“Fractional Shares” allow you to buy less than a single share of the stock or ETF that supports it. Fractional shares ensure that every last penny of cash in your account is actively invested, which, in my view, is a Good Thing. Non-interest earning cash isn’t helping you meet your retirement goals.
Questrade currently holds the majority of my retirement savings, mostly because they were offering free money last year to move accounts over to them1.
They provided support for fractional US ETFs over a year ago, to great fanfare, with Canadian ETFs “coming soon”. It would appear that “soon” is “now”. There’s no way to see which Canadian ETFs have support for fractional trading in any sort of list, but here’s the status of the Canadian ETFs on my magnificent seven ETFs list2, which you can see if you ask for a quote of any symbol you’re interested in.
I’ve tested it out, and the one flaw I’ve found is that you cannot enter a dollar amount for a trade when using the Edge Web version of the Questrade platform. You’re free to do the math yourself and enter a decimal number of shares when using Edge Web4.
Wealthsimple also offers fractional ETFs, and there I have found no restrictions. Questrade is catching up, but still behind Wealthsimple in this regard.
And if you are considering Questrade yourself, you can earn a bit of free money if you use my referral code: 755609544498867 ↩︎
These are the ETFs that make up the lion’s share of my retirement portfolio. ↩︎
Fractional VFV is particularly valuable since its unit cost is north of $100. ↩︎
Which you are forced to do if you want to make trades on accounts for which you are the authorized trader. ↩︎
After much consideration, I’ve decided that holding USD-denominated assets during retirement is no longer a good idea. I have been struggling with this question for a while now.
There are a few reasons why I’ve reached this conclusion:
I no longer spend USD. I have two credit cards1 that allow me to avoid foreign exchange fees.
Complexity. The USD in my RRIF accounts needs to be converted periodically since withdrawals are in CAD. The USD in my non-registered account might eventually lead me to have to file a T1135, and I hate new tax wrinkles. And of course the USD funds add to the universe of funds I have to manage in all the accounts. Fewer is better!
Choice. Without USD in my portfolio, the universe of DIY brokers opens up2 and the number of accounts I have to have is also reduced34.
The fluctuating CAD/USD FX rate might be another reason, but that hasn’t really bothered me. In the long term, it’s reasonably stable.
So how to go about doing it, and what impacts will this have? Let’s take a look.
General considerations
So of course, the only real way to convert USD into CAD at Questrade is to use Norbert’s Gambit. Performing the Gambit is a multi-day activity:
Day 1: Sell the USD asset and buy DLR.U with the proceeds; make journaling request to convert DLR.U into DLR
Day 2: Wait for settlement of trades made on day 1
Day 3: Wait for journaling to complete
Day 4: Wait for journaling to complete
Day 5: Sell DLR and buy CAD-listed assets to replace what I sold on day 1
Each time I do this exercise, it makes me a little leery since
I have to pay $9.95 plus GST to journal the shares on Questrade (not a huge deal, but as you have read elsewhere on the blog, I am a cheapskate)
I’m out of the market for 3 days. I really hate being out of the market since big moves can happen over short periods of time. Of course, this cuts both ways; I could miss a big rally or a big meltdown as a result5.
I’m making a bet on favourable FX rates. FX rates don’t typically swing much in short periods of time, but since over 50% of my retirement portfolio is in USD I’m not willing to try to find the “right” time to make such a trade.
As a result, I’ve made the decision to
Sell off 1/6th of my USD portfolio every month for the next six months (or thereabouts). This will allow me to smooth out any FX speed bumps and limits how much of my portfolio is idle at any one time.
Take advantage of a free month of Questrade Plus6 and do a few journaling requests during this month and save a few bucks
I’ll try to start moving my portfolio to these new targets as I make this shift, but given the targets are brand new, I’m in no particular time constraints; I’m expecting the portfolio to slowly move from the old targets to the new ones, finally landing at some point later in 2026.
