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USD Cash ETF Recommendations
June 10, 2024
11:42 am
canuckles
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Can anyone recommend some USD cash ETF's please? I'm looking for something similar to CASH.TO or HISA.TO but one that is for extra USD that I have on hand. The ones I find are still in CAD and track USD movements. The best I found was a US ETF for short term bonds (ICSH) but I'm more looking for something that's a high interest USD cash savings ETF. HSUV.U is great but it's over subscribed and I don't want to pay above NAV.

Thanks for your ideas!

June 10, 2024
11:57 am
NorthernRaven
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Global X (née Horizons), the CASH.TO people, have UCSH.U, which is USD deposits at the usual suspects (Scotia, CIBC, National). Purpose (the PSA people) have the similar PSU.U, currently showing a 5.19% net yield.

June 10, 2024
3:01 pm
HigherRate1
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Have been buying this new one MNU.U.
It's always been just a bit higher than the rest, currently 5.4%.
https://money.tmx.com/en/quote/MNU.U
Also note: These are usually 50$ or 100$ per share.
Unless you use WeathSimple which does fraction shares, the brokerages in Canada would only do DRIP if the dividend is enough for at least 1 share.
So you might want to do a calculation.

June 10, 2024
6:47 pm
NorthernRaven
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MNU.U is a money market fund (80% commercial paper, 20% TBills) rather than CDIC-insured bank deposits, so it will have some extra juice at times over their PSU.U (purely deposits, at least right now). I think some of the cash ETFs do or have the leeway to use government instruments or even commercial paper - if this is an issue one should check the holdings and prospectus.

June 11, 2024
7:56 am
JPenterprise
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June 11, 2024
9:14 am
AltaRed
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The MMF offerings are often more flexible than the ETF versions as long as there are no commissions. There was a huge surge in the popularity of Cash ETFs when yields took off but I have never seen the real attraction.

What one does depends a lot on one's brokerage. If a brokerage does not offer mutual funds OR charges commissions to buy/sell MMFs, and doesn't charge commissions to buy/sell Cash ETFs, then obviously Cash ETFs are more attractive. And conversely, the other way if one's brokerage does not charge commissions for MMFs.

Caution: Remember that USD MMFs and ETFs are trusts, not deposit accounts, so they will attract capital gains (or losses) when sold.....due to forex differences between date of acquisition and date of sale....and must be reported on Schedule 3 if that cap gain/loss is more than $200.

June 12, 2024
8:54 am
canuckles
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AltaRed said
The MMF offerings are often more flexible than the ETF versions as long as there are no commissions. There was a huge surge in the popularity of Cash ETFs when yields took off but I have never seen the real attraction.

What one does depends a lot on one's brokerage. If a brokerage does not offer mutual funds OR charges commissions to buy/sell MMFs, and doesn't charge commissions to buy/sell Cash ETFs, then obviously Cash ETFs are more attractive. And conversely, the other way if one's brokerage does not charge commissions for MMFs.

Caution: Remember that USD MMFs and ETFs are trusts, not deposit accounts, so they will attract capital gains (or losses) when sold.....due to forex differences between date of acquisition and date of sale....and must be reported on Schedule 3 if that cap gain/loss is more than $200.  

Thanks for your thoughts! I didn't know about the $200 capital gains threshold. Does CRA discuss it somewhere? Also, is the $200 per trade, per equity, or total per year, etc?

June 12, 2024
8:55 am
canuckles
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Thank you for everyone's ideas! I'll check them out.

June 12, 2024
2:16 pm
AltaRed
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From the horse's mouth https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/completing-schedule-3/bonds-debentures-promissory-notes-other-similar-properties/foreign-currencies.html

The $200 forex exemption is for trading currencies (money) only such as deposit accounts, ISAs, etc, and is total for the tax year. It has nothing to do with forex gains/losses in USD denominated securities such as stocks and bonds.

June 13, 2024
4:13 am
savemoresaveoften
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HSUV can be had for close to NAV if you are patient and put in limit order.
At a few cents premium, the capital gain tax treatment plus the timing difference (if it matters to ur situation) is worth a lot more than a few pennies in my mind.

June 13, 2024
8:17 am
Norman1
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AltaRed said

The $200 forex exemption is for trading currencies (money) only such as deposit accounts, ISAs, etc, and is total for the tax year. It has nothing to do with forex gains/losses in USD denominated securities such as stocks and bonds.

These RBC Wealth articles reiterate that and have examples of how that is applied:

The Navigator (May 2016): Currency tax reporting – foreign exchange gains and losses
The Navigator (July 2018): Foreign currency tax reporting

The articles also explain the "funds on deposit" concept.

Previous discussion Taxation of USD Brokerage Investment Savings Accounts has details as well.

June 13, 2024
10:49 am
HigherRate1
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This actually turns into an interesting discussion. Personally, I wouldn't worry about $200 or so capital gains that might require you to report on tax return. Because 1st, you can try to have these ETFs in registered accounts. 2nd, in non registered accounts you can try to buy at the same price and sell at the same price as prices oscillate each month, hence repeats sort of on the same day of the month depending on which div record date that month dictates (29 days vs 31 days). 3rd, they tend to oscillate between 50$ - 50.21$ or 100$ - 100.45$ per share due to the interest rate being around 5%. That is about 1 cent per trading day for 50$ a share or 2 cents per trading day for 100 a share. This means to have $200 capital gain you need to have at least 50k invested plus buy at minimum and sell at maximum. Can certainly avoid that by spreading them in many accounts.

June 13, 2024
11:47 am
AltaRed
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In taxable accounts, I think HSUV would be treated like a USD stock or equity due to its cap gains/losses treatment. It is not a currency trade.

Every buy and sell would have to be recorded in CAD equivalent on the date of settlement (or transaction). The annual aggregated $200 forex waiver for currency trading would not apply.

June 14, 2024
10:42 am
savemoresaveoften
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if one ends up having less than $200 in forex gain, prob should not even touch any non CAD investment given how small the position is.

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