📈📚 As always, if you're a beginner to the Stock Market in Canada and you're looking for a step-by-step blueprint on how to get started... Find out more about our Investing Academy here - bit.ly/theinvestingacademy Do you use (or plan to use) hedging strategies in your portfolio? If so, share your thoughts in the comment section below! Thanks for watching! :D
Great video. Made my 90% clarity closer to 100% clarity. I bought a lot of VOO in USD when the CAD was just over $0.80 in my LIRA that I moved out of Sunlife. My view is that the CAD is fairly strong recently and since this is a long term investment I am reasonably confident the CAD will frequently fall to $0.70 or lower and I will have opportunities in the next 15 years or so to move back to CAD to realize the additional gain. Also I like buying the US version of vanguards index funds in RRSP or LIRA due to no withholding tax as opposed to VFV.
This channel is a breath of fresh air for this platform! Too many "financial gurus" here these days and too many unsuspecting people taking bad advice. Thank you for raising the bar and for taking the time to make these very insightful videos!
Thumbs up for Marc. More Marc please. There's just something that hits different when the information is coming from a person who's worked in the industry for over 20+ years... thanks!
Marc thank you so much for your time!!! You are professional, clear, and well-mannered in front of the cameras. Because you have so many years of experience you are able to speak with clarity and confidence. Consider teaching in a 'formal' setting. Cheers!
You speak my mind. I'm like right...right... right...as you introduce the video. Thank you for making video for Canadian. Marc, don't stop joining Brandon as older Canadian investors need your perspective.
Use Norton Gambit to exchange cdn to usd. During 2009 meltdown, I took advantage of cdn and usd at par and loaded my portfolio with long term U S equities in fintech finance tech commodity railway sectors. I took the risk but it was worth it.
My boyfriend and I both enjoy your channel Brandon. We attribute a lot of our success to your advice. Your dad is also a great addition to this channel!!! Shoutout to Marc :)
Both VFV and VSP actually own units of VOO. Because VOO is in USD, if you want to use this strategy to hedge you'd have to use VSP. Or hedge directly with the forward agreements but now you're getting into pro space. - Marc
Thanks for the video! Follow up question: If you wanted to hold a CAD $ Un-Hedged ETF (e.g. VFV) vs a comparable USD $ ETF (e.g. VOO) in your TSFA for the long term - which would be more favorable and why? For example, let’s say you already maxed out your RRSP so there is no more room there, you used Norbert's Gambit to convert the $, and taking into consideration that there are usually lower expense fees for USD ETF’s? Thank you! 🥰
Thank you for explaining this!! I was just looking at a stock that said CAD hedged, I had no idea what that meant and googling didn't help. I've been trying to teach myself this investing, and finance stuff. I appreciate this channel so much. I always thought this was something I just could never understand. I just made my first investment 3 days ago! Thank you for taking us by the hand through this. It's a shame this stuff wasn't taught in school.
Can you please do a video about portfolio creation and diversification and what is the best way to create a portfolio esp keeping current market conditions
Hedging is new to me, and to complex for me to focus on as I am a long term growth investor with ETFs. I have enough other things to focus on currently. Great insightful video!
Well said. I think this clip explains the topic very clearly. Over the years I have used a hedge strategy from time to time,but not since I took over my own accounts. As you say,hedge or not...it can get seriously complicated,so for myself I just keep it as simple as I can.(and within my ability to understand fully what I’m invested in) great episode!👍👍👍
Excellent content Marc. Thank you for explaining for us Canadians to better understand hedging or not against US market. You and Brandon make a great team. Keep it coming
Agreed! The multi-generational idea was such a great one. Really liking you guys and your level headed approach to all of this, but also the funny videos you've added with the young academy guys, love those too. It's a great idea to add all the components you've added, Brandon! Good job 👍
I recommend a non-US centric, international ETF as studies prove higher risk-adjusted returns. Check out VXC or XAW. The US has outperformed lately, meaning a mean reversion is in the cards.
Thanks again for that great content!! I own VFV and will now look at VSP. I purposely avoid US stocks because of the changing exchange rate, but now that I watched this, I agree that in the long term it doesn't change that much.
