# Good ETFs to use for Norbit's Gambit - List them here



## lu1sa (Feb 25, 2015)

I have yet to see a list of all possible stocks / ETFs that can be used for Norbit's Gambit; I'd like to create one. I've primarily used *DLR / DLR.U*. However, what I'd REALLY like (not sure if this exists) is an S&P 500 Index fund (or a fund that tracks any major index). I have 2 complaints with NG using DLR/U:
(1) It requires that big chunks of my money be UNinvested in the market for 5-7 days because of all the steps involved (selling my index fund / buying DLR / journaling shares, waiting for settling, etc) -- just bad luck, but I got burned in Dec 2014 when I missed out on the 2-day 4% runup, costing me a few Ks; also
(2) Because I keep all of my money invested in the market (usually broad index ETFs), it requires me to realize a capital gain/loss when I may not want to.
So I want to create a list of all known candidates for using NG, since I'd rather make use of an investment vehicle that keeps my funds invested in the broader market.


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## larry81 (Nov 22, 2010)

Beside DLR/DLR.U, there is no point is using "ETF" to perform a NG trades pair.

Simply use any interlisted stock with good volume.

Identified selection of NG-worthy stocks on the GlobeFund stock filter and looked for TSX common stocks with Min price>50, Min volume>1 million. The 5 results were RY, BNS, TD, POT, TCK.B. Out of those, the least volatile were BNS and TD, with very narrow bid/ask spread, perfect for the Gambit.

ps: its Norbert's Gambit and not Norbit


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## AltaRed (Jun 8, 2009)

Just don't use a stock that one already owns since the ACB of both tranches must be aggregated.


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## Woz (Sep 5, 2013)

You might be interested in HXS/HXS.U. It's an S&P500 index fund that trades on the TSX in both CAD and USD. HXT/HXT.U would also work (TSX60 index) but you'd also have currency exposure in addition to the market exposure.


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## lu1sa (Feb 25, 2015)

larry81 said:


> Beside DLR/DLR.U, *there is no point is using "ETF" to perform a NG trades pair.*
> Simply use any interlisted stock with good volume.
> Identified selection of NG-worthy stocks on the GlobeFund stock filter and looked for TSX common stocks with Min price>50, Min volume>1 million. The 5 results were RY, BNS, TD, POT, TCK.B. Out of those, the least volatile were BNS and TD, with very narrow bid/ask spread, perfect for the Gambit.


Actually there's a very good reason, as I articulated in OP...I keep my money invested in a broad index fund, and I'd like to be able to execute NG _without_ realizing a capital gain/loss (as it may not suit my tax strategy for that year.) For someone whose main objective is to minimize volatility, DLR/U is prob a perfect option, but there are other considerations at play too (staying invested in market / not realizing capital gains-or-losses)



AltaRed said:


> Just don't use a stock that one already owns since the ACB of both tranches must be aggregated.


Yup, good point.



Woz said:


> You might be interested in HXS/HXS.U. It's an S&P500 index fund that trades on the TSX in both CAD and USD. HXT/HXT.U would also work (TSX60 index) but you'd also have currency exposure in addition to the market exposure.


Thanks, this sounds promising, I'll look into it.



larry81 said:


> ps: its Norbert's Gambit and not Norbit


Damnit. Mods, feel free to change thread title


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## humble_pie (Jun 7, 2009)

Woz said:


> You might be interested in HXS/HXS.U. It's an S&P500 index fund that trades on the TSX in both CAD and USD. HXT/HXT.U would also work (TSX60 index) but you'd also have currency exposure in addition to the market exposure.



i don't believe either of these pairs have a pegged component, therefore they would not be efficient for a delayed gambit.

the DLRs were invented specifically for gambit trades at the many brokers whose online platforms do not permit instant sells. Chez these brokers, clients have to phone to place gambit sell side orders if they wish to sell instantly. Some brokers are charging full agent commissions for gambit sell orders, other brokers are charging web commish for the same trade (note: this lack of consistency is an old, well-known issue.)

the gambit trader will always pay only a web commish for an online sell side order if he uses the DLRs, but the steps will drag out over 3 days or longer. Note that in the DLR pair, DLR.U is pegged. The rate of exchange therefore depends only upon when the trader buys DLR. Once DLR has been purchased, trader can wait days, even weeks to sell DLR.U. He will always obtain the same exchange rate.

notice also, that this does not work in reverse. Gambit traders trying to arb from USD to CAD who buy DLR.U will be exposed to several days of currency fluctuation, because DLR is *not* pegged.

i doubt that either HXS or HXT were built with one pegged side? another drawback would be the extreme illiquidity of the USD-traded member of each pair. What a gambit trader needs is the opposite, he needs the utmost liquidity for an interlisted stock in both canadian & US markets that he can find.

another negative would be the spread charged by horizons betaPro or by any other ETF vendor for an ETF pair.

the best choices for gambit interlisteds are those set forth by larry81 upthread. That being said, haroldCrump (a good gambit trader) recently weighed in on the forum with his experience that RY around 11 am to 1 pm was both highly liquid & stable, with price not moving much after bursts of trading in the morning hours.

apart from larry's choices plus harold's RY, not much else is successful as a gambit carrier stock. I would not use Teck B/TCK myself. 

notice that a gambit trader who *does* have to pay a full agent commission for the sell side should arbitrage with an expensive stock such as RY or BMO, in order to purchase as few shares as possible & thus pay a lower commission.


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## RBull (Jan 20, 2013)

I've used only RY and DLR. Both worked perfectly and small spread.


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## humble_pie (Jun 7, 2009)

lu1sa said:


> ... So I want to create a list of all known candidates for using NG



a top-down approach like this doesn't work for currency gambits. What does work is a custom-built bottom-up strategy.

in fact the real art of currency arbitrage is not knowing How It Works, which is plain dumb simple. The real art lies in knowing exactly what your own broker's rules, regulations, online website restrictions & commissions are going to be.


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## humble_pie (Jun 7, 2009)

lu1sa said:


> Actually there's a very good reason, as I articulated in OP...I keep my money invested in a broad index fund, and I'd like to be able to execute NG _without_ realizing a capital gain/loss (as it may not suit my tax strategy for that year.) For someone whose main objective is to minimize volatility, DLR/U is prob a perfect option, but there are other considerations at play too (staying invested in market / not realizing capital gains-or-losses)



this is *not* a good reason.

if perchance you already own an interlisted security that you bought originally in CAD, but now you are wishing to arb it in order to obtain USD, all you have to do is get it journalled over to US account (unless you are a BMO or roybank client, in which case the system can figure everything out by itself) and then sell it. This is known as a half-gambit. It does result in a capital gain or loss.

if, on the other hand, you hold some securities such as broad index funds in CAD but don't wish to sell them, then leave them be. Instead, use new money for a currency arbitrage trade. Select one of larry's candidates as the carrier stock, or select haroldCrump's favourite RY. Just make sure, as altaRed suggests, that the carrier stock is not something you already hold, since an arbitrage series would result in gains or losses.