Kicking USD out of my RRIF accounts
Of the 5 RRIF accounts I have in the household (three for me, two for my spouse), only two of them have USD in it, and the USD portion is 100% invested in either AOA (an 80/20 all-in-one global equity fund) or ICSH (an ultra short-term bond fund that stands in for cash)
AOA can be replaced with XGRO but it’s not an exact replacement. AOA has almost no Canadian Equity content and a higher US Equity content than XGRO. This means that a one-to-one switch will cause my Canadian Equity content to increase and my US content to decrease. I’m expecting this will eventually cause me to need to replace some of my AOA with a pure play US Equity asset. I’ve chosen VFV since it mirrors the S&P 500, an index that won’t be adding the mega-IPOs any time soon 🙂
ICSH can be replaced with ZMMK since they are similar in nature, but I’m not going to do that. Why? Because I hold ZMMK in my non-registered account as a VPW cash cushion, I do make trades in ZMMK from time to time. I don’t want to end up in a situation where I’m selling ZMMK in my non registered account and buying it in my RRIF, since this could deprive me of possible (small) capital losses — CRA does not look kindly on trying to “artificially” generate capital losses in this way.
So after mulling it over a bit, I’ve decided to replace ICSH in my RRIF accounts with ZST. It’s a short term bond fund which is a bit riskier than ZMMK7, but I’m counting on it being cash-like for my purposes. Neither has been around all that long, but it appears they are pretty close on the performance front with a slight edge for ZST.
So when all is said and done, my RRIFs should have three holdings: XGRO (mostly), VFV (some), ZST (about 2.5% of overall portfolio),
Kicking USD out of my non-registered accounts
Here there are two holdings
ICSH in my VPW cash cushion account
SCHF, an international equity fund I’ve held for years and years
The ICSH replacement is easy — move it to ZMMK. I’ll do that all at once. It will mean a loss of over a percentage point in gains at the moment, but this is the price of simplicity, I guess.
The SCHF sale is a bit like selling 6 months of RRIF payments all at once, which will attract a capital gain. I’m ok with that, but I’d prefer to avoid more capital gains for the rest of the year (I didn’t budget for that when I tried to work out my likely tax bill for 2026). Since selling SCHF is actually helpful in getting my new asset allocation targets right, I don’t need to replace it with another International Equity fund. My calculations tell me that I’ll probably need to replace it with a Canadian Equity fund. Here I’ve chosen to use VCN since it uses a different index provider8 and would be considered different from my other non-registered Canadian equity funds, namely XIC and HXT9. Buying VCN and selling it in subsequent months to fund my retirement salary should result in minimal capital gains for the remainder of the year.
So when all is said and done, the VPW cash cushion account should be 100% ZMMK and the other non registered account will be 100% CAD-listed ETFs, mostly tied up in Canadian Equity.
This Friday (June 12, 2026) SpaceX (which, as it turns out, doesn’t just make rockets — it also encompasses Starlink and Twitter — er, X) will launch its mega-IPO. It’s expected to immediately become a top 10 company in terms of market capitalization, putting it in the same stratosphere as Nvidia, Apple, and Microsoft.
There’s a lot of chatter over how (and even if) this will impact the boring old index investor. It might help to review what the major US Indices are. The major US indices1 that show up again and again in ETFs are
S&P 500 — this is the index used by ETFs like VFV, XSP, ZSP and HXS
CRSP US Total Market Index — VUN, VUS and VEQT for example
The ETFs that track indices don’t have discretion over when or if to include a stock in their ETF. When the index changes, so does the ETF. It’s totally mechanical. The indices also have published rules on how and when to include stocks, but because SpaceX is anticipated to be so exceptionally large, there was pressure on the index providers to tweak their rules to make sure SpaceX was included. If you’re keeping score, only Nasdaq made changes to accommodate SpaceX. S&P did not.
After much anticipation, here’s the state of play as of June 9, 2026:
Many of the indices use the float-adjusted amounts; this means a lower weighting for SpaceX than its full market-cap, which means a lower weight in any index that uses float. In the coming months, I’ll take a peek at how much SpaceX I hold, and how it’s changing, just for my own education.
So, for me, it looks like I’ll be owning some SpaceX in the not-too-distant future since the vast majority of my US holdings are in XEQT/XGRO/AOA. And, the odds are, it will lose value post IPO. That kinda sucks.