I do not hedge per se but as an investor in several currencies, mainly British pound, Euro, US dollar and Swiss franc so what I gain or lose with one currency is compensated by the others. Good video.
Question: I have been investing in VFV and haven't figured out where or how the MER is accounted for. Does it just come off of the top of the quarterly dividend? Thanks for this video, it is VERY helpful to me :)
Yes, i've choosed un-hedged ETFs every time they were available (i.e: for some EVOLVE'S ETF there's only the hedge version available on WS); I also red somewhere that historically un-hedged version usually perform better... I think that if you mostly own CAD stocks, it's actually a good idea to have your ETF's un-hedged (if they are exposed to the US market). Great video, thank you Marc for the input! :D im studying finance btw
Thanks for the video! I only once saw someone say hedging is just easier since you don't have to worry bout the exchange rates much so I just always bought the hedged ETFs. But this video really explained it well!
Good stuff. It’d be great if you can speak about hedging against potential stock market drawdowns. Whether it be through shorting equity/etfs or longing puts on a certain ETF/index, covered calls etc
@@beaviswealth Yeah just a thought : ) Looks like you have great teaching skills haha so it might be good food for thought for us more intermediate investors
Thank you for the video explaining the differences. Great timing. I have been comparing etfs this week and I wasn't sure what the advantages/disadvantages of going with hedged funds or not.
Hi, Brandon and Marc! Thanks for the great content. I'd love to see a video about Marc's career path. How'd he get started in the securities industry? What courses/degrees/designations did he complete? How'd he move up the ranks of Manulife? Is there anything he would've done differently? What are his best tips for growing a client book? What advice would he give to young people interested in a similar career? All the best!
Thanks for the information. I have been thinking about this issue for awhile now so a question for you. Do you have any thoughts on how you would manage approx. 100k in US dollars, currently in a cash account? As you mentioned, currency risk goes both ways. Leave it in US and invest in non hedged or?
great video marc! really interesting to see the topics professional money managers look into as alot of the younger youtubers out there sometimes skip these topics or dont pay much attention to them. To be hones I usually dont hedge (as historically its been a hair cheaper) but really interesting on the targeted hedging. I feel like as the US economy picks up after covid the CAD will weaken a bit more so seems like non hedging might be the way to go in the immediate future. Thanks again!
For my RSP I used unhedged nasdaq and sp500 index ETFs and US Stocks these investments are for long term savings/retirement. My TFSA investments are in CAD funds in Canadian stocks/etfs and hedged CAD etfs. There are pros and cons to both hedging and unhedging, doing both I think my RSP and TFSA help balance the other out.
Love Marc's educational videos! I chose to purchase CGL (hedged) rather than CGL.C, since my thesis for purchasing gold in the first place was hedging myself against US dollar going down.
Thanks Mark. I'm wondering if you can cover bonds. I'm 44 and a new investor. I know everyone says you should have bonds to balance your portfolio but with today's interest rates is it a good investment? And what about bond ETFs? Thanks so much guys for the amazing content! Love the videos.
1.72 when you buy 1.22 when you sell .50 disadvantages on every US$ in xchange... Like a blackjack table game, when your card is 15 and the dealer first card is 10, then your disadvantages is 50% when you hit one more!
Thank you so much for the great video! Quick question - does it make any sense to hold a stock (e.g. Royal Bank) in both Canadian Dollars and US dollars if you want to take advantage of the exchange rate now (assuming you are expecting the US dollar to appreciate in the future)? Thanks.
I use hedged funds in my Wealthsimple account and trade more freely in U.S. dollars in Questrade. But I don’t really base a buy or sell of a position on the currency price.
Good content! Option 1 is the simplest choice but it only hedges against what you have in the index and not the rest of your portfolio. Tactical or option 3 is what ive been doing. I've been very cautious about my timing of when i make withdraws and deposits in us stocks. Over the years ive shifted to a mostly Canadian portfolio simply because of these issues along with additional fees. There are many other ways to hedge against currency loss as well. options and futures contracts come to mind. I usually prefer to just buy an index then sell options against it which i use to mitigate downturns, and increase income/returns. For shorter term trades though ill do carry trades, iron condors and usually credit spreads or just currency options. Im strongly in favor of it. especially when you can make it pay for itself and increase returns. The only argument i would make against it is that it takes more knowledge and is more complicated and the capital that gets used for the hedge could have been redeployed towards other positions or averaging down on positions in a downturn.
