Q – I have a about 85% Canadian funds as I converted most of my US cash back to Canadian over a year ago. I was very concerned about the foreign exchange risk as I was over 40% in US dollars in my portfolio. That said, would you recommend staying with Canadian dollar investments? I am 62 years of age, and my income has dropped to a very low level, so I really do not have much savings ability. My portfolio is just over $1.2 million, of which 70% is outside an RRSP. I’m interested in dividend stocks. – Jeff C.
A – You may be too focused on exchange rates. There is nothing to indicate the Canadian dollar is likely to move dramatically up or down against the greenback in the foreseeable future. A penny or two either way should not affect your buy/sell decisions. Instead, concentrate on finding securities that meet your investment goals, in whatever currency.
An ETF that has done well recently is the iShares Core MSCI Canadian Quality Dividend Index ETF (TSX: XDIV). It invests in a portfolio of Canadian high-dividend stocks with steady or increasing yields. It gained 16.4% in 2023, more than double the return of the TSX Composite. – G.P.