Of course, as BMO correctly points out, nobody will be immune from this kind of market movement — why, you may ask? Given SpaceX is going to be included in the popular Nasdaq 100, funds that mirror this index are going to have to make room for the new arrival, selling off shares of things they already hold, like Nvidia, and Microsoft. This will create downward pressure on the prices of these tech stocks, and hence it will also create downward pressure on any ETF that also holds Nvidia, and Microsoft. The S&P 500 holds many of the Nasdaq 100 companies, so you can expect some price erosion of ETFs mirroring the S&P indices as the Nasdaq ETFs do their rebalancing act.
In the grand scheme of things, I don’t think I really care. I don’t love SpaceX, or any other stock for that matter. The S&P indices have historically rewarded the patient investor, and I see no reason to change my strategy based on one IPO, no matter how splashy. It won’t be the last — both Anthropic and OpenAI are probably close behind with their IPOs.
The small cap Russell 2000 is also popular, but I don’t mention it in the main list since SpaceX is too big to be a small cap ↩︎
This is a CAD ETF and holds things beyond “just” the S&P index. See more here. ↩︎
This is a USD ETF, and holds things beyond just the S&P index. See more here. ↩︎
The most famous Nasdaq 100 ETF trades in USD and is QQQ. This would explain the not-very-original names chosen by the Canadian management companies. ↩︎
I think only TD uses this one, but since I’ve written about TEQT in the past, I figured I’d include it. ↩︎
and likely longer, since there is a profitability screen imposed as well for inclusion in the S&P 500 ↩︎
Over time, the size of the SpaceX float is expected to increase as insiders unload their shares; the timing of this is not known. I’d expect the SpaceX % to increase over the first year of inclusion on the S&P Total index. ↩︎
As reported last week, the USA cut their prime rates while Canada did not. The latest rates are now reflected in the HISA and short-term bond table (Canada & US). No changes for at least 6 weeks at this rate. Most cash I hold in my retirement savings is invested in an ultra-short-term bond fund, namely ICSH (one of my ETF all-stars) so I can squeeze out a few more basis points on my cash holdings.
TD Cuts Trading fees on 100 ETFs
TD seems to be upping its game. Not only are they throwing free money around, but an observant reader (thanks, big brother 🙂 ) alerted me to a recent change. You can read all about it here, but the skinny is that they cut trading fees on a list of 100 ETFs. Paying trading fees of any kind seems to be a dying business model, so it’s nice to see TDDI join the free club, at least a little bit. Some of these ETFs are even worth holding; I’ll save you the trouble and show you which ones:
Name
Symbol
What it holds
Vanguard S&P 500 Index
VFV
Largest US Companies
SPDR S&P 500
SPY
Largest US Companies in USD
Vanguard 500 Index
VOO
Same as SPY
iShares Russell 2000
IWM
Small cap US Equity in USD
TD all-in-ones
TEQT, TGRO, TBAL, TCON
100% Equity, 90% Equity, 60% Equity, 30% Equity. Read more here and here.
Newly free-to-trade ETFs at TDDI that are moneyengineer.ca approved
All the above funds would be worthy of consideration since they adhere to my rules about being passively managed, low cost, and aligned with my asset-allocation strategy. The simplest purchases here would be one of the TD or Vanguard all-in-ones (new to all-in-ones? read about them here) best aligned with your risk profile. There’s a bunch of other ones that aren’t of interest to me — bitcoin, leveraged, actively managed, segment-based…nah, I’m good.
Summary: The standard ETF fact sheet is 4 pages of information a Canadian ETF provider is required to provide. Here’s some tips about what to look for in a name.
Google AI, which is never wrong, tells me that there are more than 1500 ETFs available for purchase on the Canadian market. For those new-to-DIY-investing1, that can seem a little overwhelming. Most of my retirement holdings are tied up in just two asset-allocation ETFs, but prior to retirement, I enjoyed juggling a bunch of index ETFs to roll my own custom asset allocation that I rebalanced manually.
A good skill to have is to understand some of the basic language used in these fact sheets so you can decide if a given ETF is right for you and your investment objectives.