Thank you marc for the clear contents. How about paying tax to invest in us companies and etf. I have heard we need to pay 15% tax on divident, is it true? How about on capital gain?
Such a great video Marc! I've always wondered why stocks both listed on TSX and NYSE have different returns. So if I understand it correctly, does it mean that when CAD rate drops, it's better to buy stocks on TSX and when it raises, it's better to buy ones on NYSE, given that you have equal amount of CAD and USD in your account?
So in your opinion, considering the canadian dollar went up quiet a bit lately, would you consider hedging if planning to be passive and long time investor looking forward ? I was hoping to hear a bit of forecast regarding the strenght of cad dollar vs us dollar. But anyways great video and thank you !
I've had some hedged ETFs before, but not currently I think. I've stayed away from buying US equities directly mainly because of the currency conversion fees as much as anything, so ETFs seem like a good way to avoid those at the potential cost of not investing directly into specific stocks. I've read some about Norbert's Gambit in terms of converting currencies, but it doesn't seem to be a thing with WealthSimple as they don't allow you to hold USD in your account as the conversion fees seems to be their main source of revenue, unlike Questrade which does charge a minimal transaction fee. One related point that might be worth covering that Brandon has touched on before is the 15% withholding tax - Brandon specifically said that you should focus on the investment first rather than the tax insofar as whether it's something to consider and while I agree I think there's an argument to be made for holding US Stocks in your TFSA rather than RRSP despite the dividends. It would depend on the stock, but I would think that for a company which sees a sizeable capital gain equal to or greater than the dividend payout over the same time period (something like Microsoft as opposed to IBM) would be beneficial inside of a TFSA as that capital gain (as well as 85% of the dividends) would be free from Canadian income tax, whereas it would be subject to income tax upon withdrawal from an RRSP. I suppose for a true apples to apples comparison it would depend on your top marginal tax rate at the time of the investment into an RRSP as that investment would be pretax and thus have a leg up to begin with. I'd started to do the math one night but stopped short of that calculation. Thanks for the videos and I look forward to the next one.
Nice video. These past year, I put my money in VSP since US dollar is going down. I am thinking of switch to vfv in coming days. I would said the dollar may rebounce in near future.
Hi love the video just a question I own vfv for my long term retirement, the risk I’m concerned about is if the Cad dollar goes back pair with the US dollar when I retire that would be a -20-30% decrease in the US dollar ( give or take on worst case scenario) and that would be about a 40-50 % gain in the Canadian dollar. If I have 1 million in VFV would if go down 40-50 % because of cad Increase, making the 1 million dollars to 500-600K
Another great video from Marc ! I personally use the norbert gambit method to get USD to invest and I do not hedge I have all my US equities in USD and Canadian equities in CAD and I am a long term investor therefore whenever our dollar goes stronger I beef up my US Cash gradually usually about 10 to 15%. Thanks again for sharing this great video I see now where Brandon got his smarts from :-)
So if the can dollar is at a 5 year high or so, maybe it is better to buy the hedged fund and then switch to unhedged when the can dollar rate is low. ? Is that right...?
What if you intend to hold for the long term, but are making regular purchases via dollar cost averaging? E.g. What if I intend to hold my S&P500 ETF for the next 20 years, but I'm going to be buying $100 worth, per paycheque, every paycheque for those 20 years? Is there an advantage to hedging vs non-hedgining given how dollar cost averaging will affect my purchasing quantities during the peaks and valleys of CAD valuations? Or is 20 years 20 years and it really doesn;t matter?
Soooo if I'm buying a usd stock with my cad money in my TFSA. Normally rbc direct invest will do the conversions each time when I buy or sell.. Should I be converting that cad to usd first? And then buying the stuck with my usd cash in the tfsa?