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## Eclectic12 (Oct 20, 2010)

lu1sa said:


> ... I keep my money invested in a broad index fund, and I'd like to be able to execute NG _without_ realizing a capital gain/loss (as it may not suit my tax strategy for that year.)


If I am understanding correctly .. where one is 100% invested and there is no new cash to fund the gambit pair - the only solution that comes to mind that would avoid a CG/CL is to use a TFSA (hopefully for the CG flavour as a CL in a TFSA is useless :biggrin: ).

Without new cash, one can only sell something ... which in a taxable account is going to mean a CG/CL.


Cheers


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## larry81 (Nov 22, 2010)

lu1sa said:


> Actually there's a very good reason, as I articulated in OP...I keep my money invested in a broad index fund, and I'd like to be able to execute NG _without_ realizing a capital gain/loss (as it may not suit my tax strategy for that year.)


Excuse me but what is this non-sense.


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## lu1sa (Feb 25, 2015)

humble_pie said:


> this is *not* a good reason.
> 
> if perchance you already own an interlisted security that you bought originally in CAD, but now you are wishing to arb it in order to obtain USD, all you have to do is get it journalled over to US account (unless you are a BMO or roybank client, in which case the system can figure everything out by itself) and then sell it. This is known as a half-gambit. It does result in a capital gain or loss.
> 
> if, on the other hand, you hold some securities such as broad index funds in CAD but don't wish to sell them, then leave them be. Instead, use new money for a currency arbitrage trade. Select one of larry's candidates as the carrier stock, or select haroldCrump's favourite RY. Just make sure, as altaRed suggests, that the carrier stock is not something you already hold, since an arbitrage series would result in gains or losses.





larry81 said:


> Excuse me but what is this non-sense.


Consider the following: I have a lot of my savings in each of USD and CAD on account of having worked in both countries. Suppose on the US side of my brokerage account I purchase $75K USD of VOO (US-denominated S&P 500 Index fund), which has appreciated to $100K. Let's say I like how strong the USD is vs. the CAD right now (assume 1.24:1) and would like to convert this holding to CAD, but I want to keep the investment in a low-cost index fund. What I've had to do in the past is:
i) sell the VOO (realizing a $25K CG, which I didn't necessarily want to do)
ii) purchase $100K DLR.U
iii) journal the DLR.U over to DLR
iv) sell the DLR (getting $124K CAD)
v) purchase a CAD-denominated index fund.

I've done the above several times, but (a) it results in 4-5 days in which that money is uninvested in the market, which I try to avoid); and (b) I've had to realize a $25K CG due to the appreciation of VOO, which I didn't want to do.

My hope was that there was an interlisted ETF (VOO is not) that would make the above 5-step process unnecessary...whereby if I owned the .U version of it, I could simply have it journaled over to the Canadian side, keeping the money invested in the market (but now in CAD not USD) and not having to realize a capital gain. Or to put it differently, suppose VOO was interlisted, so there was a VOO.U and VOO...would what I describe accomplish what I want it to?


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## humble_pie (Jun 7, 2009)

lu1sa said:


> Consider the following: I have a lot of my savings in each of USD and CAD on account of having worked in both countries. Suppose on the US side of my brokerage account I purchase $75K USD of VOO (US-denominated S&P 500 Index fund), which has appreciated to $100K. Let's say I like how strong the USD is vs. the CAD right now (assume 1.24:1) and would like to convert this holding to CAD, but I want to keep the investment in a low-cost index fund. What I've had to do in the past is:
> 
> i) sell the VOO (realizing a $25K CG, which I didn't necessarily want to do)
> ii) purchase $100K DLR.U
> ...




ouch, using the Dollars when moving from USD to CAD is not a good strategy. The reason is that moving slowly from DLR.U to DLR means exposure to currency fluctuation for all the days of duration of the exercise, since only DLR.U is pegged.

luis the reason why you will not find your ETF plan working as you hope is that currency arbitrage requires that the carrier security have the same CUSIP number in both markets. Nearly all ETFs & their canadian clones have different CUSIP numbers.

this is why larry's short list of well-known interlisted common stocks is used in gambit trades. The Dollars, which were invented expressly for currency arbitrage, can also be utilized to exchange from CAD to USD at brokers whose online platforms don't allow instant gambit sell orders. But - as mentioned - the Dollars don't work in reverse. 

if one is exchanging a largish sum such as $75k & one is fretting about delay, it's far better to carry out an instant gambit trade. Use an interlisted common stock such as those in larry's list, or use RY. Avoid the Dollars, why pay the ETF vendor's spread when you don't have to pay any spread at all?

find a TD representative who will charge the web commish to do the sell side. There are still some agents who do this, although my guess is that there will be fewer & fewer, as the big green seems likely to increasingly seek full agent-handled commish for gambit sell sides.

make sure your TD rep understands what you are going to do. He should, in fact, be preparing your sell side order in the opposite CAD exchange as you prepare your buy side order in USD. Now send your buy order. As soon as the rep sees that the buy is filled, he will release the sell order.

it's as simple as that. Just a little pas-de-deux.

understand that, to do the above in the example you provide, you will need to sell a USD ETF such as VOO in a prior separate transaction. Thus there will be capital gains/losses to declare on the USD VOO sale.

notice that the same would be true for any USD security that you may be holding. If you hold Apple or Merck, for example, but you wish to sell in order to convert those US dollars into CAD, capital gains or losses will apply to the AAPL or MRK sale.

the only way to avoid these gains is to utilize new money for the gambit arbitrage, meanwhile leaving existing USD holdings alone.


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## lu1sa (Feb 25, 2015)

Thanks for the reply.



humble_pie said:


> ouch, using the Dollars when moving from USD to CAD is not a good strategy.
> <snip> The Dollars, which were invented expressly for currency arbitrage, can also be utilized to exchange from CAD to USD at brokers whose online platforms don't allow instant gambit sell orders. But - as mentioned - *the Dollars don't work in reverse*.


Well they certainly still "work" in that they'll effectively exchange USD > CAD at a rate 1.5 - 2.0% better than I'd get from TD if I just let them put through a currency conversion at their terrible exchange rate...yes, as you point out I'm still exposed to currency fluctuations for an extra ~3 days as the transaction(s) play out, but these were USD funds that had been invested in VOO (USD) and exposed to currency fluctuations for years anyway, I'm pretty indifferent to an extra few days.



humble_pie said:


> luis the reason why you will not find your ETF plan working as you hope is that currency arbitrage requires that the carrier security have the same CUSIP number in both markets. Nearly all ETFs & their canadian clones have different CUSIP numbers.


