. Can you please tell me the difference between VUN/VUS, HXS and SPY? Which one is better? Do you think this is a good time to invest in the S&P with it at all time highs?
As always your advice is greatly appreciated.
Nancy

Q: Peter, I am considering buying one of these ETF's. HXS is quite small vs XSP but it has had much returns over the past 5 years. I would have thought that the returns of both would have been quite similar as they are designed to track the S&P 500.