I'm confused. If VSP is currency hedged, why is VSP's 5 year return (43%) so much lower than the S&P500's 5 year return (50%)? The difference is almost 1 full year worth of growth just over 5 years
Hi Brandon & Marc, great content you are both producing. Wondering if you could discuss your thoughts regarding passive income from Split Share funds and Covered Call ETFs in a video. Pluses and minuses from the perspective of older and younger investors.
You said that... Hello! You mentioned that if the Canadian dollar falls, your returns increase. And vice versa. But at 11:00, the canadian dollar rose AND the VSP (hedged CAD) also went up? Shouldn't it have gone down? Or was this a special scenario because the Canadian dollar was oversold as a result of the pandemic? Also thank you for this video! Feels like I'm back in school with this type of video haha
Hi Robert. In that example it's because VSP is hedged, which means it will take currency exchange out of the equation. That's the benefit of hedged vs non-hedged. It's confusing, and somewhat counterintuitive. Hope this makes sense, and thanks for watching. - Marc
📈📚 As always, if you're a beginner to the Stock Market in Canada and you're looking for a step-by-step blueprint on how to get started... Find out more about our Investing Academy here - bit.ly/theinvestingacademy
Do you use (or plan to use) hedging strategies in your portfolio? If so, share your thoughts in the comment section below! Thanks for watching! :D
Can you do a video on VUN as a viable option?
Great video. Made my 90% clarity closer to 100% clarity. I bought a lot of VOO in USD when the CAD was just over $0.80 in my LIRA that I moved out of Sunlife. My view is that the CAD is fairly strong recently and since this is a long term investment I am reasonably confident the CAD will frequently fall to $0.70 or lower and I will have opportunities in the next 15 years or so to move back to CAD to realize the additional gain. Also I like buying the US version of vanguards index funds in RRSP or LIRA due to no withholding tax as opposed to VFV.
I cool Channel i am from Germany and watch you Videos
This channel is a breath of fresh air for this platform! Too many "financial gurus" here these days and too many unsuspecting people taking bad advice. Thank you for raising the bar and for taking the time to make these very insightful videos!
Brandon your dad seems so nice and patient - he explains things so well !
This channel should be essential for any Canadian investors. You guys are too damn good.
Thumbs up for Marc. More Marc please. There's just something that hits different when the information is coming from a person who's worked in the industry for over 20+ years... thanks!
Thanks a ton for your comment. Appreciate the support. - Marc
totally agree
100% agree
Marc thank you so much for your time!!! You are professional, clear, and well-mannered in front of the cameras. Because you have so many years of experience you are able to speak with clarity and confidence. Consider teaching in a 'formal' setting. Cheers!
You speak my mind. I'm like right...right... right...as you introduce the video. Thank you for making video for Canadian. Marc, don't stop joining Brandon as older Canadian investors need your perspective.
Every video is a new opportunity to learn something new. Many thanks Marc.
Thank you, Enid. - Marc
Use Norton Gambit to exchange cdn to usd. During 2009 meltdown, I took advantage of cdn and usd at par and loaded my portfolio with long term U S equities in fintech finance tech commodity railway sectors. I took the risk but it was worth it.
My boyfriend and I both enjoy your channel Brandon. We attribute a lot of our success to your advice. Your dad is also a great addition to this channel!!! Shoutout to Marc :)
Both VFV and VSP are Canadian ETF’s traded in $CAD so how the hedging works then compared to VOO which is vanguard’s US version!!
Both VFV and VSP actually own units of VOO. Because VOO is in USD, if you want to use this strategy to hedge you'd have to use VSP. Or hedge directly with the forward agreements but now you're getting into pro space. - Marc
So educational!!! Really appreciate you sharing your knowledge with us Canadians!! Thank you!
That chart at the 1:15 mark is very cool. I didn't see UK on there and I'm surprised they wouldn't be one of the bigger ones in Europe.
Another great video! Thank you so much for your help, keep it up!
Thanks for the video!
Follow up question: If you wanted to hold a CAD $ Un-Hedged ETF (e.g. VFV) vs a comparable USD $ ETF (e.g. VOO) in your TSFA for the long term - which would be more favorable and why? For example, let’s say you already maxed out your RRSP so there is no more room there, you used Norbert's Gambit to convert the $, and taking into consideration that there are usually lower expense fees for USD ETF’s?
