# HXS vs VFV in non registered accounts



## younginvestor1988 (Oct 4, 2016)

I asked this great board for advice some months ago, and received great advice, and hope to get some again...
Anyway- am a relatively new physician with a professional corporation (only invest via this). Am planning to do index funds for investing...
I was 100% cash at the time of last post and since then am about 20% invested in HXS and rest in cash.
I am now having second thoughts about HXS and wondering if VFV might be a better choice...
My concern is many people haven't heard of it including one investment person at TD i spoke to, and is quite small (530 million)
Horizons products is a subsidiary of some Korean firm I've never heard of as well....
Seems possible in 1-2 decades they decide to shut the fund down due to lack of profits due to ever decreasing MER? What if the Canadian gov bans swap based ETFs and triggers an inopportune sale?
I am literally losing sleep about this- I honestly want a fund that will let me just buy it and forget about it and look at it in 30, 40 years time...should I switch to VFV even though in a non registered account it will be taxed quite highly? 
So HXS- higher returns but more murky future
VFV- lower returns but more clear, guaranteed future
Thanks guys!
Much appreciated


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## Eclectic12 (Oct 20, 2010)

VFV is taxed quite highly?

The unit price change will be a capital gain. Income is paid (which is different from HXS), with the US gov't taking their slice ... but on a unit price of $47+ in 2015/2016, the income paid only works out to about 2.2% or so. 

Keep in mind some of that income is capital gains as well as return of capital (RoC) so less than the full 2.2% will be in the "high tax" category.

So yes, HXS as it is 100% capital gains is likely taxed better but not by as much as you seem to think.


As for "never heard of it", VFV started in 2012 while HXS started in 2010. VFV is definitely a bit bigger at $1 Billion or so compared HXS at $500 million ... iShares XUS is a similar age, with almost the same size VFV.


As for the gov't banning swap based ETFs, I'd hedge my bets by splitting $$ between a more regular ETF and HXS ... but that's me.


You may be expecting too much with "just buy it and forget about it and look at it in 30, 40 years time ... iShares was originally owned by Barclays, who originally was going to sell to a private equity firm before BlackRock offered more. Even before the buyout, I seem to recall Barclays getting rid of some ETFs that didn't sell like they thought they would. BlackRock seems to have tweaked things as well as I can recall there being a S&P500 ETF, long before the current one that is offered which has a similar inception date to Vanguards.


Cheers


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## GalacticPineapple (Feb 28, 2013)

HXS is a better deal from a tax perspective in a non-registered account than VFV. But if it's keeping you up at night the slight advantage is not worth it.


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