# Do you hold VTI ETF?



## jargey3000 (Jan 25, 2011)

just want a show of hands. who in here owns some VTI?


----------



## AltaRed (Jun 8, 2009)

jargey3000 said:


> just want a show of hands. who in here owns some VTI?


It is my second largest individual holding. Been a key component of my US allocation for a very long time.


----------



## OnlyMyOpinion (Sep 1, 2013)

Our US etf exposure is in VUN (the Cdn VTI wrapper) embedded as about 30% of VGRO


----------



## jargey3000 (Jan 25, 2011)

VGRO?
WTF?


----------



## OnlyMyOpinion (Sep 1, 2013)

I know, it sounds like a pot stock doesn't it.
http://canadianmoneyforum.com/showthread.php/128849-Vanguard-Canada?highlight=vgro


----------



## m3s (Apr 3, 2010)

I'm considering making VTI the backbone in my RRSP to fill out my US allocation from USD cash

My problem with the one fund solution like VGRO is that I prefer to hold US equity in RRSP and Canadian equity in TFSA for tax reasons

I currently hold VWO, VPL and VGK in RRSP for international but I'm thinking of switching to that to VIU and VEE in non-reg


----------



## OnlyMyOpinion (Sep 1, 2013)

Tax efficiency is certainly a valid consideration. At our point in life, simplicity trumps efficiency.


----------



## jargey3000 (Jan 25, 2011)

BTW....IMHO, I think WTF would make a great stock or ETF symbol. Is it one?(too lazy to look it up) hic!


----------



## gibor365 (Apr 1, 2011)

jargey3000 said:


> BTW....IMHO, I think WTF would make a great stock or ETF symbol. Is it one?(too lazy to look it up) hic!


There is WTFC


----------



## gibor365 (Apr 1, 2011)

jargey3000 said:


> just want a show of hands. who in here owns some VTI?


I hold VTI, as well as VGK, VEA, IDV .... in different reg accounts


----------



## olivaw (Nov 21, 2010)

I hold VTI. It is my largest single holding at 18.8% of my portfolio.


----------



## RBull (Jan 20, 2013)

Yes, it is a key holding for me.


----------



## john.cray (Dec 7, 2016)

Without trying to sidetrack this thread, I was hoping to add in an additional related question to this and get other people's opinions:

In which circumstances would you prefer VTI vs VUN?

A few key points that I can think of, that might tilt the balance in one way or the other:
* Currency of available cash to invest: VTI:USD <--> VUN:CAD
* MER: VTI:0.04% <--> VUN:0.16%
* USD/CAD currency pair fluctuation effects: same for both (use VUS for hedged to CAD variant).
* Adjusted Cost Base and Capital Gains/Losses record keeping: Even though VTI is purchased with USD, a Canadian investor must maintain ACB in CAD. Thus they are exposed to the same changes of the USDCAD pair but they must track this themselves in addition to every purchase or sale using the BoC daily rate of the settlement of the transaction. With VUN this is built in.
* Distributions composition for tax purposes in non-registered accounts: VTI:all foreign income. VUN: foreign income + Return of Capital + Reinvested Capital gains. Thus VUN's distributions will change your ACB and the investor must keep track of that themselves.
* Distributions currency: VTI:USD, VUN:CAD (if I am not mistaken). As such each VTI distribution needs to be converted to CAD for taxation purposes. In addition to that the USD cash itself needs to be kept track of as a separate security until disposed of (extra work).
* Withholding tax: 
- VTI: Taxable: 15% recoverable; RRSP: 0% no withholding; TFSA/RESP: 15% non-recoverable (lost)
- VUN: Taxable: 15% recoverable; RRSP/TFSA/RESP: 15% non-recoverable (lost)
* T1135: VTI might require this additional reporting depending on the size since this is a foreign holding.

Am I missing any other consideration?