What’s the name of the ETF?
So much is captured in the full name of a given ETF. There’s key words I look for, and key words that I avoid.
Words I look for: “Index” or maybe “Idx”
An index is a list of assets that comply to a set of rules laid out by the index manager. You can think of an index as a detailed recipe for building a list of stocks or bonds. What’s important is that the index is not invented by the company selling you the ETF. The index is a third-party invention, and any ETF company can make use of the recipe in offering you, the investor, a product to buy. The index is the recipe, and the ETF company is the chef that prepares the dish that you buy. You could become a chef yourself, and buy the individual components of the index on your own. However, since some of the indices are comprised of hundreds or even thousands of assets, not every index is realistic for the home chef to create.
An ETF that uses the word “index” in its name suggests it’s a passive ETF, meaning there’s a skeleton crew of managers making trades based solely on what’s in the index. I like index funds because they are generally cheap, and over time, they beat the active traders2 again and again.
Like the ETF market itself, there has been an explosion in the number of indices3 out there created by the likes of FTSE Russell or MSCI. Knowing the names of some of the most popular indices can help:
S&P/TSX 60: Canadian stock market’s largest 60 companies. Canadian ETFs that track this include XIU and ZIU.
S&P 500: US Stock market’s largest 500 companies. Canadian ETFs that track this include VFV, ZSP, and XUS.
Russell 2000: US Stock market’s next-largest 2000 companies after first dropping the top 10004. A Canadian ETF that uses this index is XSU.
MSCI EAFE: Developed country index, excluding USA and Canada. Canadian ETFs that use this index include ZEA and XEF5
A quick search reveals all kinds of very specific index funds: sector based (e.g. “AI” or “Healthcare”) and country/region based (e.g. “China”, “BRICSA”). I ignore these kinds of funds because betting a sector or a region feels like market timing to me, and market timing is a proven loser in terms of long-term returns.
Words I avoid: “Hedged”
“Hedged” means that the ETF uses some kind of strategy to smooth out the ups and downs in the Canadian dollar’s exchange rate. And on one level, it makes sense: if you buy the S&P500, you’re owning a bunch of US stocks priced in US dollars. If the Canadian dollar gets stronger, then your US holdings are worth less in CAD. If the Canadian dollar gets weaker, then your US holdings are worth more to you in CAD. So some funds try to make this variance go away.
I avoid hedged funds for a few reasons:
It adds cost and complexity to the fund, two things I dislike about where I choose to invest.
It’s imperfect; while it makes the bumps in the foreign exchange rate get smaller, it would be overly expensive to make them go away completely
If you hold an asset long enough and reinvest your dividends, it will be a wash in the end, and the extra cost just creates a drag on your returns. For example, let’s compare XUS versus XSP, which are identical, save for XSP’s use of hedging:
The long term cost of using hedging: XUS vs XSP (hedged)
Words I avoid: “Leveraged” / “Bull” / “Bear”
“Leveraged” means “we’re buying stocks using borrowed money”. And while buying stocks using borrowed money can significantly enhance your returns in an up market, the opposite is true in a down market. No free lunch.
Any ETF that has Bull or Bear in the name is making a bet based on short term returns. Buying scratch tickets at Christmastime is enough gambling for me, and gambling has no place in my retirement strategy.
Summing up
Looking at the name of an ETF is a good starting filter to decide if it’s for you. It’s just one piece of many included in an ETF’s fact sheet.
Tips on how to execute on that decision were the topic of a previous post ↩︎
One tip I can offer: if more than one ETF exists offering the index, it’s probably a decent index to consider. Be a bit suspicious if only one company has an ETF that mirrors said index — I’d consider it a bit of a fringe offering, of no interest to me. ↩︎
As an illustration of the insanity regarding the explosion of indices, XEF tracks not MSCI EAFE but MSCI EAFE IMI, which adds a few more smaller companies into the mix. But if you refer to https://www.msci.com/documents/10199/11a56df6-0f09-4477-a168-cce49e1719cd you will see that the long term performance differs by 0.01%. ↩︎
