BMO SP 500 HEDGED CAD IDX ETF (ZUE-T)

(A Top Pick Oct 20/15. Up 6.81%.) The US stock market is about half of the world’s stock market capitalization, and he likes this one because it is currency hedged. Had felt that the Cdn$ was probably as low as it was going to go relative to the US$, and as the Cdn$ rose in value, you would need a hedge to minimize the losses.

An S&P 500 tracker, hedged to the loonie. It is hedged and he thinks this is a critical difference. If you really want to get into the US market, now is probably a wise time to be doing it with a hedge. For people buying individual US securities, you are going to have a challenge going forward. Even if the US stock market does well, and if the Cdn$ also does well, which he expects, whatever gains you make in the stock market, you will be giving back when you do the currency conversion.

This is a hedged product which means you are factoring out the Cdn/US dollar issue. He would go unhedged, because he believes that the Cdn$ is likely to continue to be weak compared to the US$.

There is also the XSP-T. He is fully hedged against the US$. ETFs are the only way to do this.

Hedging is the thing that protects you in terms of currency fluctuation. If the Cdn$ is strong, you lose money when you convert from US$’s to Cdn. However, if it is relatively weaker, you are making money. As it is right now, if you have things invested in the US, most people think that an $.88 dollar might be a bit of a stretch, but a $.90-$.91 dollar a year from now, might be quite realistic so a hedge is rather unnecessary.

S&P 500 Hedge to CAD Index (ZUE-T) or S&P 500 Index ETF (ZSP-T)? Of the 2, he prefers ZSP a bit more because of the broad Standard & Poor’s benchmark that everyone understands. Not sure what the benchmark for this one is.