I do have USD cash that I've been thinking of investing in VTI in a taxable account initially. These days I am a bit on the fence and wondering if I should convert to CAD and simplify the record keeping. What do you think?

Cheers,
JC


----------



## RBull (Jan 20, 2013)

^I'm guessing most investing in VTI are doing so in registered accounts. Which I do. I simply like having large amounts of holdings in USD for the lower investment costs, the security of owning the worlds currency reserve and also because in retirement I spend a fair bit in the US. I don't really concern myself with currency fluctuations but there are always better and worse times to invest or to convert as needed. 

You seem to have a very good grasp on the considerations. G/L with the decision.


----------



## jargey3000 (Jan 25, 2011)

john.cray said:


> Without trying to sidetrack this thread, I was hoping to add in an additional related question to this and get other people's opinions:
> 
> Cheers,
> JC


 buzz off JC!!!
just kidding...


----------



## m3s (Apr 3, 2010)

My plan is VTI in RRSP. Lower MER and no WHTX. Questrade RRSP can receive distributions in USD

In non-reg I would opt for VUN. Much easier for reporting taxes in CAD


----------



## john.cray (Dec 7, 2016)

m3s said:


> In non-reg I would opt for VUN. Much easier for reporting taxes in CAD


Just out of curiosity - have you considered XUU as an alternative of VUN? It has an MER of 0.07% and wraps 4 US-traded ETFs.


----------



## Ponderling (Mar 1, 2013)

yes vti as our biggest and only (almost) for us exposure in rsp. Some smaller amount as vun in one smaller account.

Then open acct play with smaller values in us market in raw equities in usd: amaz, sbux, pep, and utx


----------



## m3s (Apr 3, 2010)

john.cray said:


> Just out of curiosity - have you considered XUU as an alternative of VUN? It has an MER of 0.07% and wraps 4 US-traded ETFs.


Haven't as my US allocation is within RRSP in USDs for now. But if non-reg I would switch to a CAD US ETF

I lean towards Vanguard's reputation/structure for being owned by its own ETF investors and a pioneer of sorts.

I see iShares as the new kid on the block.. may be cheaper but will it stick?


----------



## carson (Apr 28, 2011)

jargey3000 said:


> just want a show of hands. who in here owns some VTI?


No, I hold QQQ as my only US ETF.


----------



## gardner (Feb 13, 2014)

I hold VTI. It is my largest single non-registered holding.


----------



## FIRE40 (Sep 27, 2017)

I do. It's currently a little over 11% of my portfolio.


----------



## My Own Advisor (Sep 24, 2012)

Interesting thread. Seems most hold under 20% in it despite the fact that many "experts" tout you should invest internationally more than domestically.


----------



## gardner (Feb 13, 2014)

My Own Advisor said:


> you should invest internationally more than domestically.


No-one asked about VEA or ZEA. Or individual foreign holdings.


----------



## AltaRed (Jun 8, 2009)

gardner said:


> No-one asked about VEA or ZEA. Or individual foreign holdings.


I also hold VTV for a value bias plus a few other ex-Canada ETFs. Don't know why, but Jargey was obviously not interested in asking a broader question.


----------



## john.cray (Dec 7, 2016)

Another consideration in holding a US-traded equivalent that I've seen here and there but don't quite know well is the US estate situation. Maybe it's appropriate for someone who understands it better to describe here?

Also a question: In the case where a TSX-traded ETF (like VUN for example) only holds US traded ETF (VTI in the example) or multiple ETFs like in the XUU case, is it true that one doesn't need to file T1135 since those holdings -- VUN, XUU -- are not considered foreign in this case? Also no US-estate issues apply either?

Buzzing of now ....

Cheers,
JC


----------



## olivaw (Nov 21, 2010)

My Own Advisor said:


> Interesting thread. Seems most hold under 20% in it despite the fact that many "experts" tout you should invest internationally more than domestically.


