1. Should I buy in USD (QQQ, VOO)or CAD(ZNQ.TO,XUS.TO) I am wondering how the returns are affected if the cad appreciates in future ?
2. If I buy on tsx am I correct in thinking no tax will be withheld as it’s in Tfsa account ?
My ideas : NDAQ QQQ XQQ.TO ZNQ.TO
VOO. XUS.TO ZSP.TO HXS
Appreciate your opinion as to best ones to own
If you can rank best first
Thank you again
The returns between a USD S&P 500 or Nasdaq 100 ETF will largely be very similar to that of a CAD-unhedged ETF. If an investor opts for a CAD-hedged ETF, the hedging costs can act as a drag on its performance.
For example, QQQ is the Nasdaq 100 ETF based in USD. XQQ is denominated in CAD, and is CAD-hedged, while ZNQ is denominated in CAD and is unhedged. On a returns basis over the past five years, ZNQ has returned 167%, QQQ has returned 147%, and XQQ 128%. This comparison uses the same denominator (percentage returns), but it does not factor in the fact that QQQ is in USD, while the rest are in CAD. If we instead use dollar figures, we would need to convert QQQ to CAD, which would then cause the QQQ's returns to match with the unhedged ETF (ZNQ). While XQQ would continue to lag. This also works against an investor in the event of a USD depreciation against the CAD.
Overall, we prefer unhedged ETFs.
For the Nasdaq 100, we like ZNQ, and for the S&P 500 we like ZSP.
Within a TFSA, there is full withholding tax as the account is not recognized by the IRS. In an RRSP there is no withholding tax on ETFs that hold the individual US stocks (ZSP and ZNQ).