First, let's compare the returns of the iShares CDN S&P 500 Hedged to
Canadian Dollars Index Fund (TSX: XSP) with the iShares S&P 500 Index Fund (NYSE Arca: IVV) in US dollars.
The BMO US Equity ETF is significantly more expensive than the Vanguard Total Market ETF (VTI) but is likely to be a significant competitor to the iShares CDN S&P 500 Hedged to
Canadian Dollars Index Fund (XSP).
However, XSP and the TD fund track the S&P 500 Hedged to
Canadian Dollars Index, which factors in the currency hedging, reset once a month.
Not exact matches
The
dollar also weakened against the yen, sterling,
Canadian dollar, Swedish krona and Swiss franc, which are the other
index components this year.
The CEER
index is a weighted average of bilateral exchange rates for the
Canadian dollar against the currencies of Canada's major trading partners.
In the Conference Board's
Index of Business Confidence survey, business leaders cited weak market demand, government policies, a shortage of qualified staff, and the depreciation of the
Canadian dollar (which increases the cost of imported technology and machinery) as reasons for not investing.
DXY was pretty much flat year - to - date, but CERI (the
Canadian dollar trade weighted
index) was down a couple percent.
Only 8 % of actively managed U.S. equity funds outperformed the S&P 500 in
Canadian dollar terms, while less than 5 % of actively managed International equity funds outperformed their respective
index return.
Foreign equities moved higher for a seventh successive quarter, advancing 5.3 per cent in
Canadian dollar terms against 5.2 per cent for the MSCI World
Index.
After my post last night got me reading Budget 1980 and the National Energy Program, I stumbled upon something completely fascinating: the hated National Energy Program proposed an
indexed price for synthetic crude from oil sands projects which, had it been followed until today, would have been above the
Canadian dollar price of WTI in -LSB-...]
This chart shows the performance of the US S&P 500
index over the past two years versus the Australian and
Canadian equivalents, all expressed in US
dollar terms.
During that period, his portfolio posted an annualized 8.3 - per - cent return before fees, compared with 5.6 per cent for the S&P / TSX Total Return
index and a 3.2 - per - cent loss for the S&P 500 Total Return
index in
Canadian dollars.
«If you look at the S&P / TSX Composite
Index, it had an annual compound return (including dividends) of 8.9 per cent between 2001 and 2010 while the S&P 500 had an annual compound return of 3.0 per cent, or -2.3 per cent in
Canadian dollars given our currency's appreciation during that period,» says Dimock.
During the 10 years ending in 2011, U.S. stocks (measured by the S&P 500 in
Canadian dollars) delivered negative returns, while developed markets in Europe, Asia and Australia (measured by the MSCI EAFE
index) were just barely positive.
The ETF hedges foreign currency exposure, so the
index returns are measured in
Canadian dollars.
ZCH tracks the BNY Mellon China Select ADR
Index hedged to Canadian dollars, which is an index of American depositary receipts of China - based compa
Index hedged to
Canadian dollars, which is an
index of American depositary receipts of China - based compa
index of American depositary receipts of China - based companies.
The
Canadian dollar to US
dollar exchange rate can be obtained by processing the Yahoo! Finance quote for USDCAD = X. (If you are interested here's how the exchange rate is obtained: «=
Index (ImportHTML («http://finance.yahoo.com/q?s=USDCAD=X»,» table», 1), 8,2)».).
For example, in October 2008 the MSCI All Country World
Index fell 17 % in local currency terms, but in
Canadian dollars the decline was only half as bad at -8 %.
If a
Canadian buys an unhedged
index fund that tracks US stocks, her returns will suffer if the US
dollar declines against the loonie.
Musson's Mackenzie Ivy European Class Series A mutual fund is up 4.7 % year - to - date (as of Nov. 7), almost 10 percentage points better than the benchmark MSCI Europe
index in
Canadian dollars, according to Morningstar.
To test this idea, I looked at equity
index returns for Canada, the US and international developed markets (in
Canadian dollars) since 1970.
