Many Canadians invest in foreign-listed exchange-traded funds (ETFs). While foreign-listed ETFs can provide you with access to different types of strategies and asset classes, there are risks that you should understand before investing.
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What is a foreign-listed ETF?
An exchange-traded fund (ETFs) holds a collection of investments, such as stocks or bonds. ETFs are managed by professional money managers, and units of ETFs are owned by individual investors.
When you invest in an ETF, you do not own the actual securities (i.e., stocks, bonds), but you do own shares (units) in the fund. Find out more about how ETFs work.
A foreign-listed ETF is one that is listed and traded on a stock exchange outside of Canada. Foreign-listed ETFs represent a significant portion of ETF investments held by Canadians. For example, as of March 2026, foreign-listed ETFs accounted for about one-quarter of total ETF assets held by Canadian retail investors.
What are the differences between foreign-listed and Canadian ETFs?
Foreign-listed ETFs may appear similar to Canadian ETFs, but there are a few key differences to watch for, including:
- Regulatory differences – Foreign-listed ETFs are regulated under the rules of their home jurisdiction rather than Canadian rules. Managers of foreign-listed ETFs are typically not registered with Canadian securities regulators and foreign-listed ETFs typically do not file disclosure documents, such as an ETF Facts document, in Canada. As a result, foreign ETFs may be permitted to use investment strategies that would not be available to Canadian ETFs and Canadian securities regulators may have access to a more limited set of regulatory tools to address any issues relating to the management or disclosure of a foreign ETF.
- Disclosure documents – Canadian ETFs are generally required to file an ETF Facts document — a concise, plain-language summary designed to give you information about the fund and allows you to compare products — along with other disclosure documents. Foreign-listed ETFs that are not offered under Canadian securities laws generally do not file the same types of disclosure documents, including ETF Facts documents. This means you may need to rely on disclosure prepared under the rules of another country.
- Currency exposure – Most foreign-listed ETFs trade in a foreign currency. This means that investors who do not have an account with a Canadian registered dealer that can hold the relevant foreign currency may incur currency conversion costs. In addition, your investment returns can be affected by changes in exchange rates. For example, if you buy a U.S.-listed ETF, you could experience gains or losses due to movements in the Canadian dollar relative to the U.S. dollar, even if the ETF itself remains unchanged in value. Foreign ETFs also do not generally offer currency-hedged options tailored for Canadian investors.
- Tax considerations – When you earn money from investments, this may be considered taxable income depending on the type of investment it is and what kind of an account it is held in. Tax rules for different investments can be complex and vary by your individual circumstances. Investments in foreign-listed ETFs may have tax implications that differ from those associated with investing in Canadian ETFs. These may include:
- Foreign withholding taxes on dividends or distributions
- Foreign estate tax
- Different tax treatment depending on the type of account in which the investment is held (such as an RRSP, TFSA, or non-registered account)
You may wish to consult a qualified tax advisor before investing.
Learn more about how investments are taxed.
Questions to ask before investing in foreign-listed ETFs
It’s important tounderstand any investment before putting your money into it. If you are considering purchasing units of a foreign-listed ETF, you may want to consider these questions:
- What does the ETF invest in?
Make sure you understand the ETF’s investment objective, holdings, risks, and strategy. Do not assume that a familiar name means the product works the same way as a Canadian ETF.
- What fees will you pay?
Fees can impact your overall investment returns. It’s a good idea to look beyond the ETF’s management fee and consider:- Foreign exchange conversion costs
- Trading commissions
- Bid-ask spreads
- Potential tax consequences
- What are the risks?
Some foreign ETFs may use leverage, derivatives, concentrated portfolios, or other investment techniques that increase risk. You should carefully review the available disclosure and understand how the ETF operates.
- Is the ETF appropriate for your goals?
An ETF that is popular online or frequently discussed in financial media may not necessarily be suitable for your financial circumstances, investment objectives, or risk tolerance.
How can you evaluate a foreign-listed ETF?
When evaluating any ETF, it is important to look beyond management fees and historical performance to consider other relevant factors. For foreign-listed ETFs, factors such as currency exposure, foreign withholding taxes, account type considerations, foreign exchange costs, and potential foreign estate tax implications may all affect the overall costs, risks, and suitability of an investment. Taking these factors into account can help ensure that the ETF you choose aligns with your investment objectives and personal circumstances. Canadian investors are increasingly exposed to information about foreign investment products through social media, online forums, podcasts, and financial influencers. While these sources can provide useful information, they may also present incomplete or biased views of a product. Always conduct your own research and consider seeking professional advice before making investment decisions. Find out how to research your investments.
Summary
Foreign-listed ETFs can provide Canadian investors with access to global markets, specialized investment strategies, and products that may not be available in Canada. However, foreign ETFs often operate under different regulatory frameworks, provide different disclosure, and may involve additional tax and currency considerations. Before investing, take the time to understand the product, review the available disclosure, and consider whether the ETF aligns with your investment goals and risk tolerance.