Thank you! 🥰
Thank you for explaining this!! I was just looking at a stock that said CAD hedged, I had no idea what that meant and googling didn't help.
I've been trying to teach myself this investing, and finance stuff. I appreciate this channel so much. I always thought this was something I just could never understand.
I just made my first investment 3 days ago!
Thank you for taking us by the hand through this. It's a shame this stuff wasn't taught in school.
Appreciate the clarification!
So happy to see Marc!
Can you please do a video about portfolio creation and diversification and what is the best way to create a portfolio esp keeping current market conditions
thank you, these videos are so helpful!
does it make sense to have both VSP and VFV? or is it better to focus on one?
I would like to know as well
Hedging is new to me, and to complex for me to focus on as I am a long term growth investor with ETFs. I have enough other things to focus on currently. Great insightful video!
Which ETFs do you invest in if you don't mind?
Do you want dividend paying etfs or growth?
I appreciate the very organized and well presented video.
I'm hoping you'll show up more often, Marc!
That's the plan! Thanks so much, Deo. - Marc
Well said. I think this clip explains the topic very clearly. Over the years I have used a hedge strategy from time to time,but not since I took over my own accounts. As you say,hedge or not...it can get seriously complicated,so for myself I just keep it as simple as I can.(and within my ability to understand fully what I’m invested in) great episode!👍👍👍
Thanks, Derek. Sometimes simple is best. - Marc
Excellent content Marc. Thank you for explaining for us Canadians to better understand hedging or not against US market. You and Brandon make a great team. Keep it coming
Thanks, Sheryl. Appreciate your feedback. - Marc
I have a much better understanding on hedging after this. Thanks a bunch dudes!
Our pleasure! - Marc
Awesome, Marc! Thank you so much for bringing such an important topic. Explanation is thorough and concise.
Thanks a ton, Vadim. Glad you liked the video and thanks for watching. - Marc
This is a video I didn't know I needed but needed. Great content Marc!
Glad to hear it! - Marc
Love watching this channel. I take a little bit from every video.
Agreed! The multi-generational idea was such a great one. Really liking you guys and your level headed approach to all of this, but also the funny videos you've added with the young academy guys, love those too. It's a great idea to add all the components you've added, Brandon! Good job 👍
Thanks for the in-depth coverage on this. Always kinda wondered.
Just what I needed! I was debating between the two funds recently. I am looking to hold these etfs for life so I just went with VFV 😄
I recommend a non-US centric, international ETF as studies prove higher risk-adjusted returns. Check out VXC or XAW. The US has outperformed lately, meaning a mean reversion is in the cards.
Thanks again for that great content!! I own VFV and will now look at VSP. I purposely avoid US stocks because of the changing exchange rate, but now that I watched this, I agree that in the long term it doesn't change that much.
Wow! Another lesson learned from you guys. Getting smarter every video I watched from you guys
Thanks for watching Earl! - Marc
I do not hedge per se but as an investor in several currencies, mainly British pound, Euro, US dollar and Swiss franc so what I gain or lose with one currency is compensated by the others. Good video.
@Brandon Beavis Investing Scammer
@Williams brandon scammer
Great video. You explained things really clearly! Thanks so much for your help, keep it up!
Question: I have been investing in VFV and haven't figured out where or how the MER is accounted for. Does it just come off of the top of the quarterly dividend? Thanks for this video, it is VERY helpful to me :)
Yes, i've choosed un-hedged ETFs every time they were available (i.e: for some EVOLVE'S ETF there's only the hedge version available on WS);
I also red somewhere that historically un-hedged version usually perform better...
I think that if you mostly own CAD stocks, it's actually a good idea to have your ETF's un-hedged (if they are exposed to the US market).
Great video, thank you Marc for the input! :D
im studying finance btw
All the best with your studies, Julien! Thanks for sharing your thoughts.. - Marc
What about if you buy VFV with half of the money and VSP with the other half?
