Investing in Canada

david236

I'd like to get some exposure to the Canadian stock market or a similar vehicle to take advantage of what I believe will be an interesting time for the country over the next few years.

Not having much luck finding such a vehicle.........any suggestions?

Thanks

pressuredrop_2

Exposure to Canada when 50% of the index is commodities?

Why not a resources fund/etf?

DavidHayton

david236 wrote: »

I'd like to get some exposure to the Canadian stock market or a similar vehicle to take advantage of what I believe will be an interesting time for the country over the next few years.

Not having much luck finding such a vehicle.........any suggestions?

Thanks

Hi David,
I have about 30% of my portfolio invested in a variety of Canadian stocks and ETFs. I use TD Waterhouse's Trading Plus Account.
http://www.tdwaterhouse.co.uk/Choose-an-account/Trading-Plus-Account.aspx

This allows me to hold CAD cash in the account and buy and sell stock on both the TSX and Canadian Venture Exchange. A good place to start might be the iShares ETF that tracks the index of 60 leading companies, XIU. It is cheap and it gives you a good exposure.

I would like it better if TD lowered their charges somewhat. It costs £12.50 per trade (on the expensive side) and they load the exchange rate by 1.75% whenever you move money from one currency to another. This means that if you were planning to repatriate the money to the UK then you should think about it as 3.5% "round trip." However, until I come across anything better, I'll stick with TD.

Best wishes
David

Special_Saver2

Hi Davids,

How about using the International Retail Service?

This would allow you to trade in pounds sterling on the London Stock Exchange and receive your dividends in pounds sterling. The downside is that the bid/offer spread is wider than if you traded directly on the Toronto Stock Exchange. You can buy and sell using IRS with x-o.co.uk for £5.95 - see this page. I can see that some Canadian shares can be traded as a CREST Depositary Interest (CDI) using the International Retail Service, e.g. Toronto Dominion Bank. I have never done this myself but it looks interesting.

As a matter of interest, what happens with taxation on dividends of Canadian shares? For American shares, you can fill in an W-8BEN to keep some of the tax that you would otherwise have to pay. How does it work for Canadian shares?

SS2

DavidHayton

Hi SS2,
Thanks for the link to the IRS.
As for direct investments in Canada, dividend payments attract a witholding tax of 15%. As far as I am aware, you cannot get this back. However, I tell HMRC that I have already paid 15% tax and they allow this as a credit against the 10% UK dividend tax. There is therefore an unrecoverable penalty of 5% on dividends.

David

bbxsa

DavidHayton wrote: »

I would like it better if TD lowered their charges somewhat. It costs £12.50 per trade (on the expensive side) and they load the exchange rate by 1.75% whenever you move money from one currency to another.

Interactive Brokers (IB) has a minimum commission of about $1 and foreign exchange is done at inter-bank prices with a minimum commission of about $2.50. You can trade nearly any electronic exchange worldwide with them.

I use TDW for my buy and hold ISA (in particular with their regular saver commission breaks) because charges are too high. I use IB for more frequent trading.

Special_Saver2

Interactive Brokers looks interesting but if I understand things correctly, you need to open an account with at least US$10,000 (or equivalent) and spend US$10 in commission each month (or pay that as an inactivity fee, US$20 if your equity balance is less than US$2,000).

SS2

DavidHayton

Hi SS2,
TDW also apply an inactivity fee of £12/quarter to their Trading Plus Account if you have less than £5k in the account (stock + cash).

http://www.tdwaterhouse.co.uk/Choose-an-account/Rates-and-Charges.aspx

David

bbxsa

Special_Saver2 wrote: »

Interactive Brokers looks interesting but if I understand things correctly, you need to open an account with at least US$10,000 (or equivalent) and spend US$10 in commission each month (or pay that as an inactivity fee, US$20 if your equity balance is less than US$2,000).

SS2

Yes, I believe the account minimum is $10k. The $10 monthly fee is waived if you generate more than $30 in commissions in the month. Even if you only place 1 trade with IB and then pay the $10 fee, it is still cheaper than TDW.

If you have less than $10k then I would argue that you probably should not be trading actively with TDW. The commissions are so high relative to likely trade size that one is probably better off saving at least $10k before trading regularly.