Opinions
Larry Berman CFA, CMT, CTA
Horizons Equal Weight Canada Banks Index ETF
HEWB-T
WEAK BUY
Jan 27, 2025
$39.620
Stock price when the opinion was issued
E.T.F.'s
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Which Canadian financials ETF to buy? Do you want income or equal weight? Defer capital gains? FIE-T pays a monthly income and include preferred shares, corporate bonds and banks stocks, so it's diversified. If you don't want this income and prefer exposure and a total return swap and defer the taxation, then he suggests HWEB-T. You don't get dividends, so it's a great way to defer capital gains. But do you want to pay an MER to hold the big 6 Canadian banks?
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Any sale triggers either a capital loss or gain. It depends on the election you made with CRA on your exact tax treatment. Capital gains are the most efficient tax treatment.
Benefit of CRA and dividends only comes from Canadian companies. So, even if you have an ETF that pays a distribution that comes from European or American companies, that dividend is treated as income even though it comes through a Canadian ETF.
He very much likes the Global X series of corporate class ETFs. They give you broad exposure to markets but don't have those distributions, so they're a bit more tax-efficient. Now, there are some additional costs in there to create those structures. As well, it really depends on your tax rate whether they're a really big benefit to an individual. More benefit to those in higher tax brackets than in lower ones.