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So, imagine a situation, I am a Canadian citizen who decided to invest into an American based company, consequently all the activity is taking place at the NASDAQ.

At some point in the future I am interested in withdrawing my investments, and preferably lose as little on the CAD/USD exchange as possible.

My question is how do I mitigate the exchange rate losses when withdrawing. With this question in mind, what available channels of trading/investing should I consider (ie. doing it through personal bank, looking for specific stock trading companies, trading apps etc.)

I would really appreciate some feedback on this matter.

EDIT: Just did a quick google search on this, and found out about Norbert's Gambit trick: does it only apply to companies that have their stocks traded in both US and CA stock exchanges?

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Norbert's Gambit only saves you on the one-time transaction fees. It does not help you "lock-in" an exchange rate over a period (e.g. a year).

To prevent the exchange rate from moving, you need Leveraged Forex or Canadian Dollar Futures.

The concept is like this. Suppose 1 USD = 1.45 CAD.

Before Stock Purchase:

Stock (USD) 0

Cash (USD) 0

Cash (CAD) 145,000

After Stock Purchase:

Stock (USD) 100,000

Cash (USD) -100,000 (Margin interest will be charged)

Cash (CAD) 145,000

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  • Good answer and maybe a little more explanation would help - that you are investing in USD assets and that those unavoidably involve currency risk, so that risk needs to be hedged with an offsetting action the other way. Explaining in detail what your chart means could also help.
    – Grade 'Eh' Bacon
    Mar 23, 2020 at 17:35
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You can often find Canadian based funds which track US equities. VUN is a Vanguard fund that is based in Canada but tracks the US total stock market.

Alternatively if you want to trade specific US equities that don't have a Canadian counterpart you can open a CIBC investor's edge account. They currently offer free currency conversions.

Norbert's Gambit is fine and I've heard that other people have success with it, but you will have to pay the trading fees on both ends, and it does require a little more work-- I'd only advise doing it if you're dead-set on keeping your investments in a bank that doesn't offer free currency exchange and you're trading a lot of funds infrequently.

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  • The first sentence is okay, but the rest of the answer talks about how to cheaply convert funds - this is not the same as reducing the currency risk exposure underlying the reality of investing in US securities.
    – Grade 'Eh' Bacon
    Mar 23, 2020 at 17:34

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