Like, buy VFV and sell VSP when the CAD is up, and sell VFV and buy VSP when the CAD is down. Hmmm 🧐
@@braydonjones6280 selling VSP once CAD is already up isn't useful. You need to be able to predict the future for that strategy to work.
Market levels can indicate that it may be wise to hedge. Been going long fresh water, gold, and foreign stocks.
This is great Marc!!!!!!!!!!!!!!!
Thanks for the video! I only once saw someone say hedging is just easier since you don't have to worry bout the exchange rates much so I just always bought the hedged ETFs. But this video really explained it well!
Thanks for sharing. Hope the video helps. - Marc
Good stuff. It’d be great if you can speak about hedging against potential stock market drawdowns. Whether it be through shorting equity/etfs or longing puts on a certain ETF/index, covered calls etc
Thanks for the input, Bin. Will work on a more broad strategy video at some point. - Marc
@@beaviswealth Yeah just a thought : ) Looks like you have great teaching skills haha so it might be good food for thought for us more intermediate investors
Thank you for the video explaining the differences. Great timing. I have been comparing etfs this week and I wasn't sure what the advantages/disadvantages of going with hedged funds or not.
Glad it was helpful! - Marc
Hi, Brandon and Marc! Thanks for the great content. I'd love to see a video about Marc's career path. How'd he get started in the securities industry? What courses/degrees/designations did he complete? How'd he move up the ranks of Manulife? Is there anything he would've done differently? What are his best tips for growing a client book? What advice would he give to young people interested in a similar career? All the best!
I agree! I would like to see this too
Great request!
What was his career?
Yep, agreed! Let’s hear more about Marc!
Thanks for the information. I have been thinking about this issue for awhile now so a question for you. Do you have any thoughts on how you would manage approx. 100k in US dollars, currently in a cash account? As you mentioned, currency risk goes both ways. Leave it in US and invest in non hedged or?
Great explanation for investors of all levels
Thanks for watching - Marc
great video marc! really interesting to see the topics professional money managers look into as alot of the younger youtubers out there sometimes skip these topics or dont pay much attention to them. To be hones I usually dont hedge (as historically its been a hair cheaper) but really interesting on the targeted hedging. I feel like as the US economy picks up after covid the CAD will weaken a bit more so seems like non hedging might be the way to go in the immediate future. Thanks again!
This is simply great. Brandon and Marc make a really great team👍🏼👍🏼👍🏼👍🏼
For my RSP I used unhedged nasdaq and sp500 index ETFs and US Stocks these investments are for long term savings/retirement. My TFSA investments are in CAD funds in Canadian stocks/etfs and hedged CAD etfs. There are pros and cons to both hedging and unhedging, doing both I think my RSP and TFSA help balance the other out.
This is so, so helpful. Thank you.
thank you for this video. very informative.
Love Marc's educational videos! I chose to purchase CGL (hedged) rather than CGL.C, since my thesis for purchasing gold in the first place was hedging myself against US dollar going down.
Thanks for sharing! - Marc
great video marc! thanks for the knowledge !!!
My pleasure! - Marc
US investor here !!! LOVE your videos
Awesome! Thank you! - Marc
Thanks Mark. I'm wondering if you can cover bonds. I'm 44 and a new investor. I know everyone says you should have bonds to balance your portfolio but with today's interest rates is it a good investment? And what about bond ETFs? Thanks so much guys for the amazing content! Love the videos.
Yes, a deeper video on bonds is on my list.... the list is just getting longer!!! Thanks so much. - Marc
This is GREAT! Keep it up, team!
Thank you! Will do! - Marc
You're a natural Marc!
Thanks Marc for the clarification! I heard hedging before, but not sure how it actually works and affect on my us stocks exposure.
Great video Marc!! Thank you so much!!
My pleasure! - Marc
Great video, just needed a long term comparison of returns for the two strategies.
this is exactly the video i needed to see... thanks.
Glad it was helpful! - Marc
1.72 when you buy
1.22 when you sell
.50 disadvantages on every US$ in xchange...
Like a blackjack table game, when your card is 15 and the dealer first card is 10, then your disadvantages is 50% when you hit one more!
Why would i buy VFV instead of XUS? both are SP500 index, but VDY costs $90.xx while XUS cost $63.xx today. Anything im missing? Thanks in advance.
