# When buying td e-series u.s. Index, does TD convert my CDN$ to USD first?



## vitaminsarenecessary (Dec 31, 2014)

Hi all,

I have a couple of questions regarding the TD e-series they are not too clear from the TD website.

When I buy u.s. Index fund from TD e-series, do they convert my Canadian dollars to US dollars first then buy units from the fund using the USD?

I read somewhere about this concept of "currency hedged TD e-series". What exactly is this? When I buy TD e-series u.s. Index - e (with no US$ attached to the end of the fund name) using my Canadian dollar, am I getting currency-hedged? 

I have some US dollar that I made from my internship in the states. Should I buy the "-e" or the "-e US$"

Thanks a lot!


----------



## humble_pie (Jun 7, 2009)

wise senior posters have always suggested buying the plain USD e-fund. Hedging costs big $$ & produces noticeable tracking error.

also, if you have a broker account, please consider learning to gambit your currencies. This means arbitrage. There will be no FX fee, hidden or not, to pay to the broker. In fact, once you learn how, you'll never again pay any USD foreign exchange fee, for the rest of your life.

if you do buy USD e-funds with canadian dollars, the bank or broker as the case may be, will charge you roughly 1.50% on a one-way conversion. For very small amounts below $8-10k, it's easiest to simply submit & pay this outlandish fee. 

but starting around $10k & up, one will save significant $$ by learning how to gambit the currencies. There's quite a lot to learn, far too much for one post. It will take a while to pick up the skill. Google for how-tos, both in the forum & in the internet at large.


----------



## GreatLaker (Mar 23, 2014)

There are 3 versions of TD's S&P 500 US index fund:

TD U.S. Index - e - purchased in C$
TD U.S. Index Currency Neutral - e - purchased in C$ but uses currency hedging so fluctuations in the Can/US exchange do not affect the value of your holdings
TD U.S. Index ($US) - e - purchase in US$. You either need to have existing US$ or convert C$ to US$ as Humble noted.
The underlying holdings are the same in all 3, the differences are whether you purchase in C$ or US$, and whether you are exposed to currency fluctuations, or hedged against it.

Based on your description it sounds like #3 is what you want, especially if you expect to eventually sell and spend the funds in US$.
If # 3 is your choice, contact TD to find out how to ensure your existing US$ are used.

Here are some articles on currency hedging:
Stepping Back From the Hedge
How a Falling Loonie Affects US Equity ETF
Why Currency Hedging Doesn’t Work in Canada


----------



## Spudd (Oct 11, 2011)

To add to GreatLaker's point, if you want to buy with CAD, then buy #1 or #2 (depending if you want hedging or not). 

Humble's points about the gambit etc are all valid but not very relevant for you buying e-series from TD Bank. They're more relevant once you open a discount brokerage account and start buying ETF's etc, which will be a few years away probably.


----------



## Sampson (Apr 3, 2009)

vitaminsarenecessary said:


> When I buy u.s. Index fund from TD e-series, do they convert my Canadian dollars to US dollars first then buy units from the fund using the USD?


Buying either #1 or #3 avoids currency hedging, one denominated in CAD the other in USD. These are the best options, since as Pie points out, currency hedged funds always lag unhedged funds.



vitaminsarenecessary said:


> I have some US dollar that I made from my internship in the states. Should I buy the "-e" or the "-e US$"


This is good, since you earned the USD directly, the -e USD fund is better since converting your CAD to USD now is probably going to hurt your returns if the value of CAD rises.

I would buy the -e USD.


----------



## lost in space (Aug 31, 2015)

one point to keep in mind re blancing is harder when you're dealing with foreign currencies. Maybe if you have a large account or plan on never re-balancing it might be ok but It was one of the reasons why I went with an ETF rather than buying US stocks directly.


----------



## cashinstinct (Apr 4, 2009)

For a lump sum $US purchase, I would buy an ETF like VTI. I don't see why you would buy td e-series U.S. index -e US$.

I am a fan of td e-series for regular purchases (automatically biweekly or monthly for example), but for lump sum purchases, ETFs have better MER % cost.


----------