And, really, the last thing
Canadian investors need is another S&P 500
index fund that's hedged to the
Canadian dollar.
And the benefit certainly isn't guaranteed: the funds paid very substantial distributions from 2005 through 2007, when the S&P 500 and MSCI EAFE
indexes saw large gains in
Canadian dollar terms.
The TD e-Series US
Index Fund tracks the S&P 500 in
Canadian dollars and has a MER of 0.33 %.
With an annual dividend in
Canadian dollars, the number of new shares bought of underlying companies will be different compared to the
index expectation.
TD e-Series International
Index Fund tracks the MSCI EAFE
Index in
Canadian Dollars.
Vanguard FTSE Developed All Cap ex North America
Index ETF and the
Canadian dollar - hedged Vanguard FTSE Developed All Cap ex North America
Index ETF provide investors with exposure to developed markets outside of Canada and the U.S..
Monday — Bean oil, T - Bonds, S&P, Dow Jones,
Canadian dollar, British pound, Cotton Tuesday — Wednesday — RBOB gas, Heating oil Thurday — Corn, Dollar Index, Eurocurrency Firday — ... rea
dollar, British pound, Cotton Tuesday — Wednesday — RBOB gas, Heating oil Thurday — Corn,
Dollar Index, Eurocurrency Firday — ... rea
Dollar Index, Eurocurrency Firday — ... read more
RBC Global Government Bond (CAD Hedged)
Index ETF seeks to replicate, to the extent possible and before fees and expenses, the performance of a broad world government bond index that is hedged to Canadian dol
Index ETF seeks to replicate, to the extent possible and before fees and expenses, the performance of a broad world government bond
index that is hedged to Canadian dol
index that is hedged to
Canadian dollars.
Appreciation of the
Canadian dollar may cancel out any gains from Emerging Market
Index fund for example.
@
Canadian Couch Potato: Since I reported VEA and VWO
index returns in USD terms, the loss in value of CAD against the USD helped in cushioning the drops in US
dollar terms for the
Canadian investor.
Any time a rising
Canadian dollar takes a bite out of foreign stock returns investors can feel tempted to use ETFs and
index funds that employ currency hedging, a strategy designed to protect you from the effects of a decline in the U.S.
dollar and other foreign currencies.
Although U.S. stocks have risen in value in their native currency over that period, U.S. equity
index funds saw negative returns when measured in
Canadian dollars.
The Solactive US 7 - 10 Year Treasury Bond CAD Hedged
Index (Total Return) is designed to measure the performance of the US 7 - 10 Year Treasury Bond market, hedged to the
Canadian dollar
Monday — Soy meal, Crude oil, Natural gas, Heating oil, S&P,
Dollar index, Canadian dollar Tuesday — Silver, Cocoa Wednesday — RBOB gas, Treasury notes Thursday — Corn, Natural gas, Heating oil, Gold Friday — Canadian dollar... rea
Dollar index,
Canadian dollar Tuesday — Silver, Cocoa Wednesday — RBOB gas, Treasury notes Thursday — Corn, Natural gas, Heating oil, Gold Friday — Canadian dollar... rea
dollar Tuesday — Silver, Cocoa Wednesday — RBOB gas, Treasury notes Thursday — Corn, Natural gas, Heating oil, Gold Friday —
Canadian dollar... rea
dollar... read more
The benchmarks should be those
indexes in
CANADIAN dollars since that is the currency the Canadian funds have to re
CANADIAN dollars since that is the currency the
Canadian funds have to re
Canadian funds have to report in.
Similarly, TDB911 captures the return of the MSCI EAFE
Index, which tracks markets in Europe, Japan and Australia, in
Canadian dollars and TDB952 hedges the exposure of our
dollar to a basket of currencies such as Euros, Pounds, the Yen and the Aussie D
dollar to a basket of currencies such as Euros, Pounds, the Yen and the Aussie
DollarDollar.
