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Hi all,

I have begun investing in Canadian ETF like XIC, XIU, XMD, etc...

I have read that investing in US ETF like Vanguard could help me reduce the management fees. But can someone can point me on a good article to help me weigh the pros and cons of investing in non-Canadian ETF ?

What do I have to consider other then the exchange rate ? Does commissions are much higher ? Is their any fiscal impact I should consider, etc...

Also is there a limit of the amount I can transfer or hold into US ETF ?

And last, why my financial advisor is saying not to hold much then 10-15% of my portfolio in foreign ETF ?

Thanks !

Mollari
 

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http://canadiancouchpotato.com/2010/01/24/should-you-buy-us-listed-etfs/

Exchange rate would be the #1 cost. At TDWH, they charged me around 2.3% on top of what the exchange rate is for that day. So for example, if the CADUSD rate for today was 1 CAD = 0.9719 USD, the exchange rate TDWH give me would be 1 CAD = 0.9489. This adds up to hundred of dollars. They will play the same trick when you convert from USD to CAD again.

Consider utilizing the Nortert's Gambit if you're exchanging more than $10k.

http://www.financialwebring.org/forum/viewtopic.php?t=198

Commission should be the same, but check with your broker.

There should be no limit to amount of US ETF you can hold in any account.

If you financial advisor failed to explain to you the why of his advise, then you should be very concerned. There are risks with holding foreign currency, there is no guarantee that the USD won't go on an extended slide for decades to come. Maybe their debt level becomes unsustainable, and the fed will be forced to massively deflate the USD to pay off the debt, who knows. These are just speculations, but you are responsible for know what the risks are. On the other hand, history and conventional wisdom may say to never count out the Americans, and the exchange rate will return to the levels of the 90's.

PS: I'm 30, no house, no dependents, and 50% of my equity portfolio is in foreign equities.
 

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If you financial advisor failed to explain to you the why of his advise, then you should be very concerned. There are risks with holding foreign currency, there is no guarantee that the USD won't go on an extended slide for decades to come.
+1 What good is an advisor that won't give you the reasons why, probably because he has alternative motives

The pros of investing in USD ETFs is reduced drag from currency exchange from what I can see. The Con would be if USD tanks. Maybe the best idea is a mix?
 

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On the other hand, Vanguard ETF's tend to track the index better than the CAD denominated iShares ETF's, at a lower MER%.
 

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Note that whenever there is any crisis anywhere in the world that investors always seem to flock to the U.S. dollar as a safe haven and that is not about to change.

One Vanguard ETF worth considering is their emerging markets fund (VWO).

I also hold their Europe/Asia ETF (VEA).

Go to www.canadiancouchpotato.com for model portfolios many of which incorporate Vanguard ETF's.
 
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