My 18.8% of total portfolio in VTI is not as bad as it sounds. It actually represents around 36% of my equities. 

Point taken though. I am overweight Canadian equities. It is easier to track Canadian holdings and their dividends in non tax sheltered accounts. I find it difficult to figure out the tax ramifications of investing outside of the US or Canada.


----------



## Spudd (Oct 11, 2011)

john.cray said:


> Also a question: In the case where a TSX-traded ETF (like VUN for example) only holds US traded ETF (VTI in the example) or multiple ETFs like in the XUU case, is it true that one doesn't need to file T1135 since those holdings -- VUN, XUU -- are not considered foreign in this case? Also no US-estate issues apply either?


Yes


----------



## AltaRed (Jun 8, 2009)

john.cray said:


> Another consideration in holding a US-traded equivalent that I've seen here and there but don't quite know well is the US estate situation. Maybe it's appropriate for someone who understands it better to describe here?


The US Estate tax issue is, for most Canadians, an annoyance of having to file a US tax return for US holdings exceeding US$60k. https://www.taxtips.ca/calculator/us-estate-tax.htm

However, it would be a rare Canadian that would actually owe US estate tax. Scroll to the bottom of https://www.taxtips.ca/personaltax/usestatetax.htm for examples.

The primary risk, as always, is that Congress could change the legislation and re-negotiate the tax treaty on potentially a whim.


----------



## john.cray (Dec 7, 2016)

AltaRed said:


> The US Estate tax issue is, for most Canadians, an annoyance of having to file a US tax return for US holdings exceeding US$60k. https://www.taxtips.ca/calculator/us-estate-tax.htm
> 
> However, it would be a rare Canadian that would actually owe US estate tax. Scroll to the bottom of https://www.taxtips.ca/personaltax/usestatetax.htm for examples.
> 
> The primary risk, as always, is that Congress could change the legislation and re-negotiate the tax treaty on potentially a whim.


Thanks for that. Again, if you hold TSX-traded ETFs, even if all they do is wrap US-traded such -- like VUN/XUU -- then a Canadian doesn't need to worry about T1135 or US estate taxes? I.e. the simple fact that the wrapping ETF is traded on the TSX is enough to remove both those requirements, even though it invests in US ETFs under the hood?


----------



## AltaRed (Jun 8, 2009)

john.cray said:


> Thanks for that. Again, if you hold TSX-traded ETFs, even if all they do is wrap US-traded such -- like VUN/XUU -- then a Canadian doesn't need to worry about T1135 or US estate taxes? I.e. the simple fact that the wrapping ETF is traded on the TSX is enough to remove both those requirements, even though it invests in US ETFs under the hood?


The criteria is where is the investment domiciled... and in this case VUN and XUU are domiciled and regulated in Canada (doesn't matter where it's holdings are).


----------



## john.cray (Dec 7, 2016)

AltaRed said:


> The criteria is where is the investment domiciled... and in this case VUN and XUU are domiciled and regulated in Canada (doesn't matter where it's holdings are).


Cheers.


----------



## My Own Advisor (Sep 24, 2012)

olivaw said:


> My 18.8% of total portfolio in VTI is not as bad as it sounds. It actually represents around 36% of my equities.
> 
> Point taken though. I am overweight Canadian equities. It is easier to track Canadian holdings and their dividends in non tax sheltered accounts. I find it difficult to figure out the tax ramifications of investing outside of the US or Canada.


Me too...overweight in CDN stocks. Most of my RRSP is in U.S. or foreign assets. TFSA = CDN. Non-registered = CDN dividend payers only.


----------



## larry81 (Nov 22, 2010)

Used to hold VTI, now hold VUN. Happy but i still miss VTI 0.04% MER


----------



## gardner (Feb 13, 2014)

larry81 said:


> Used to hold VTI, now hold VUN. Happy but i still miss VTI 0.04% MER


It would be nice if there was a VUN.U in US$ -- or some other way to hold VTI, but avoid T1135 requirements. I got started with VTI because I have a stream of $US income and don't like norberting it over all the time. Since I want to invest in VTI and VEA, I can do that directly in $US. But I am getting close to the second level of T1135 invasiveness and would like to avoid the extra bookkeeping if possible.