Yes, I'm aware they have to have the same CUSIP...BMO has ZSP / ZSP.U that appeared to be good candidates, but have different CUSIPs so can't be used for NG. But HXS/HXS.U apparently have the same CUSIP, which is why I'm intrigued as to whether it would make a good candidate.



humble_pie said:


> understand that, to do the above in the example you provide, you will need to sell a USD ETF such as VOO in a prior separate transaction. Thus there will be capital gains/losses to declare on the USD VOO sale.


Yes, I know -- it's what I described as one of the things I'm trying to _avoid_...so what I'm asking is merely whether -- if HXS/HXS.U will work for the purposes of NG -- would that be an effective way to keep my money invested in an S&P fund, but essentially get to "toggle" the currency exposure depending on how I feel about the anticipated movement of the USD:CAD?


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## gardner (Feb 13, 2014)

humble_pie said:


> Gambit traders trying to arb from USD to CAD who buy DLR.U will be exposed to several days of currency fluctuation, because DLR is *not* pegged.


I never really understood why you put it this way. The way I understand it both DLR.U and DLR are always 100% pegged to the US$. I also don't really get the currency fluctuation risk. You always control the timing of the buy or sell to $CAN transaction, down to the minute or second. The only way you wind up holding DLR[.U] and not locking in your exchange rate is in the $US --> $CAN trade. If for some reason the currency market went against you while you were holding DLR[.U], you could still sell back to $US 1:1 and hold/invest it for a better time.

You never don't control the timing of the actual currency trade and you are never really locked into carrying out a currency trade before the moment you do it.

The risk I see is that you will leave $US sitting around tied up in DLR/DLR.U for some time paying the MER instead of earning 0.004% or whatever $US cash yields these days. I don't see this as a significant risk. Plus an extra pair of trade commissions and maybe a call to the broker.


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## My Own Advisor (Sep 24, 2012)

What about a delayed Gambit? 

Meaning, buy a CDN bank stock, for example, hold in CDN $$ RRSP. When you see fit, +X days or +X weeks, ask brokerage to journal over shares to USD $$ RRSP. +X days or +X weeks, sell stock within USD $$ RRSP, to free up USD $$ for future trades.

I was thinking a delayed Gambit has advantages since you get some dividends while you wait things out.

Also, I was wondering...when would it be cost efficient to Gambit for those that do it? >$2k? > $5k? I suppose more is better?


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## humble_pie (Jun 7, 2009)

to advisor - CC's rough rule used to be gambit for $10k or more. Some talk about $5k but it hardly seems worthwhile. More is definitely better. The people truly saving awesome $$ are the folks passing through $50k.

re a delayed gambit: this is more or less a short term trade, isn't it? there are people who do partial gambits. They pick an existing interlisted holding whose partial sale won't have undesirable tax consequences, then get an appropriate amount of stock journalled to USD account, then sell at their leisure.


to gardner - only DLR.U is pegged. DLR is not pegged. A party buying DLR.U with the intention of arbing it for CAD takes on currency risk the moment he completes his DLR.U purchase.


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## My Own Advisor (Sep 24, 2012)

humble_pie said:


> to advisor - CC's rough rule used to be gambit for $10k or more. Some talk about $5k but it hardly seems worthwhile. More is definitely better. The people truly saving awesome $$ are the folks passing through $50k.
> 
> re a delayed gambit: this is more or less a short term trade, isn't it? there are people who do partial gambits. They pick an existing interlisted holding whose partial sale won't have undesirable tax consequences, then get an appropriate amount of stock journalled to USD account, then sell at their leisure.


Thanks HP! I have considered doing a Gambit but I will need to wait until I can save (much) more. $10k seems like a good starting value.


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## humble_pie (Jun 7, 2009)

lu1sa said:


> But HXS/HXS.U apparently have the same CUSIP, which is why I'm intrigued as to whether it would make a good candidate ... if HXS/HXS.U will work for the purposes of NG -- would that be an effective way to keep my money invested in an S&P fund, but essentially get to "toggle" the currency exposure depending on how I feel about the anticipated movement of the USD:CAD?




HXS appears to be another synthetic horizons betaPro product built like HXT, ie it doesn't own any stocks itself although it represents that it does. What it does own are forward contracts with a counterparty bank that promises to give horizons the return of the S&P 500.

HXS.U is not liquid, it might be difficult to acquire a number of shares all at once (the OP has mentioned $75k & $100k.)

a 5-year comparison chart indicates that HXS.U noticeably underperformed HXS in recent years, particularly in recent months. Presumably the mechanism that caused this is the swoon in the loonie, which inflated all USD holdings. Even though HXS is hedged to CAD, so the hedges should have tempered its rise somewhat.

HXS.U did perform in line with vanguard's VOO, though.












for my part, i'd rather hold a big well-known US ETF such as VOO. When it comes time to gambit some US dollars into canadian dollars, i'd do an instant gambit. I'd use an interlisted canadian stock from larry's list. I'd seek out a licensed representative who'd charge the web commish to sell the gambit. This way, everything will be fast, instant, easy. All transactions will conclude within a couple of minutes.

if i couldn't find a representative willing to do the gambit sell for a web commish, i'd pay the full agent commission. Because even a broker-handled commission will be considerably less than broker FX fees to exchange the same amount of capital.

lastly, i'm not quite sure what "toggling" means here! i do believe that, if one wishes to obtain an inventory of the opposite currency in cash, one does have to sell, whether one sells VOO or HXS.U OR HXS. And selling means capital gains or losses.


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## james4beach (Nov 15, 2012)

humble_pie said:


> notice also, that this does not work in reverse. Gambit traders trying to arb from USD to CAD who buy DLR.U will be exposed to several days of currency fluctuation, because DLR is *not* pegged.


Yes it's true that doing the reverse gambit (as I did several times in 2014) one remains exposed to currency movements. Personally I still don't believe this is a problem because you can't time the forex market. True, you will sit there exposed to a couple days of forex movements, but there's no reason to think that gives you a worse result than an immediate conversion.

I crunched my year-end taxes. I used DLR to convert $30,000 and had a $43 capital gain due to currency movements that were in my favour. In other words I did $43 better than an instant gambit at spot FX rates. They could have just as easily gone in the reverse direction, but this illustrates that the reverse DLR gambit doesn't put you at a disadvantage -- the FX movement is just random.

I would happily keep using DLR, except that it's an ETF and (due to US residency) I can no longer use any Canadian ETFs. Therefore my next gambits will be with regular stocks, so I'm very interested in the original point of this thread... which stocks are good to use?


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## james4beach (Nov 15, 2012)

I want to stress again how great the gambit method is. On that 30k I converted, I achieved an average forex 'fee' of 0.16% ( = $48) compared to TDDI's forex spread/fee of 1.5% ($450).

That's $400 in forex fees saved, even after paying the trade commissions!


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## humble_pie (Jun 7, 2009)

james4beach said:


> I would happily keep using DLR, except that it's an ETF and (due to US residency) I can no longer use any Canadian ETFs. Therefore my next gambits will be with regular stocks, so I'm very interested in the original point of this thread... which stocks are good to use?




