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Discussion Starter #1
I plan to purchase a bond ETF (iShares XSB) for my self-directed RRSP account. One thing that is confusing to me though. From reading all the literature on the iShares site as it relates to these bond funds, I do not understand how they distribute the returns that are made. It sounds like they send you an amount on a quarterly basis. But if I have an RRSP, then I want these amounts re-invested automatically, or is that what they do? If not, then do these amounts become taxable and even more confusing, if I try and re-invest them back into the fund, does this count toward my maximum amount that I can contribute per year ... which makes no sense. Can anyone clarify for me.

Regards, Utterly Confused
 

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50invester, if you want to synethic DRIP the ETF, you'll need the quarterly distribution to be equal to one share. For example, for XSB, you'll need to own approximately 100 shares for each quarterly distribution to equal 1 share. After purchasing, you can call your discount broker to DRIP XSB, which means that they'll automatically purchase shares of XSB at every distribution date (if the distribution is enough to purchase 1 share).

If the ETF is held within an RRSP, then the distributions are not taxable (until you withdraw) nor do they count towards your contribution room.
 

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Question for everyone out there. Claymore touts the fact that all their funds are eligible for DRIP, but it sounds like they are only offering a synthetic DRIP (shares purchased on the market by the brokerage rounded down to whole shares). If this is the case, can't you swing such a DRIP on any ETF at many brokerages, and thus the Claymore claim is just spin?
 

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Discussion Starter #4
Thanks for the reply. So am I to understand that the distributions from the fund will be deposited within my RRSP account and not sent to me directly .... like a cheque?
 
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