Is Putting Money into CDRs Beneficial 5 Years Later? [Podcast]

What a CDR truly represents (and what you genuinely possess): A “wrapped” variant of an underlying equity, valued in CAD, that provides you a fractional stake in the actual stocks. Same dessert—varied presentation.

Why the lower share price shouldn’t be seen as a discount: Acquiring 20 “pieces” rather than 1 “whole” share doesn’t alter your return—percentage performance is what counts.

How currency hedging operates—and when it misfires: CDRs can eliminate CAD/USD fluctuations from your returns, yet hedging can work against you (as it has in recent years if the USD gained strength).

Dividends and withholding taxes: what remains unchanged: You continue to receive dividends (issued in CAD), and withholding tax generally applies similarly depending on account type.

The two significant drawbacks Mike can’t overlook:

Annual charges (typically ~0.60%–0.80%) for something you can often purchase directly without a product fee
Broader bid/ask spreads due to decreased liquidity—making limit orders more essential

A practical substitute for “no currency conversion” promotions: How Norbert’s Gambit can transform CAD to USD with minimal expense (and why DLR is often utilized to mitigate volatility risk).

For novice investors with small monthly contributions: Why initiating with diversified ETFs frequently surpasses assembling a stock portfolio $100 at a time—even if CDRs seem more thrilling.

The main insight: CDRs can offer convenience, but convenience comes at a cost—your choice should hinge on whether hedging + CAD simplicity justifies ongoing expenses.

Is Putting Money into CDRs Beneficial 5 Years Later? [Podcast]

Related Content

Recent Posts

Archives