Larry's List of efficient stocks to use in currency arbitrage is good.

RY, BNS, TD, POT, TCK.B/TCK, says larry81.

me i'd omit BNS (not liquid enough in US market) & i'd add BMO. Potash & teck are often too volatile. Really the 3 big banks are the best. Just choose one you don't already own.

note that, if a licensed rep is doing the sell side order & if he is going to charge an agent phone commission, it's important to use as expensive a stock as possible. In order to have as few shares as possible & keep the commission low. Something like RY or BMO.

i see over on financial wisdom forum they are doing gambits backwards. The client shorts the carrier stock online first, then buys the same stock online in the opposite currency. A short strategy like this does ensure low web commish for both the buy & the sell side.

the client has to make sure that the short position isn't coming up for a dividend X date, though. Because a short artist has to pay the dividend.

later, at leisure, client phones to ask that the long stock be journalled to the short account to cover.

the problem with this is that the licensed reps tend to argue & fight when the client phones for the journal. It appears that the brokers don't want gambit traders using up what might be a small allocation of stock that's available for regular shorting at the broker loan post. Brokers want to keep that stock available for their regular shorting clients. From the brokers' POV, this seems entirely reasonable to me.

i'm not sure how the brokers can actually prevent short-first-then-buy-to-cover gambits, though. I'm told that if clients repeatedly do this, scolding notes will be placed on their accounts. I was once told that the broker might even start delaying trading orders for a repeat offender client who keeps on shorting first! 

ooh, this does sound naughty. Next thing you know the broker will be sending recidivist short gambit traders to the principal's office for detention after school each:


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## gardner (Feb 13, 2014)

humble_pie said:


> to gardner - only DLR.U is pegged. DLR is not pegged. A party buying DLR.U with the intention of arbing it for CAD takes on currency risk the moment he completes his DLR.U purchase.


This does not make sense to me. If DLR can be journaled to DLR.U or vise versa, it must be essentially the same thing -- just one CUSIP. I just had a gander at Horizon's info and AFAICS, DLR/DLR.U do have the same CUSIP: 44049C401 -- ie, they are the same exact thing -- and pegged to $US. If they are different, then what sort of black magic transforms one CUSIP into another?


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## lu1sa (Feb 25, 2015)

Let me ask a straight-forward question, then, since my Q about capital gains (far more important to me than a couple extra days of currency movement exposure) seems to have been getting muddled: *does the journaling of shares count as a disposition for tax purposes*?

If I take $10K USD and buy HXS.U, and it appreciates to $12K, and I then journal it over to HXS on the Canadian side of my account...does the $2K in appreciation qualify as a capital gain for tax purposes? Dd I essentially "dispose" of HXS.U and acquire HXS resulting in a capital gain for that year's taxes?


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## humble_pie (Jun 7, 2009)

no, you did not dispose of HXS.U when you journalled it over to HXS. Therefore you have no gains to declare.

but my question is, what is the purpose of merely toggling the stock over to the CAD version? 

nearly all parties gambit/arbitrage interlisted stocks because they intend to sell the stock in the opposite currency account in order to obtain an inventory of cash dollars in that opposite currency.

the parties are *not* merely jiggling an interlisted stock back & forth between USD & CAD accounts, without ever selling. They sell, they receive hard cash exchanged at spot rates without any broker FX fees & then they move on to something else.

the only reason to move an interlisted stock to the opposite currency without selling is to receive dividends or distributions in their first-issued currency. This is done to prevent the broker from charging hidden FX fees on said dividends.


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## 0xCC (Jan 5, 2012)

lu1sa said:


> Let me ask a straight-forward question, then, since my Q about capital gains (far more important to me than a couple extra days of currency movement exposure) seems to have been getting muddled: *does the journaling of shares count as a disposition for tax purposes*?
> 
> If I take $10K USD and buy HXS.U, and it appreciates to $12K, and I then journal it over to HXS on the Canadian side of my account...does the $2K in appreciation qualify as a capital gain for tax purposes? Dd I essentially "dispose" of HXS.U and acquire HXS resulting in a capital gain for that year's taxes?


Ok, so first for the simple question: the journaling of the shares from a CDN version to a US version should not count as a disposition, you are effectively owning the same underlying security, just in a different currency.



lu1sa said:


> Consider the following: I have a lot of my savings in each of USD and CAD on account of having worked in both countries. Suppose on the US side of my brokerage account I purchase $75K USD of VOO (US-denominated S&P 500 Index fund), which has appreciated to $100K. Let's say I like how strong the USD is vs. the CAD right now (assume 1.24:1) and would like to convert this holding to CAD, but I want to keep the investment in a low-cost index fund. What I've had to do in the past is:
> i) sell the VOO (realizing a $25K CG, which I didn't necessarily want to do)
> ii) purchase $100K DLR.U
> iii) journal the DLR.U over to DLR
> ...


The more interesting thing that no one else seems to have picked up on is what are you really trying to achieve in the steps you have outlined in the above post? It sound like you basically want to play the exchange rate without incurring a capital gain but you want to do it after the exchange rate has moved. Others have basically presented ways to do this by using HSX/HSX.U but doing that won't buy you anything. You are owning the same underlying securities. If you want to play the exchange rate directly maybe something like buying and holding DLR/DLR.U is the way to do that.


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## lu1sa (Feb 25, 2015)

humble_pie said:


> no, you did not dispose of HXS.U when you journalled it over to HXS. Therefore you have no gains to declare.
> but my question is, what is the purpose of merely toggling the stock over to the CAD version?
> nearly all parties gambit/arbitrage interlisted stocks because they intend to sell the stock in the opposite currency account in order to obtain an inventory of cash dollars in that opposite currency.


I realize that some of the confusion may stem from the fact that I may have slightly different underlying motives than most people who use NG -- I agree that 95% of the people interested in NG have a simple objective: they have CAD _cash_ they want to convert to USD _cash_ (or vice versa), and want to get the best possible exchange rate. I've used DLR/DLR.U to execute a NG in the past myself, and it has worked great for that purpose.

But here are circumstances that may be individual to me, which may help explain my motives.
- I have around half my savings in each of USD and CAD on account of having worked in both countries for a spell.
- My investment strategy is very simple: I don't think I can beat the market so basically invest 100% of my savings in low-cost ETFs that track the S&P 500.
- The ETFs I have used to this point have mostly been VOO (for my USD) and HXT (for my CAD).
- I've held each of VOO / HXT for the last 2 years, so they've appreciated a fair amount (_particularly_ the VOO b/c of the decline of the CAD) and I have substantial as-of-yet-unrealized capital gains in each.
- I now want to convert some of my USD assets into CAD (due to favorable exchange rate), but I realize that there's no way for me to do so without selling my VOO and realizing a CG.