You read my mind. Rumored the US dollar to fall 10% this year
Thank you so much for the great video! Quick question - does it make any sense to hold a stock (e.g. Royal Bank) in both Canadian Dollars and US dollars if you want to take advantage of the exchange rate now (assuming you are expecting the US dollar to appreciate in the future)? Thanks.
Fantastic video! Thanks!
Glad you liked it! - Marc
I use hedged funds in my Wealthsimple account and trade more freely in U.S. dollars in Questrade. But I don’t really base a buy or sell of a position on the currency price.
Good content! Option 1 is the simplest choice but it only hedges against what you have in the index and not the rest of your portfolio. Tactical or option 3 is what ive been doing. I've been very cautious about my timing of when i make withdraws and deposits in us stocks. Over the years ive shifted to a mostly Canadian portfolio simply because of these issues along with additional fees. There are many other ways to hedge against currency loss as well. options and futures contracts come to mind. I usually prefer to just buy an index then sell options against it which i use to mitigate downturns, and increase income/returns. For shorter term trades though ill do carry trades, iron condors and usually credit spreads or just currency options. Im strongly in favor of it. especially when you can make it pay for itself and increase returns. The only argument i would make against it is that it takes more knowledge and is more complicated and the capital that gets used for the hedge could have been redeployed towards other positions or averaging down on positions in a downturn.
There are also may other hedged etfs to look into like xsp or txf
Great video!!!!
Thank you sir
You're welcome!! - Marc
Awesome video...thanks!
Glad you liked it! - Marc
Thank you marc for the clear contents. How about paying tax to invest in us companies and etf. I have heard we need to pay 15% tax on divident, is it true? How about on capital gain?
Incredibly useful video!
Glad you think so! Thanks. - Marc
Amazing video as always
Glad you enjoyed, Tennyson. - Marc
Such a great video Marc! I've always wondered why stocks both listed on TSX and NYSE have different returns. So if I understand it correctly, does it mean that when CAD rate drops, it's better to buy stocks on TSX and when it raises, it's better to buy ones on NYSE, given that you have equal amount of CAD and USD in your account?
So in your opinion, considering the canadian dollar went up quiet a bit lately, would you consider hedging if planning to be passive and long time investor looking forward ? I was hoping to hear a bit of forecast regarding the strenght of cad dollar vs us dollar. But anyways great video and thank you !
great video topic
I've had some hedged ETFs before, but not currently I think. I've stayed away from buying US equities directly mainly because of the currency conversion fees as much as anything, so ETFs seem like a good way to avoid those at the potential cost of not investing directly into specific stocks.
I've read some about Norbert's Gambit in terms of converting currencies, but it doesn't seem to be a thing with WealthSimple as they don't allow you to hold USD in your account as the conversion fees seems to be their main source of revenue, unlike Questrade which does charge a minimal transaction fee.
One related point that might be worth covering that Brandon has touched on before is the 15% withholding tax - Brandon specifically said that you should focus on the investment first rather than the tax insofar as whether it's something to consider and while I agree I think there's an argument to be made for holding US Stocks in your TFSA rather than RRSP despite the dividends.
It would depend on the stock, but I would think that for a company which sees a sizeable capital gain equal to or greater than the dividend payout over the same time period (something like Microsoft as opposed to IBM) would be beneficial inside of a TFSA as that capital gain (as well as 85% of the dividends) would be free from Canadian income tax, whereas it would be subject to income tax upon withdrawal from an RRSP. I suppose for a true apples to apples comparison it would depend on your top marginal tax rate at the time of the investment into an RRSP as that investment would be pretax and thus have a leg up to begin with. I'd started to do the math one night but stopped short of that calculation.
Thanks for the videos and I look forward to the next one.
Nice video. These past year, I put my money in VSP since US dollar is going down. I am thinking of switch to vfv in coming days. I would said the dollar may rebounce in near future.
Sounds like you've got the right idea. Good luck! - Marc
Wow!, Great content!. Keep it coming, the deep analysis of these topics is amazing!. Have you guys thought about doing a livestream or Q&A?
