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Video is on point! Personally Norbert's gambit approach is my go-to for bypassing exchange fees... Also make sure to have currency settlement set to accept both CAD and USD in your brokerage account. When I first started out all my US dividends were converting to CAD automatically, lost a couple percentage points on every payout🤦♂
Hi Justin, at the end of this video, you said "However, Norbert's gambit is not without issues of its own..." So do you have any video about this, or can you explain it a bit more? Thank you and awesome video again!
Great advice. The only U.S. listed ETF I hold is SCHD. It's worth the time/effort for me to use Norbert's Gambit because there is no Canadian equivalent imo. ZDY is close, but not the same. Looking forward to your next video. This series is excellent.
Hi Justin. Thank you for this shorter video serie, I really like this new format. Are you going to talk about the risk of holding USD versus CAD ETFs on the long term relatively to the change rate variation between these two currencies? You took the assumption that the rate stay at 1.25 when selling and buying VTI for example, but what is historically the effect of the change rate on the final return when selling those ETFs (the one you mentioned in your serie of course). Is it better to currency-hedge? Thank you for your answer.
The 1.25 FX rate was just a hypothetical one time currency conversion example. For the VTI vs. VUN comparison, I used the actual FX rates available throughout the measurement period. As well, whether you purchase VTI or VUN, you have the exact same currency exposure (i.e., the U.S. dollar). This is a confusing concept for investors, so be sure to check out my video, Foreign Currency Exposure of Your ETFs: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-D8wnrDJOFLY.html
You analyzed a hypothetical portfolio growth over 6 years. What if you hold the investment longer, say 30 years? Wouldn't this scenario favor the USD investment with more time to compound the savings? Thanks.
@Jason - Based on a 1.61% U.S. dividend yield, and a total expected return of 7%, it would take about 17 years for the foreign withholding tax benefit to outweigh the 2% currency conversion cost (all else equal). Probably best to just learn how to use the Norbert's gambit strategy if you're considering holding U.S.-listed ETFs in your RRSP.
Hi thanks for the informative videos! I recently qualified for Wealthsimple premium and they say I can open a USD account where there are no FX fees on each trade of US stocks and etf’s. Would this mean I can hold VOO in my RRSP instead of VFV and wouldn’t have to pay all the currency conversion fees? Thanks!
@timbrown9760 - You would still need to initially convert your CAD to USD when you transfer the funds to your new USD account, so they'll hit you with the conversion fee at that time (and again when you convert your USD back to CAD to spend).
@Tribu Kahu - ~80% of VUN is made up of the companies in VFV, so the two ETFs are expected to have similar performance over the long-term. However, VUN is slightly more diversified, so I usually opt for it over VFV in portfolios.