_To be clear, I am aware that there's nothing that can help me in my current situation (where I own only VOO and HXT, neither of which are interlisted)_...if I want to convert some of my assets, I'm well aware that my only option is to sell some VOO and realize a CG. My motivations in creating this thread were in trying to figure out how to avoid hamstringing myself for NEXT time around >> I want to know whether there was a different ETF that I should use as my default S&P-500 investment vehicle in the future that IS interlisted, and could be journaled back-and-forth to, using words from a recent CCP post "turn currency hedging on and off at the right times", without creating a taxable gain/loss.

So my ears perked up when a poster mentioned HXS / HXS.U, and I'm wondering if it's exactly what I should use going forward as my default S&P500 investment vehicle, which would allow me to "play the exchange rate" (to use another poster's language), while achieving my objectives:
(i) keeping all of my money in a low-cost diversified ETF (my preferred investment strategy), AND
(ii) Journaling it back and forth ("toggle" it, if you will) depending on whether I want to be exposed to USD:CAD fluctuations or not.

(Set aside any comments about whether it's possible to successfully "play" the exchange rate / predict currency movement...I get it, and it's a valid opinion. But for the sake of argument just assume that I feel like the CAD is nearing its low.)

Hope that helped a little bit


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## Silverbird (Mar 5, 2013)

gardner said:


> This does not make sense to me. If DLR can be journaled to DLR.U or vise versa, it must be essentially the same thing -- just one CUSIP. I just had a gander at Horizon's info and AFAICS, DLR/DLR.U do have the same CUSIP: 44049C401 -- ie, they are the same exact thing -- and pegged to $US. If they are different, then what sort of black magic transforms one CUSIP into another?


I think Humble is referring to the way the DLR pair is priced. DLR.U is always within a penny of $10/share USD. DLR is the one that reflects the current F/X rate in $CAD

Moving CAD to USD: you purchase DLR and lock in the current spot rate (currently $13CAD/share), and you know that you'll get $10 USD when the shares get journalled over in a few days. the currency risk is gone as soon as you buy DLR.

Moving USD to CAD: you purchase DLR.U for ~$10USD/share, however the value of DLR continues to move the few days while the journalling happens. you still have the currency risk as you don't know how much $CAD you'll get until the journalling is complete and DLR is sold.


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## larry81 (Nov 22, 2010)

lu1sa said:


> I realize that some of the confusion may stem from the fact that I may have slightly different underlying motives than most people who use NG -- I agree that 95% of the people interested in NG have a simple objective: they have CAD _cash_ they want to convert to USD _cash_ (or vice versa), and want to get the best possible exchange rate. I've used DLR/DLR.U to execute a NG in the past myself, and it has worked great for that purpose.


I understand what you want to do, i am in the same situation: Taxable account, half my saving in USD and positions with considerable appreciation.

What you want is a pegged VTI, VTI.U, there no such solution and doubt we will ever see a product like this.


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## 0xCC (Jan 5, 2012)

lu1sa said:


> So my ears perked up when a poster mentioned HXS / HXS.U, and I'm wondering if it's exactly what I should use going forward as my default S&P500 investment vehicle, which would allow me to "play the exchange rate" (to use another poster's language), while achieving my objectives:
> (i) keeping all of my money in a low-cost diversified ETF (my preferred investment strategy), AND
> (ii) Journaling it back and forth ("toggle" it, if you will) depending on whether I want to be exposed to USD:CAD fluctuations or not.
> 
> ...


I didn't mean to imply that "playing the exchange rate" was necessarily negative, having an opinion on which way currency is going to move is fine. Putting some cash behind that opinion is also fine.

The confusion I am having is where the gains will come from (and if there aren't any gains to be harvested, why bother?). If we start at a very high level and say that, for example, HXS/HXS.U are at their core a collection of US stocks. Now if we can agree that the value of HXS/HXS.U is based on the value of those individual stocks and their weighting inside the fund (i.e. what percentage each stock makes up of the entire fund). So we can take the next step then and just focus on one stock instead of 500 (or whatever number the fund holds) since the value of the one stock has a direct impact on the value of the entire fund. Finally, since I don't know of any stocks off the top of my head that are US stocks but trade on the TSX lets pick a stock that trades in the other direction - a Canadian stock trading on an American exchange. Lets pick Royal Bank as an example.

So what you want to do is buy a share of RY today on a US exchange in US dollars. If in the future the Canadian dollar strengthens against the US dollar you want to journal that share of RY over to the Canadian exchange (denominated in Canadian dollars) to capture that rise of the Canadian dollar against the US dollar. Is this a reasonable summary of what you want to do (but with a US company instead)?


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## gardner (Feb 13, 2014)

Silverbird said:


> Moving USD to CAD: you purchase DLR.U for ~$10USD/share, however the value of DLR continues to move the few days while the journalling happens. you still have the currency risk as you don't know how much $CAD you'll get until the journalling is complete and DLR is sold.


Yes, except that just holding DLR.U you are not actually committed to making any currency trade at all. The moment you sell the DLR to CAN$ cash is when your currency trade occurs and you can time that trade however you like it. You can do it in stages or all at once, and if you get cold feet you can sell the DLR back to $US.

I guess if you start with the notion "I need to do a currency trade right now" and buy DLR.U then, it feels like there is a risk period, but if you start with the notion "I'll need to trade some currency this quarter" and buy DLR.U against currency transactions a few weeks or months out, it doesn't feel risky at all.


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## Silverbird (Mar 5, 2013)

gardner said:


> Yes, except that just holding DLR.U you are not actually committed to making any currency trade at all. The moment you sell the DLR to CAN$ cash is when your currency trade occurs and you can time that trade however you like it. You can do it in stages or all at once, and if you get cold feet you can sell the DLR back to $US.
> 
> I guess if you start with the notion "I need to do a currency trade right now" and buy DLR.U then, it feels like there is a risk period, but if you start with the notion "I'll need to trade some currency this quarter" and buy DLR.U against currency transactions a few weeks or months out, it doesn't feel risky at all.


Gardner, agreed - I was looking at the perspective that most investors kick off a F/X gambit because they want the currency changed as soon as they can, as they presumably just sold a USD security and want to move it.


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## humble_pie (Jun 7, 2009)

luis won't you please stop making mountains out of molehills.

you buy a security. It goes up in value. You sell that security, you now have capital gains. Those gains are taxable at the CG rate. There is no escape.

all this stuff about jiggling the holding back & forth between HXS & HXS.U is meaningless. Such journals are not taxable events. They don't even increase or decrease the basic value of your portfolio.

btw *you* are the party who introduced the verb "toggle" to this thread. Your message No. 14 upthread each: perhaps you thought it was a new way of avoiding capital gains tax?


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## lu1sa (Feb 25, 2015)

humble_pie said:


> luis won't you please stop making mountains out of molehills.
> 
> you buy a security. It goes up in value. You sell that security, you now have capital gains. Those gains are taxable at the CG rate. There is no escape.
> all this stuff about jiggling the holding back & forth between HXS & HXS.U is meaningless. Such journals are not taxable events. They don't even increase or decrease the basic value of your portfolio.
> btw *you* are the party who introduced the verb "toggle" to this thread. Your message No. 14 upthread each: perhaps you thought it was a new way of avoiding capital gains tax?