Maybe one day! - Marc
Hi love the video just a question I own vfv for my long term retirement, the risk I’m concerned about is if the Cad dollar goes back pair with the US dollar when I retire that would be a -20-30% decrease in the US dollar ( give or take on worst case scenario) and that would be about a 40-50 % gain in the Canadian dollar. If I have 1 million in VFV would if go down 40-50 % because of cad Increase, making the 1 million dollars to 500-600K
Nice , I like it, more understanding, I use it in my TFSA, QQQ.C versus QQQ.
Glad it helped! - Marc
I consider stock entry point more important than hedging. Buy quality US companies, appreciation will take care of currency conversion and commission.
Another great video from Marc ! I personally use the norbert gambit method to get USD to invest and I do not hedge I have all my US equities in USD and Canadian equities in CAD and I am a long term investor therefore whenever our dollar goes stronger I beef up my US Cash gradually usually about 10 to 15%. Thanks again for sharing this great video I see now where Brandon got his smarts from :-)
Thanks, Moe. - Marc
@@beaviswealth My pleasure, thank you for sharing your extensive knowledge with us, it is greatly appreciated!
can you make a video about how to buy vanguard index funds/ETFS for Canadians
So if the can dollar is at a 5 year high or so, maybe it is better to buy the hedged fund and then switch to unhedged when the can dollar rate is low. ? Is that right...?
The opposite, Robert. If you expect the CAD to fall, you'd remove the hedge. If you expect it to rise, you'd hedge. It's confusing.- Marc
What if you intend to hold for the long term, but are making regular purchases via dollar cost averaging? E.g. What if I intend to hold my S&P500 ETF for the next 20 years, but I'm going to be buying $100 worth, per paycheque, every paycheque for those 20 years? Is there an advantage to hedging vs non-hedgining given how dollar cost averaging will affect my purchasing quantities during the peaks and valleys of CAD valuations? Or is 20 years 20 years and it really doesn;t matter?
I have the same question.
Marc is stud
Thanks Marc for your details info! I am a passive investor. I am not sure hedged or unhedged would be good to implement.
Soooo if I'm buying a usd stock with my cad money in my TFSA. Normally rbc direct invest will do the conversions each time when I buy or sell.. Should I be converting that cad to usd first? And then buying the stuck with my usd cash in the tfsa?
Six of one, half a dozen of the other I'd say. - Marc
@@beaviswealth thanks Marc!!
I had to google that idiom hahahaha
I'm confused. If VSP is currency hedged, why is VSP's 5 year return (43%) so much lower than the S&P500's 5 year return (50%)? The difference is almost 1 full year worth of growth just over 5 years
Love the technical explanations. Looking forward to more. Thanks Marc.👍
Great stuff. Would it be worth owning both vsp and vfv as a hedge against hedging...lol
@Brandon Beavis Investing scam
Thank you for this. I’ve had VFV for awhile now and saw other options like VFP but didn’t really know what the CAD hedge really meant. Now I do!
Glad this helped, JK. All the best. - Marc
Great video. I find myself explaining this to folk regularly.
Thx DAD
Hi Brandon & Marc, great content you are both producing.
Wondering if you could discuss your thoughts regarding passive income from Split Share funds and Covered Call ETFs in a video. Pluses and minuses from the perspective of older and younger investors.
Split Share video coming up. It's something a lot of people don't understand. - Marc
Thanks.
You're welcome - Marc
You said that...
Hello! You mentioned that if the Canadian dollar falls, your returns increase. And vice versa.
But at 11:00, the canadian dollar rose AND the VSP (hedged CAD) also went up? Shouldn't it have gone down? Or was this a special scenario because the Canadian dollar was oversold as a result of the pandemic?
Also thank you for this video! Feels like I'm back in school with this type of video haha
Hi Robert. In that example it's because VSP is hedged, which means it will take currency exchange out of the equation. That's the benefit of hedged vs non-hedged. It's confusing, and somewhat counterintuitive. Hope this makes sense, and thanks for watching. - Marc
Interesting video, thanks Marc. Can you do a video on REITs and how you go about to analyzing them? Similar to the one you did on banks.