Horizons S&P 500 (HXS-T)

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Converts dividends into capital gains such that no distributions are paid out. Based off the S&P500 index so has good diversification exposure to large cap US companies. $3.2B in assets. Fees are a bit higher than a standard ETF, but taxes are deferred and shift to capital gains taxes over dividend income. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. An ETF that holds derivatives and total return swaps instead of stocks directly. Most of the portfolio is cash which mitigates counterparty risk. It has met its goals. Unlock Premium - Try 5i Free

He likes the S&P500. He hasn’t sold anything. This is interesting because this is a total return swap. There are no distributions here. No income. No withholding taxes which is good for RRSPs.

HXS-T and HXT-T in a non-registered account. He likes this strategy based on a total return swap. You only pay capital gains tax. There is no distribution. If you believe the markets will go higher for a number of years these are great instruments. A buy and hold for many years.

HXS-T vs. XUS-T vs. VUN-T. HXF is the financial swap based ETF and the swap fee has a fee of zero. It is Canadian bank that is doing the swaps. When you sell it down the line you will have compounded the yield. There are reasons to buy into Canadian financials at this time. HXF is a good idea.

(Top Pick Aug 07/15, Up 5.11%) There are no distributions. All you get is the total return of capital gains. The ETF is based on a swap.

This tracks the S&P 500. Horizons is one of the real leaders in keeping the costs low. The US$ continues to hit new highs. If this is a long-term hold, it will probably be worthwhile.

Normally his clients tend to want dividends, but there are a lot of people who don’t because of tax reasons. They don’t need the income and they don’t want the investment income and would much rather have a total return concept like this. For individual investors he thinks this is a very good product. (See Top Picks.)

He is quite comfortable with this. Their counterparty on this is National Bank (NA-T). This is a total return which means that all the distributions, especially in a non-registered account, are going back into the ETF adjusting and increasing the NAV which reduces its taxable position. There is no tax aspect to the US, and you are not paying any dividend tax.

(A Top Pick March 23/15. Down 4.26%.) Towards the end of the seasonal period, some sectors start to fall off. He had started to see the whole sector for industrials falling off early. Usually they run until May, but when they start to fall off early, it is telling something about the market. He uses this as a holding place, unless there is something else to be invested in at the time.