It's really not that complicated, not sure why you keep misinterpreting, or assuming I don't understand what capital gains are. Re-read my most recent post where I lay out in plain English exactly what my situation and objectives are...not quite sure what you don't understand, but feel free to ask any other questions and maybe I can help you out.


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## lu1sa (Feb 25, 2015)

larry81 said:


> I understand what you want to do, i am in the same situation: Taxable account, half my saving in USD and positions with considerable appreciation.
> 
> *What you want is a pegged VTI, VTI.U, there no such solution and doubt we will ever see a product like this*.





0xCC said:


> I didn't mean to imply that "playing the exchange rate" was necessarily negative, having an opinion on which way currency is going to move is fine. Putting some cash behind that opinion is also fine.
> 
> The confusion I am having is where the gains will come from (and if there aren't any gains to be harvested, why bother?). If we start at a very high level and say that, for example, HXS/HXS.U are at their core a collection of US stocks. Now if we can agree that the value of HXS/HXS.U is based on the value of those individual stocks and their weighting inside the fund (i.e. what percentage each stock makes up of the entire fund). So we can take the next step then and just focus on one stock instead of 500 (or whatever number the fund holds) since the value of the one stock has a direct impact on the value of the entire fund. Finally, since I don't know of any stocks off the top of my head that are US stocks but trade on the TSX lets pick a stock that trades in the other direction - a Canadian stock trading on an American exchange. Lets pick Royal Bank as an example.
> 
> So what you want to do is buy a share of RY today on a US exchange in US dollars. If in the future the Canadian dollar strengthens against the US dollar you want to journal that share of RY over to the Canadian exchange (denominated in Canadian dollars) to capture that rise of the Canadian dollar against the US dollar. Is this a reasonable summary of what you want to do (but with a US company instead)?


Sounds like you both 'get it', and I actually just wrote CCP an email and got an answer, which I doubt he'll mind if I post here:


> "_No, moving back and forth between HXS and HXS.U would not change your currency exposure. In both cases you would would be exposed to the US dollar. Many others have wondered the same thing, so I wrote about this idea here: http://canadiancouchpotato.com/2014/01/13/how-a-falling-loonie-affects-us-equity-etfs/_'


My interpretation wasn't without basis >> Google Finance lists the title of _HXS as "Horizons Betapro S&P 500 Index C$ Hedged ETF_". But that's *WRONG*. It's not $C-hedged. According to CCP (in a follow-up email), "_HXS is not hedged. It used to be a couple of years ago but they changed the mandate._"

IOW, what I would need -- as I think Larry is pointing out with his his VTI example -- is an interlisted ETF where the canadian side is CAD-hedged. But as best I can tell, that vehicle does not exist (although apparently HXS used to be exactly that.)


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## james4beach (Nov 15, 2012)

gardner said:


> but if you start with the notion "I'll need to trade some currency this quarter" and buy DLR.U against currency transactions a few weeks or months out, it doesn't feel risky at all.


You shouldn't hold DLR or DLR.U (they're the same security, remember) for too long. I do not recommend that you buy the security and hold it, while you wait.

It bleeds value from its NAV. The MER of 0.51% is pretty high... it loses 0.01% a week!

This is more visible on DLR.U but remember, they're the same security, so either one you hold loses value. If you hold DLR.U even for a few days you will notice the bid-ask average decline. Get in and out fast, because as long as you sit in it, you're paying MER.


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## 0xCC (Jan 5, 2012)

lu1sa said:


> IOW, what I would need -- as I think Larry is pointing out with his his VTI example -- is an interlisted ETF where the canadian side is CAD-hedged. But as best I can tell, that vehicle does not exist (although apparently HXS used to be exactly that.)


This is what I was trying to get at with the post of mine you quoted. It sounds like you are looking for some way to switch between an non CAD hedged fund and a CAD hedged fund without incurring a taxable transaction in the process. That is almost like saying that you would like to switch between a REIT and a big 6 bank stock without incurring a taxable transaction.

Having said that there might be ways that you can achieve this within a single mutual fund company. There are fund companies that allow you to switch from one fund to another without making a taxable transaction in the process. Of course they are quite happy to provide this sort of service while you pay your 2.5% MER year in and year out.  Pick your poison I guess....


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## humble_pie (Jun 7, 2009)

0xCC said:


> So what you want to do is buy a share of RY today on a US exchange in US dollars. If in the future the Canadian dollar strengthens against the US dollar you want to journal that share of RY over to the Canadian exchange (denominated in Canadian dollars) to capture that rise of the Canadian dollar against the US dollar. Is this a reasonable summary of what you want to do (but with a US company instead)?




alas the above scenario is not quite how canadian interlisted price patterns behave.

if USD rises while US markets also rise, a canadian interlisted stock trading in US markets will not rise in tandem with US stock markets.

this is because, throughout the rise of both the greenback & the stateside markets, the US trading price of canadian interlisteds will be continuously dragged by arbitrageurs trading off their base CAD prices in toronto, the home market. 

the share price rise of interlisteds in US market will be more subdued than a relevant pure US index.

it is not uncommon, on a day of strong USD/CAD price fluctuation, to see a canadian share price rise or fall on toronto, while its interlisted counterpart trading on new york either fails to rise or fall as much, or even does the opposite. Again, this is because the base canadian share price is dragging - or leading - as the arbs work the interlisted markets.

in addition, i'd expect that the toronto drag or lead on canadian interlisted prices on US markets would also reflect the proportionate volume as traded in the 2 countries. I'd expect that a predominantly US volume leader such as teck, potash or blackberry might suffer less toronto dragging or leading than, say, a canadian bank stock, whose US trading is thin compared to its toronto trading volume. IE in developing a pricing matrix for interlisteds, comparative volume ratios should have influence as well. I've never heard of academic studies of this phenomenon though.


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## humble_pie (Jun 7, 2009)

luis i do most solemnly assure you that i totally *get* what you are hoping to find & i don't misinterpret by one iota. 

but how many people will it take, all telling you that there's no such interlisted animal, hedged or not, which can neutralize a taxable capital gain, before you settle down & start learning how to do things the right way?

you did the same thing in options. You hadn't been on cmf forum two days before you were demanding that the minister of finance rewrite the registered account rules, just for you, so you could exercise options in a reg'd account with a massive over-contribution but no penalty. Why? because otherwise you'd have to sell your options to the market maker & you were feeling a tad peckish over his prices.

it all reminds me of a latter-day Don Quixote tilting at windmills.

surely a good chartered accountant could assist you. Because no amount of toggling, fiddling, jiggling or wriggling in the Aitch Exx Esses or any other interlisted security, hedged or not, can camouflage a capital gain or loss.