I am quite pissed off at the T1135 thing. IMO they should not have to get this extra reporting for things I hold in a Canadian brokerage. They see everything on the T5008 and can walk in to TD any time they want.


----------



## john.cray (Dec 7, 2016)

gardner said:


> It would be nice if there was a VUN.U in US$ -- or some other way to hold VTI, but avoid T1135 requirements. I got started with VTI because I have a stream of $US income and don't like norberting it over all the time. Since I want to invest in VTI and VEA, I can do that directly in $US. But I am getting close to the second level of T1135 invasiveness and would like to avoid the extra bookkeeping if possible.


How exactly do you exchange USD to CAD using Norbert's gambit? By using the DLR/DLR.U I thought you can only reliably go from CAD -> USD. Or maybe you use the short first strategy instead?



gardner said:


> I am quite pissed off at the T1135 thing. IMO they should not have to get this extra reporting for things I hold in a Canadian brokerage. They see everything on the T5008 and can walk in to TD any time they want.


Similar aim here. In addition to trying to avoid the T1135 reporting I want to also avoid maintaining ACB of the USD cash that is being distributed (dividends).


----------



## AltaRed (Jun 8, 2009)

gardner said:


> It would be nice if there was a VUN.U in US$ -- or some other way to hold VTI, but avoid T1135 requirements. I got started with VTI because I have a stream of $US income and don't like norberting it over all the time. Since I want to invest in VTI and VEA, I can do that directly in $US. But I am getting close to the second level of T1135 invasiveness and would like to avoid the extra bookkeeping if possible.
> 
> I am quite pissed off at the T1135 thing. IMO they should not have to get this extra reporting for things I hold in a Canadian brokerage. They see everything on the T5008 and can walk in to TD any time they want.


Except of course, that not all ex-Canada holdings are in brokerage accounts. Hence the need for a form. 

I don't see what the issue really is on the T1135, even for 'detailed reporting' over $250k, particularly for most of us who just have US domiciled securities in our brokerage accounts. I fill out Category 1 (foreign bank holdings) and Category 7 for my US domiciled holdings in my brokerage account. Minimal data to input and hunt down with the only 'difficult' one taking a bit of effort being 'Maximum Market Value during the Year'.


----------



## gardner (Feb 13, 2014)

john.cray said:


> DLR/DLR.U I thought you can only reliably go from CAD -> USD


It is the DLR<-->CAN$ transaction that does the actual currency swap, and this is the second step going from US->CAN. The risk is that the currency will go against you while you hold DLR, but the risk is not that great for 2 days settle time even, and if the movement really scares you, you can sell back to $US and wind up back where you were (less the buy/sell spread and commissions). For amounts of ~15K it is a risk I generally don't get too upset about.


----------



## gardner (Feb 13, 2014)

AltaRed said:


> not all ex-Canada holdings are in brokerage accounts. Hence the need for a form


I'm not saying there should not be a T1135. Only that holdings in a Canadian brokerage account that is otherwise compliant with CRA reporting requirements shouldn't need one. That was the case in 2013 and I don't know why they changed.


----------



## jargey3000 (Jan 25, 2011)

(ahem!) VTI...please?


----------



## snowbeavers (Mar 19, 2013)

Yes, it is my major holding for US stocks and comprises around 23% of my portfolio. I used to hold VTI but switched to VUN to avoid US estate taxes.


----------



## 30seconds (Jan 11, 2014)

snowbeavers said:


> Yes, it is my major holding for US stocks and comprises around 23% of my portfolio. I used to hold VTI but switched to VUN to avoid US estate taxes.


