There’s a time and place for U.S.-traded ETFs in the Canadian portfolio, and while it’s not the quickest or simplest way to gain broad exposure to a sector, theme, industry, index, or international market, there are significant savings (think expense ratios) to be had. Of course, such ETF fee savings don’t mean much if you have to pay your bank or broker to exchange currency with a 2% charge added on top (use Norbert’s Gambit if you can)!
That’s why I’d argue it is worthwhile to go after U.S.-traded ETFs if it really makes sense. Perhaps you’re looking to side-step the U.S. dividend withholding tax with an RRSP, or you need to have exposure to the most opportunistic industry in the market, or you want to bet on an active ETF from a star manager you deeply respect. Whatever the reason is, it’s worth exploring what else is out there in the ETF markets.
Broadening your horizons as a Canadian can pay dividends, not just in stocks, but in ETFs. And when it comes to very specific ETFs, I do think it makes sense to consider what’s trading on the NYSEARCA or Nasdaq exchanges. Indeed, if you’ve got access to the U.S. exchanges, you pretty much have access to a world of investments that span the globe, given the ETFs that allow one to bet on numerous markets across the globe.
In this piece, though, we’ll focus on saving on fees. And, of course, we’re not going to be considering FX fees when you swap your Canadian dollars! So, if you can minimize your FX fees (preferably to zero), the following U.S.-traded ETFs are worth checking out for the low expense ratios (or fees).
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Invesco QQQ Trust ETF
First, we have the Invesco Nasdaq 100 ETF (NASDAQ: QQQM), which trades on the Nasdaq exchange. It’s a bet on the Nasdaq 100 Index at the absolute lowest price with a 0.15% net expense ratio. Of course, there are more convenient options on the TSX Index that will allow you to stay in Canadian dollars.
But, if for one reason or another, you’ve got lots of U.S. dollars and want to keep them in greenbacks, the QQQM stands out. With shockwaves working their way through tech, the QQQM has been a choppy ride, and while there’s a chance of a technical breakdown, I do think the tech-heavy index is worth keeping a close watch on.
SPDR Gold MiniShares
It can be expensive to bet on gold, especially if you’re looking at securing physical bullion. Of course, gold ETFs can also cost quite a lot in fees, especially if we’re talking about Canadian gold ETFs. In any case, the SPDR Gold MiniShares (NYSEMKT: GLDM) stands out as one of my favourite ways to bet on gold while minimizing the fees.
Whether you’re paying 0.4% or closer to 0.6% in MERs for your gold ETF, the GLDM really shines as a money-saver on a relative basis, with its mere 0.1% gross expense ratio. Indeed, that’s a new low!
That’s shockingly low for a gold ETF. And while there are notable differences between GLDM and some of its pricier counterparts (think liquidity, the custodian, fees, CEFs vs. ETFs, and all the sort), I do think the GLDM is a name that’s a perfect fit for a Canadian investor who wants gold on the USD side of their portfolios with rock-bottom expense ratios.
A few basis points saved over the years can be a big deal. And that’s why investors should stay informed of the MERs (or net expense ratios in the U.S.) and how they change over time!