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## andrewt (Mar 3, 2015)

james4beach said:


> I want to stress again how great the gambit method is. On that 30k I converted, I achieved an average forex 'fee' of 0.16% ( = $48) compared to TDDI's forex spread/fee of 1.5% ($450).
> 
> That's $400 in forex fees saved, even after paying the trade commissions!


TD only charges 1.5% for amounts below 25k USD. Below was the conversion I tried just now:

$32,000.00 CDN = $25,495.98 USD
$1.00 USD = $1.2551 CDN

and back

$25,495.98 USD = $31,523.23 CDN
$1.00 USD = $1.2364 CDN

$32,000.00 - $31,523.23 = $476.77 (1.489%) / 2 = 0.744% forex fee

Most of the time I don't bother with the gambit when I can do an immediate currency conversion for 0.75%. The rates get cheaper as you convert more. I think the top tier is >50k and comes with 0.5% forex fees.


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## 0xCC (Jan 5, 2012)

humble_pie said:


> alas the above scenario is not quite how canadian interlisted price patterns behave.
> 
> if USD rises while US markets also rise, a canadian interlisted stock trading in US markets will not rise in tandem with US stock markets.
> 
> <snip...>


Agreed. I was just using a single stock as an example of what the goal of the "capital gains neutral currency exchange trade" was. The next step in the argument was to point out that the stock price on both exchanges will fluctuate such that there wouldn't be any currency gains to be had.

Maybe lu1sa needs to look for an off-shore place to hold accounts that don't have so many tax rules.  They should also take a look at james4beach's recent thread in the Taxation section about loving Canadian taxes.


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## humble_pie (Jun 7, 2009)

andrewt said:


> TD only charges 1.5% for amounts below 25k USD ...
> 
> $32,000.00 - $31,523.23 = *$476.77 (1.489%) / 2* = 0.744% forex fee
> 
> Most of the time I don't bother with the gambit when I can do an immediate currency conversion for 0.75%.



the mistake in the above is that the 1.5% FX fee applies only to a one-way trip, therefore one would not divide the fee of $476.77 in this example by 2.

TD's rate for round trip currency conversions is in line with other brokers. It ranges from 3% to as high as 4% on some days. Some of us will recall the broker FX survey that Canadian Capitalist conducted at 11 am one weekday a couple of years ago. Broker rates have very slightly increased since that date.

focusing again on the FX fee of $476.77 set forth in the example, where is the person who would even hesitate between choosing to pay this large amount vs paying a mere $19.98 in commissions for a currency gambit/arbitrage pair of trades?


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## andrewt (Mar 3, 2015)

humble_pie said:


> the mistake in the above is that the 1.5% FX fee applies only to a one-way trip, therefore one would not divide the fee of $476.77 in this example by 2.
> 
> TD's rate for round trip currency conversions is in line with other brokers. It ranges from 3% to as high as 4% on some days. Some of us will recall the broker FX survey that Canadian Capitalist conducted at 11 am one weekday a couple of years ago. Broker rates have very slightly increased since that date.
> 
> focusing again on the FX fee of $476.77 set forth in the example, where is the person who would even hesitate between choosing to pay this large amount vs paying a mere $19.98 in commissions for a currency gambit/arbitrage pair of trades?


Of course you need to divide by two, I did two currency conversions. That was a round trip. They took forex on CAD->USD and again from USD->CAD. I showed you the round trip cost and then broke it down to a single transaction. TD only charges 0.75% for 25k amounts and 0.5% for 50k amounts.


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## humble_pie (Jun 7, 2009)

^^


something wrong with your figs then. The big green is charging 1.5% on one-way, roughly 3% on round trips. So are all other brokers. No i'm not suggesting you should show your books. Although why anyone would convert round-trip for the privilege of paying the broker $476.77 is mystifying ...


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## humble_pie (Jun 7, 2009)

in addition, the big green charges FX fees by increments, with the highest FX fee rate applying to the lowest tier of money to be exchanged, namely from $1 to $9,999.99.

the round trip FX fee for exchanges in this tier at the present moment this am is 3.20%. A one-way conversion this am - for example the USD dividends that TD still converts in a covert manner - flies at 1.60%.

next tier is 10,000-24,999.99, with slightly lower rates. CAD 32,000 belongs to the next higher tier, with still lower rates. 

put another way, though, very few are the investors who would choose to pay $476.77 in broker FX fees for 2 currency conversions, when they could arbitrage the same pair of conversions for $39.96.


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## andrewt (Mar 3, 2015)

humble_pie said:


> ^^
> 
> 
> something wrong with your figs then. The big green is charging 1.5% on one-way, roughly 3% on round trips. So are all other brokers. No i'm not suggesting you should show your books. Although why anyone would convert round-trip for the privilege of paying the broker $476.77 is mystifying ...


That's the beauty of modern technology, you don't need to press the "finish" button. See attachments, I even added DLR/DLR.U for time reference. Nothing wrong with my numbers.

You can see that DLR was at 1.246 and TD added a spread of ~0.75% around it in each direction.


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## humble_pie (Jun 7, 2009)

andrewt said:


> That's the beauty of modern technology, you don't need to press the "finish" button. See attachments, I even added DLR/DLR.U for time reference. Nothing wrong with my numbers.
> 
> You can see that DLR was at 1.246 and TD added a spread of ~0.75% around it in each direction.



spreads on the Dollars have nothing to do with basic broker FX rate on cash currency conversions

it's broker spread rate (north of 3% round trip this am) on cash conversions vs cost of gambit trades that need to be compared.


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## andrewt (Mar 3, 2015)

I'm not sure what you aren't understanding. The screenshots clearly show a conversion from a CDN Cash account to a US Cash account. Show me proof of this magical 3% and 4% you seem to be making up.


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## lu1sa (Feb 25, 2015)

0xCC said:


> This is what I was trying to get at with the post of mine you quoted. It sounds like you are looking for some way to switch between an non CAD hedged fund and a CAD hedged fund without incurring a taxable transaction in the process. That is almost like saying that you would like to switch between a REIT and a big 6 bank stock without incurring a taxable transaction.
> 
> Having said that there might be ways that you can achieve this within a single mutual fund company. There are fund companies that allow you to switch from one fund to another without making a taxable transaction in the process. Of course they are quite happy to provide this sort of service while you pay your 2.5% MER year in and year out.  Pick your poison I guess....


Yup, I recognized where you were going with that. Though if CCP is correct (and HXS _used_ to be $C-hedged), then there used to be a vehicle that DID do exactly what I'm looking for, so wondering if there's another one still out there seems like an eminently reasonable query. (Unless it had a different CUSIP when it was hedged, in which case NG never would have worked with it anyway.)


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## gardner (Feb 13, 2014)

humble_pie said:


> north of 3% round trip this am


I don't follow why you are speaking in terms of a round trip when I (and maybe most folks) would be more interested in considering the cost of a one-way.

