Investment Q&A

Q: Peter,

Looking for either (unhedged ) ETF or Mutual fund in Canadian dollars that captures the Info Tech space, predominantly outside of Canada.

Thank you
Paul

Q: Hello. If I were someone who:

1. Wanted to take my time researching and selecting stocks to purchase (perhaps weeks or months between each purchase), and
2. Doesn't yet know how much I'll be investing in Canadian stocks and how much I'll be investing US stocks, and
3. Will be exclusively investing in registered accounts (TFSA and RRSP).

Is it a sound strategy to simply buy one or two dual-listed, broad-market ETFs (like HXS and HXQ) in order to just be in the market while I take my time selecting stocks? This gives me the flexibility of selling the shares in either currency when it comes time to make another purchase, avoiding hefty currency exchange fees.

Or should the increased expense ratio of these dual-listed ETFs versus the cheaper alternatives like IVV and QQQ be a concern? Are there any other flaws with this strategy and/or is there a better strategy suited to this scenario?

Thank you!

Q: What is your favourite Canadian listed etf for exposure to US technology?

Q: I have subscriptions to both 5i Research and to the ETF & Mutual Fund Newsletter. Is there any way that these subscriptions can be linked, or must they be kept separate?

In the ETF Model Portfolios you recommend VSP and XQQ. Both ETFs are "Canadian Hedged". Are there non-hedged versions of these ETFs available? Why do you prefer the Canadian Hedged versions at this time?

Q: Hi 5i,
HXQ vs. XQQ – Questions and Comment: 1. Is the XQQ’s dividend subject to US tax withholding? 2. If not, is it eligible for the Canadian dividend tax credit? 3. My discount brokerage site indicates that the MER on HXQ is actually lower than that of the XQQ but I understood you to suggest otherwise. Can you please just confirm on that one?
It seems to me the elimination of the total return feature of the HXQ may not be the most important element in deciding between these funds. The charting function I use shows HXQ to have outperformed XQQ measurably over a 3 year period. While some of that might be attributable to HXQ’s lower MER and ‘total return’ feature, isn’t the bulk of the difference attributable to the fact that HXQ is unhedged, while XQQ is CAD-hedged, and over the 3-year period HXQ’s return has been amplified by the Canadian dollar’s decline against the US buck? Or is there something else in the mix? In any case, maybe the decision on whether to switch from HXQ to XQQ should be mostly a matter of whether one would prefer to be CAD-hedged or currency-exposed over the anticipated investment timeframe. Whatever tax consequences might flow from the other variables involved, they could easily be overwhelmed by a currency move of a few percent and, in a taxable account, any gain on a currency move would remain tax-deferred until a disposition event. Even then, the applicable tax rate would still be the capital gains rate. So that aspect of HXQ’s tax efficiency would be preserved. HXQ may not end up being as tax efficient as it was when it could avoid cash distributions. But if it is just going to have a yield akin to XQQ’s 0.44%, and if available alternative holdings (like XQQ) are already doing that, the fact that HXQ may have to pay a distribution may not be the most important consideration for a switch decision. Or am I missing something? Thanks!

Q: Since the tax benefits for HXT, HXQ, HTB, HXS have or will be diminished, is there any reason to continue to hold them or should we be switching to other etf's, is so which ones would you recommend?
Thanks for your service.

Q: Hi there,

I've heard a about a new government regulation effecting swapped based ETFs. Does this new regulation effect HXQ and if so, would would be a good alternative to HXQ?

Thanks!

Q: Hello,
Can you please recommend a Canadian dollar equivalent to the following ETF's: VOX, XLV, and RYT. Thank you.

Q: Hi there, I like the risk profile of the names that you tend to select in the Balanced Equity Portfolio, however I am looking to build a growthier version that is concentrated in fewer names. Which 7 names would you remove to produce a portfolio with more torque?

Also, I am looking to layer on some US exposure at about a 25% weighting of my portfolio. I was thinking either going all HXQ, 50/50 HXQ/CYBR or 50/50 HXQ/VFV. Which do you think would be the best mix?

Thanks!

Q: In response to a question this morning regarding ZQQ, XQQ, and HXQ, you stated that the fees for HXQ are lower than the other two. Are the swap fees included in the overall fees? Do the swap fees cause a drag on the return of HXQ?
Thank you.

Q: which of the 3 ETF listed do you like the best? I am looking at buying the HXQ as it is not hedge but notice from reading the liquidity is not very good so if there was a problem would it hard to get out of this ETF if needed?
Thanks

Q: Thanks so much for your reply to my earlier question. You suggested the following ETFs and I was wondering what a good portfolio allocation would be for each (I was thinking 50% allocated toward your BE portfolio however if a lesser/more percentage makes sense then please advise):

XWD (global expoure), VFV (S&P 500), VGG (US dividend growth), HXQ (US technology), XSU (US small-cap)

Thanks!

Q: I am constructing a new equity portfolio 60% US & 40% CND. On the US equity I am using the following ETF's:
HXS @ 15%
IWO, XMH,XSU @ 10% total
VGG @ 20%
HXQ @ 15%
I also want to limit taxes, dividends and any US reporting on form 1135.
Could you comment on this set up. Thank you for your service

Q: I am considering holding VFV and XQQ in my personal unregistered accounts because they produce dividends. I could borrow money to invest in them and write off the interest. On the other hand, would it make sense to put HXS and HXQ in my passive corporation (no active income) as these two produce only capital gains and no distributions? Is there a big difference in dividends earned in a passive corp vs
personally? Also all of these will not count towards the T1135 limit. Any thoughts?

Q: Hello,
Can you please suggest an ETF for the Nasdaq Index in Canadian dollars and unhedged? Please also provide the past performance and fees charged. If there are a few, please recommend the one that you think is better. Thank you in advance!
Rossana.

Q: These ETF's are TRI or Total Return Index ETF's. They pay out no distributions of dividends and no ROC. I'm guessing that they reinvest all the payouts and subtract the fees. Since they do this would you expect that there is no CRA paperwork to complete unless you sell units which would trigger capital gains. What is your opinion of holding these in a passive corp as I think Canadian dividends would be taxed higher in the passive corp and these only produce capital gains? I am looking at the HXQ (Nasdaq 100) so I do not have to complete the T1135 paperwork and stay in CDN $.

Q: Hi,

Best ETF in Canadian $ for an RRSP to cover:

1. Nasdaq 100
2. S&P 500

There are numerous products, why do you like your picks over the rest?

Q: I want to invest in the Cdn and US Tech sector, however I don't want to purchase stocks using US currency. I would like to have exposure to both US and Cdn Tech companies via the TSX. What do you suggest?

Thanks

Q: Can you recommend a Canadian ETF that tracks the US Nasdaq? One that isn't hedged (XQQ/ZQQ)as I believe the Can. dollar is going down! Thank you!

Q: Hello. In a letter dated Feb 26, you stated that HXQ had a better growth potential than ZQQ. Why would that be as both etf’s follow the Nasdaq 100? In addition all funds that follow the same index should perform equally ( ignoring expenses) should they not?