Making Cents of Your ETF’s Loonie Currency Exposure

In Episode 8 of the Canadian Portfolio Manager Podcast, Justin starts off by answering a listener question regarding the currency exposure of two U.S. equity ETFs in the CPM model portfolios. Steven Leong, of BlackRock Canada, also drops in to provide his currency insights throughout the episode. We then embark upon a most excellent currency adventure with Bill and Ted - two pals who are trying to wrap their heads around the confusing world of currencies. The currency exposure of international, emerging markets, and the iShares “dot U” equity ETFs are also examined. Finally, we end the show with an ETF Kombat between XUU.U and ITOT (two U.S. equity ETFs that both transact in U.S. dollars).

• Why our brains as humans are not fully wired to handle foreign currency calculations [0:00:31.8].
• Ask Bender: Marc from Ottawa kicks things off by asking what the currency exposure is when investing in XUU and ITOT [0:02:24.8]
• Understanding the currency exposure of your U.S. equity ETF [0:04:02.8]
• The key currency takeaway from episode 8 [0:05:20.8]
• A quick tip on how to wrap your head around currency quotes [0:06:22.8]
• How to account for currency fluctuations when calculating your stock market returns [0:08:54.8]
• Why a positive 10% stock market gain and a negative 10% currency loss do not net out to 0% [0:11:10.8]
• Bill & Ted’s Excellent Currency Adventure [0:12:52.8]
• Understanding the currency exposure of your international equity ETF [0:15:52.8]
• Understanding the currency exposure of your emerging markets equity ETF [0:21:20.8]
• Introducing the iShares “dot U” equity ETFs [0:22:48.8]
• Understanding the currency exposure of your iShares “dot U” ETFs [0:23:29.8]
• Why you can’t use the iShares “dot U” equity ETFs to perform the Norbert’s gambit strategy [0:25:49.8]
• ETF Kombat: U vs. ITOT (featuring PWL’s own Martin Dallaire as the voice of the judge [0:29:24.8]

Blog posts/resources discussed in this episode:

CPM Episode 8: Making Cents of Your ETF’s Loonie Currency Exposure (PODCAST SCRIPT)