While it is probable that eventually, some day down the road, a reciprocal conversion might be likely or inevitable, that will be on a different day, with different currency rates, different commissions, probably for a different amount, maybe through a different institution. I don't see how it is useful to consider them as a matched set.


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## humble_pie (Jun 7, 2009)

TD charges FX fees by increments, with the highest FX rate applying to the lowest tier of money to be exchanged, from $1 to $9,999.99.

one will recall that the OP specifically mentions upthread converting $10,000. The round trip FX fee this morning for USD conversions in this tier was close to 3.20%, as already mentioned.

next tier is 10,000-24,999.99, with slightly lower rates. CAD 32,000 - the example andrewf is using - belongs to the next higher tier, with still lower rates.

even so, the phone-in rates for this $32k tier (more accurate & more timely than the website, said the representative) were 1.2545-1.2365 this AM, implying a round trip FX spread of 1.80%, or just under 1% one way.

when the big green raised its FX rates a few years ago, the tier that it raised was the lowest tier ($1-10k). Higher tiers were not so much affected. Most USD dividends fall in this lowest tier, so the broker was able to raise its FX revenues from dividend & small conversions without the clients really noticing.

put another way, what investor would deliberately choose to pay $476.77 in broker FX fees for 2 currency conversions, when he could arbitrage $32,000 for commissions of $39.96 round trip, or $19.98 for an actual one way conversion?

(aside to gardner) currency conversion rates are keyed to the spread rate, which is the spread between buying the foreign currency & selling it, ie a round trip. Even though everybody understands that an actual transaction is likely to be one way only.


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## andrewt (Mar 3, 2015)

humble_pie said:


> TD charges FX fees by increments, with the highest FX rate applying to the lowest tier of money to be exchanged, from $1 to $9,999.99.
> 
> one will recall that the OP specifically mentions upthread converting $10,000. The round trip FX fee this morning for USD conversions in this tier was close to 3.20%, as already mentioned.
> 
> ...


To avoid the risk of any possible capital gains over holding that 32k for 3 days during settlement. The more currency you try to gambit, the larger risk you can take on capital gains. That's why I just let TD stick it to me for the 0.5-0.75% on large currency conversions, the risk is known and set.


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## humble_pie (Jun 7, 2009)

oh pshaw. Converting from DLR to DLR.U is zero capital gains because DLR.U is pegged, so all is locked the moment DLR is bought.

to escape $0 in capital gains you'd pay $476.77? each:


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## humble_pie (Jun 7, 2009)

*Guys i have a Proposal for the Big Green*

.

it's obvious that the TDDI nobs are pushing the call centre licensed reps towards charging full agent-handled phone commish to carry out the sell side of a gambit trade.

me i think this decision has already been made. There will always be some hi-value clients (haha) who will be exempt, but the rest of us peasants & crumbs are going to pay.

still, i think a full phone commish is outrageously too much. The big green has got so efficient at handling currency gambits that nowadays they don't even have to bother sending wires to the credit department telling credit that the gambit sell side order is OK. 

consider the commish for 1000 shares of RY. The sell side commish is something like USD 120.00. Ouch. This does seem outrageous.

what about asking the TD to throw in the buy side, to be done lickety split by the agent, for free, along with the sell side commission?

would cmffers think this is reasonable? could we unite? sags, if you're a TD client, please do come over here. We need a first-rate trade union guy.


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## My Own Advisor (Sep 24, 2012)

humble_pie said:


> .
> 
> it's obvious that the TDDI nobs are pushing the call centre licensed reps towards charging full agent-handled phone commish to carry out the sell side of a gambit trade.
> 
> ...


@HP - so you're proposing investors basically pay the phone commission only - what is that - $43? for the buy and sell side; an all-in-one? It would be good if they would do that!

"Transactions with principal values less than $2,000 will be charged a flat fee of CDN $43. A minimum commission of CDN $43 is charged for each trade. Full commission and fee charges apply for each partial fill except when transacted within the same business day."
http://www.tdwaterhouse.ca/products...vesting/commissions-fees/#telephone-brokerage


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## humble_pie (Jun 7, 2009)

My Own Advisor said:


> @HP - so you're proposing investors basically pay the phone commission only - what is that - $43? for the buy and sell side; an all-in-one? It would be good if they would do that!



re commission for agent-handled phone trades: by no means is this a flat $43 fee. alas it can range upwards into the $100s.

here is the fee brochure. I think this might be your link also, MOA? scroll down through the PDF until you come to Telephone Commissions. You'll see the minimum is $43 but nearly all gambit trades cost more than the minimum.

http://www.tdwaterhouse.ca/document/PDF/forms/521778.pdf

for trades executed by a licensed rep, the base charge is $35 for a canadian order, $39 for a US order. To the base charge are added several pennies per share, in rising increments according to the value of the stock.

thus, full commish for 1000 shares of royal bank on new york would be USD $120.00. For 500 shares of RY, USD $80.00.

this does seem a bit steep, for TD clients who have been accustomed to gambit trading in their RRSPs for a couple of $9.99 online commish. To help resolve the issue, i'm wondering whether the TD could be asked to include the buy side of a gambit conversion without commission.


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## james4beach (Nov 15, 2012)

humble_pie: you've talked me into using regular stocks, not ETFs, for the gambit  Plus the US tax consequences require that I avoid DLR.

I just had a great experience with a TDDI phone rep in non-registered accts. Not only was he friendly, but did the same gambit just a few hours ago for someone else.

I used 200 shares of TD stock and bought in USD ... once he saw the fill, he sold on the TSX in CAD and gave me web commission!
After the trade fees, it gave me net conversation rate of 1.2665 which when compared to spot FX means a net 0.33% forex fee.

Compared to using the "foreign exchange" function of TDDI, *this 10 minute dance saved me $100 in fees!*


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## humble_pie (Jun 7, 2009)

^^^

good for you! it was a perfect little 2-step.

i think you might have saved more than $100 in FX fees though? by extremely rough ottomh estimate you were exchanging roughly $10k? slightly less in USD to start out with?

td's spread rate for amounts less than $10k a few days ago was 3.20%, or a whopping 1.60% for a one-way gambit, ouch. 

which - again extremely roughly - could have come to USD $160, or more in CAD ... even if we settle on roughly $160 & consider that you got the job done for roughly $20 (one USD commish, one CAD commish), everyone would have to agree that it was a stunning bargain.


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## james4beach (Nov 15, 2012)

Thanks! Yes I converted around 8k USD into 10k CAD. Immediately after the gambit, I went to the "foreign exchange" part of the web site and typed in the amount to see what TD's rate would be. TD was willing to give me 1.2536 versus spot FX rate of 1.2707 which would have been 1.35% fee one-way. Perhaps the FX rate was rapidly moving at the time I checked and this made it look like a lower spread.

I also have the Borderless US account, so I don't know if that gives me a slightly better rate on foreign exchange?


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