The new AA ETFs help redress the latter but of course investors are free to work with their advisors to tweak international fixed income exposure further by directly owning VBG (Vanguard Global ex-US Aggregate Bond
Index) and / or VBU (Vanguard US Aggregate Bond
Index), both of which are hedged back to the
Canadian dollar.
CIBC
Index Growth (Guaranteed Return) GICs and the Subscription Deposits held for a CIBC
Index Growth (Guaranteed Return) GIC (
Canadian dollar only)
So, let's compare the performance of the iShares CDN S&P 500 Hedged to
Canadian Dollars ETF (TSX: XSP) with the returns of iShares S&P 500
Index Fund (NYSE Arca: IVV) for the 2006 to 2009 time period for a
Canadian investor.
I ran the same study for rolling 10 - and 20 - year periods starting in 1970 using the total real (i.e. inflation - adjusted) returns of the TSX Composite, S&P 500 and MSCI EAFE
indexes in
Canadian dollars and some of the results might surprise you.
If our
Canadian investor had purchased a hedged
index fund, eliminating their currency exposure, they would have captured the full 10 % return of the S&P 500
index without being dragged down by the falling US
dollar.
The Morningstar Fund
Indices bill themselves as «the best available representation of the performance of aggregate
dollars actually invested, currently and historically, in
Canadian mutual funds and segregated funds.»
The lineup includes TD
Canadian Aggregate Bond
Index ETF, which tracks an index that measures the investment return of Canadian dollar - denominated, investment - grade, publicly issued
Index ETF, which tracks an
index that measures the investment return of Canadian dollar - denominated, investment - grade, publicly issued
index that measures the investment return of
Canadian dollar - denominated, investment - grade, publicly issued debt.
If you measure your returns in
Canadian dollar terms (as you should), your holding in EFA would have performed very similarly to the TD International
Index Fund.
So if the blended
index is denominated in
Canadian dollars and contains a chunk of US equities, that chunk will have suffered a currency drop that
Canadian Equity funds did not.
• Growth Opportunity: Gain exposure to one of the fastest - growing segments of the global economy • Diversification: Little overlap in holdings with major broad stock
indices and significant exposure to non-North American stocks • Innovative
Index Design: Stocks selected using a rigorous research process overseen by an advisory panel with extensive expertise • Currency hedged: All U.S.
dollar exposure is currency hedged, making it a more currency efficient strategy for
Canadian investors • Takeover Premiums: Companies about to experience corporate takeovers typically see their stock value increase.
This fund is based on the U.S.
Dollar Index, an index that tracks a weighted performance of the euro (57.6 %), Japanese yen (13.6 %), British pound (11.9 %), Canadian dollar (9.1 %), Swedish krona (4.2 %), and Swiss franc (3
Dollar Index, an index that tracks a weighted performance of the euro (57.6 %), Japanese yen (13.6 %), British pound (11.9 %), Canadian dollar (9.1 %), Swedish krona (4.2 %), and Swiss franc (3.
Index, an
index that tracks a weighted performance of the euro (57.6 %), Japanese yen (13.6 %), British pound (11.9 %), Canadian dollar (9.1 %), Swedish krona (4.2 %), and Swiss franc (3.
index that tracks a weighted performance of the euro (57.6 %), Japanese yen (13.6 %), British pound (11.9 %),
Canadian dollar (9.1 %), Swedish krona (4.2 %), and Swiss franc (3
dollar (9.1 %), Swedish krona (4.2 %), and Swiss franc (3.6 %).
Index returns are denominated in
Canadian Dollars for all funds, except XIG and XHY.
The investment objective of Horizons Morningstar Hedge Fund
Index ETF is unaffected and the product will continue to seek investment results that replicate the performance of the Morningstar broad hedge fund index hedged to the Canadian do
Index ETF is unaffected and the product will continue to seek investment results that replicate the performance of the Morningstar broad hedge fund
index hedged to the Canadian do
index hedged to the
Canadian dollar.