Q: In a C$Cash account, Is there an advantage buying HXS or VFV? Which one do you recommend and why?
5i Research Answer:
HXS is a total return fund. It does not pay distributions, but rather reinvests them into the NAV of the fund. This is a tax efficient strategy to some Canadian investors as they will not be subject to withholding tax and will defer taxes and not pay taxes on distributions since there are none. VFV is not a total return fund so it will pay regular distributions and investors will be taxed accordingly. If one values the tax advantage then HXS makes sense, otherwise VFV is a perfectly fine option.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in VFV.