In June 2026, the Vanguard S&P 500 ETF (VOO) became the first ETF to exceed US$1 trillion in assets. In other words, the largest US ETF alone is now larger than the entire Canadian ETF industry.
Canadian investors are not limited to domestic listed products. Many self-directed brokerages offer access to both Canadian- and US-listed ETFs, which begs the question: when is it appropriate to accept a more complex US ETF?
ETFs listed in Canada are generally easy to buy. They trade in Canadian dollars, avoid currency conversions, and offer an increasingly wide range of investment options. However, US-listed ETFs can sometimes offer lower expense ratios, more capital, and access to strategies or asset classes that do not have close Canadian equivalents.
Whether those benefits translate into better profits depends largely on four variables: the cost of converting Canadian dollars to US dollars, the tax treatment of foreign holdings for distributions, differences in cost ratios, and potential US tax filing obligations.
Foreign exchange fees can make or break a decision
A major advantage of Canadian-listed ETFs is affordability. Most Canadians receive their money in Canadian dollars, deposit those funds into their trading accounts, and can quickly buy Canadian-listed ETFs at the lowest trading fees without worrying about currency conversion.
Buying a US-listed ETF adds another step. Because the ETF trades in US dollars, you need to first convert your Canadian dollars. That conversion is rarely free. Many brokerages make money by charging foreign exchange spreads. Rather than converting your currency exactly at the current exchange rate, they add a markup.
Depending on the brokerage, these fees may be expressed as a percentage of the transaction value, a flat fee, or a combination of the two. Although it may not seem like much in an individual transaction, foreign exchange costs can add up to your total cost of ownership, especially if you contribute regularly.
Rather than comparing every brokerage available to Canadians, it is more useful to look at two popular examples that show how prices can differ: Interactive Brokers vs. Wealthsimple.
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Interactive Brokers is often one of the least expensive options for investors buying US-listed securities. US stock commissions start at $0.0035 per share, subject to a minimum commission of $0.35 per order.
Currency conversions are also inexpensive, with a fee of 0.2 points (basis point is 1/100 of 1%, so 0.2 points is 0.002%) of the trade value, subject to a minimum charge of US$2 per conversion. For large operations, foreign exchange costs are ignored.
Compare that to Wealthsimple, one of Canada’s most popular commission-free brokerages. Investors buying US-listed securities directly from a Canadian dollar account pay a 1.5% currency conversion fee on all conversions between Canadian and US dollars.
Wealthsimple offers US dollar accounts, allowing investors to hold US cash without having to convert repeatedly after each payment, sale, or withdrawal. However, unless you qualify for Premium by keeping at least $100,000 in assets, access costs $10 per month.
Even with a US dollar account, converting Canadian dollars to US dollars still has a fee based on Wealthsimple’s business exchange rate. Conversion spreads are categorized as 1.5% for transactions under $10,000, 1.0% for transactions between $10,000 and $24,999.99, 0.5% for transactions between $25,000 and $99,999.99, and 0% for transactions of $100 or more.
It’s also worth remembering that these rates work over Wealthsimple’s corporate exchange rate rather than the Bank of Canada’s daily exchange rate.
For new investors using Wealthsimple with relatively small account balances, paying a 1.5% conversion fee just to access a US-listed ETF is often difficult to justify. The equation is changing with low-cost brokerages like Interactive Brokers. When the cost of currency conversion is measured in only a few dollars rather than a certain percentage of the transaction, the cost barrier largely disappears.
My opinion is straightforward: if your brokerage charges high foreign exchange fees, Canadian-listed ETFs will generally provide better value despite slightly higher management fees. If your brokerage allows you to convert money cheaply, especially for large transactions, US-listed ETFs become more powerful and often considered.
