BMO SP 500 HEDGED CAD IDX ETF (ZUE.TO)

This, in addition to a tech ETF, skews you to the very large caps. So an investor might want to consider diversifying into US smaller caps.

The S&P 500 will always have some of the best stocks in the world. You never not want to be invested there, unless you're a trader. Looking out 5 or more years, he'd be inclined to want to be currency hedged at this point.

The 3 are on different notches on the dial of risk and growth. Allocate your money according to your risk appetite.

ZUE is solid and probably the safest, even though it has enormous exposure to mega-cap tech companies. There are ETFs to downscale your risk from that, such as RSP (equal weight) and EQL.

ZQQ has been excellent for achieving currency-hedged exposure to the NASDAQ 100. So it's even more tech and growth. Huge demand in 2023 and 2024, but (as we've seen) very exposed to downside volatility in the trade war environment.

SOXX is purely semiconductors. Enormous ups and downs on headline risk with generative AI. Even riskier.

He likes the currency hedges on both. Why choose? You could own both. If we resume the bull market, and resolve that a recession won't happen until 2026, you probably want to be in the NASDAQ as it has more beta. If we resolve to a harder recession and sooner, the S&P would probably go down less but both would be hit.

We need a little more information on which way the market's going to go. By watching and waiting, you're also going to pay a higher price. Perhaps take a little taster now, and see if there's market follow through. If it goes positive, buy more. If there's a further breakdown, cut bait with a smaller loss.

The CAD has weakened, and ZSP has the USD in it. So, he much prefers ZUE. Because interest rates are much lower than the U.S., it will cost you 1.25% in hedging. Weigh that 1.25% over, say 5 years, to where the CAD-USD exchange will go. If you expect the CAD to strengthen, then ZUE will give you a better payout than ZSP. Be hedged over not.

He'd be in favour of holding at least some positions hedged to the CAD. The hedging will eventually work in your favour.

With the CAD declining vs. USD, it's time to think about locking in gains. Consider ZSP (S&P) vs. ZUE (S&P currency-hedged) where the difference lies in the exchange rate. Also consider if you're trading in a taxable account or not. As CAD weakens, ZSP (having more US exposure) will outperform. Therefore, ZUE (hedged) will outperform once the CAD gets stronger. In a registered account, sell ZSP and buy ZUE. If in a tax account, this is an individual financial planning decision. 

US banks have been on fire, though valuations are higher. Interest rate margins are good. Do you expect banks to outperform? He suggests holding 25% in ZUB and 75% in the diversified S&P. It depends on how confident you are about the US banks.

(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.