# US ETFs in a TFSA?



## oriole72 (Nov 15, 2013)

Just looking for some opinions/recommendations on using US ETFs in their tfsa.

1) I know US etfs in the tfsa will be subject to the 15% withholding tax which can't be recovered. but since I already contribute to a pension, I think the tfsa is a better option even if I lose the 15% on any dividends.

2) what are the best US etfs for Canadians? VTI? VOO? VUN?


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## JamJam23 (Nov 8, 2013)

A lot of brokerages won't let you hold USD inside a registered account (like a TFSA). It's not that they won't let you buy the fund, but they will charge their own currency conversion rate (like 1% or something), and they'll convert the USD into CAD.

Just for variety I'll list some US Index ETF's that are listed on the TSX:
XUS (iShares S&P500)
XSP (iShares S&P500, C$ Hedged)
CLU.C (iShares Fundamental Index)
CLU (iShares Fundamental Index, C$)
HXS (Horizons Swap-based S&P500)

Here is an article discussing US-based ETFs vs Candian-based ETFs:
http://canadiancouchpotato.com/2010/01/24/should-you-buy-us-listed-etfs/

From that article:
"An iShares spokesperson I asked about this explained that XSP is able to convert currencies at the institutional rate, which means “there is almost no spread at all.” This, he explained, should allow investors to collect dividends at full value and avoid being charged a conversion fee by the broker."


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## eulogy (Oct 29, 2011)

Definitely go with VTI. Cheapest way to own 3000+ US stocks. You'll end up ahead of anything Canadian ETFs offer for US equities. Norbert's Gambit is a way to change Canadian dollars over to US (and vice versa). It's a little intimidating the first time you do it, but it's a very cheap way to change over the money. 

Some people don't like going through the hassle of going the gambit, which is fine. If you don't like the hassle, dump it into a Canadian dollar US equities ETF. If you want to do a little more work to get the US dollars, go with VTI.


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## Freddie70 (Oct 19, 2013)

There's a CAD-hedged VTI now , VUS https://www.vanguardcanada.ca/individual/etfs/etfs-detail-overview.htm?portId=9551 MER is higher. Holding US ETFs tends to mean less MER, less tracking error and its a hedge if our dollar drops. If our dollar goes up presumably the giant chunk of CAD ETFs would make up for the losses on the US ETF holdings... The other part is there are many more types of ETFs available in the US compared to Canada, sometimes all things being equal the volume on the US one makes it worth holding it instead.


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## Rysto (Nov 22, 2010)

I agree that it makes more sense to hold VTI in a TFSA than a non-registered acount. Yes, you do lose the 15% withholding tax, but that's a lot better than paying Canadian taxes on the distributions at your marginal rate (likely to be much higher than 15%) plus paying capital gains taxes.


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## uptoolate (Oct 9, 2011)

eulogy said:


> Definitely go with VTI. Cheapest way to own 3000+ US stocks. You'll end up ahead of anything Canadian ETFs offer for US equities. Norbert's Gambit is a way to change Canadian dollars over to US (and vice versa). It's a little intimidating the first time you do it, but it's a very cheap way to change over the money.
> 
> Some people don't like going through the hassle of going the gambit, which is fine. If you don't like the hassle, dump it into a Canadian dollar US equities ETF. If you want to do a little more work to get the US dollars, go with VTI.


+1


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## leeder (Jan 28, 2012)

Knowing you're going to get dinged on the withholding tax regardless, you may as well invest in VUN and reduce any currency exchange fees. VUN is the Canadian equivalent of VTI.


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## Uranium101 (Nov 18, 2011)

There is no need to settle for Canadian ETF version of US Equities because you will still get dinged regardless. US companies withhold your foreign investor taxes at source. After it run through the layers of US equity ETF wrapped around by a Canadian layer, you won't get much back in the end because Canadian version of things are more expensive due to less competition.


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## mikeyrofl (Jul 12, 2016)

What's the cheapest way to buy VTI without the exchange fee on QTrade?


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