Dan Bortolotti (a.k.a. The Canadian Couch Potato) recently wrote a post on the possibility of a Canadian investor paying US estate taxes if they hold US-listed exchange-traded funds (ETFs). He suggests that a prudent approach for someone vulnerable to this situation could be to stick to Canadian-listed ETFs for their foreign equity exposure.
The main issue with this strategy is that there are currently not many choices for investors looking for non-hedged U.S. or International equity exposure (the only ones that come to mind are listed below – with hefty MERs):
I am hopeful that Vanguard’s next Canadian product launch will include versions of the following US-listed ETFs (non-hedged):
It may seem a bit odd that I would want them to release anything other than a Canadian non-hedged version of VTI and VXUS, but there are a number of reasons taxable investors should prefer to have more than one low-cost choice for both their U.S. and International ETF selections:
It is anyone’s best guess what products Vanguard will come out with next – certainly their recent arrival to Canada should be viewed as a positive development for all investors.
For investors looking for exposure to U.S. stocks, I’ve put together a report similar to the “Canadian ETF and Mutual Fund Comparison” that was posted last week:
U.S. ETF and Mutual Fund Comparison
As with the Canadian version, I will try to update the information on a quarterly basis, depending on investor interest.
With the ever-growing plethora of broad-based and dividend focussed Canadian ETFs entering the marketplace, I’ve decided to put together a report that illustrates some of the main differences in order to help investors navigate between these ETFs, mainly:
Some of the data is incomplete, but I will update it as it becomes available (note that I’ve also included Dimensional Fund Advisors/DFA mutual funds, as we use these low-cost securities with our PWL clients to gain exposure to the small and value premiums).
If any investors find this analysis useful, I will certainly consider regularly updating it, as well as comparing various U.S. and International ETFs in the future.
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