Is this something to be concerned about? I hold VTI in my RRSP. It is my biggest US holding, I like the currency diversification and dont mind doing the norbert gambit.


----------



## AltaRed (Jun 8, 2009)

For 99% of us, US estate taxes are nothing to be worried about. The thresholds are very high. Try using this calculator for 'what if' analysis. https://www.taxtips.ca/calculators/us-estate-tax/us-estate-tax-calculator.htm

IOW, unless you have US$6M or more in worldwide assets, you are covered. I believe the new tax law has changed the $6M threshold to $12M.


----------



## m3s (Apr 3, 2010)

I thought VTI in RRSP was the most tax efficient as it dodges 15% withholding tax. I didn't realize RRSP could be subject to estate taxes but I don't expect my 30% US allocation to ever hit $6M

VUN in non-reg would be my second choice if my RRSP doesn't fit my US allocation or is drawn down. CAD ETF would just be that much easier record keeping for tax purposes


----------



## AltaRed (Jun 8, 2009)

m3s said:


> I thought VTI in RRSP was the most tax efficient as it dodges 15% withholding tax. I didn't realize RRSP could be subject to estate taxes but I don't expect my 30% US allocation to ever hit $6M


It is worldwide assets that exceed US $6M where estate taxes could come into play..... with US domiciled assets being a significant portion of that total. The formula embodies 2 numbers. RRSP assets count. This document is dated with respect to $6M thresholds, but identifies which assets count. Note they include spouse's assets as well. https://advisors.nbfwm.ca/advisorco...massullo/are you subject to us estate tax.pdf


----------



## Koogie (Dec 15, 2014)

VTI is my main US market holding. 17% of my equities. Held in corp. account.
VXUS is my main INTL market holding. 24% of my equities. Held in corp. account.

I added a little VTI on the recent market swings. Some at -5% and at -10% drops.
Waiting for another drop to -10%


----------



## snowbeavers (Mar 19, 2013)

Not for Canadian residents. Since I am considered a non-resident (for tax purposes), the cut-off is 60,000.


----------



## AltaRed (Jun 8, 2009)

snowbeavers said:


> Not for Canadian residents. Since I am considered a non-resident (for tax purposes), the cut-off is 60,000.


For not filing an estate tax return. But there are no estate taxes until $6M, or with the new tax law, I think it is now temporarily $12M.


----------



## snowbeavers (Mar 19, 2013)

According to this is is 6M for resident Canadians and non-resident Canadians it is 60K. https://www2.deloitte.com/content/d...rules-for-resident-and-nonresident-aliens.pdf

Also, my spouse is american so according to this, I should be okay "If the surviving spouse is a US citizen, there is an unlimited marital deduction — in other words, an unlimited amount of assets can pass to your spouse without being subject to US estate tax."


----------



## BoringInvestor (Sep 12, 2013)

To add some perspective to this thread: I've been holding VTI since I started my couch potato portfolio back in Dec 2012.

Over that time my annualized money-weighted rate of return on VTI has been:
- 15.7% / year in US dollars
- (roughly) 27.4% / year accounting for the currency fluctuations over time


----------



## jargey3000 (Jan 25, 2011)

BoringInvestor said:


> To add some perspective to this thread: I've been holding VTI since I started my couch potato portfolio back in Dec 2012.
> 
> Over that time my annualized money-weighted rate of return on VTI has been:
> - 15.7% / year in US dollars
> - (roughly) 27.4% / year accounting for the currency fluctuations over time


sweet!!!


----------



## BoringInvestor (Sep 12, 2013)

Yup, I certainly can't complain about the results to date (and I certainly don't expect to be earning 15+% annualized over the long-run).

Just chalk up my gains to dumb luck in timing, and being committed to the couch potato philosophy.


----------



## Ihatetaxes (May 5, 2010)

VTI in RSPs
VUN in non-reg

Total 25% of portfolio.


----------

