1. ETF Portfolio - XEQT in RRSP
Description: This portfolio is just XEQT inside an RRSP. Since XEQT is a Canadian-listed fund that holds U.S.
and international stocks through other iShares ETFs, there is some foreign withholding tax (FWT) leakage built in.
U.S. dividends from XTOT face the 15% FWT since it is CA listed, however, ITOT is exempt from FWT as it is US listed and held in the RRSP.
XEQT holds XEF for developed markets and XEC for emerging markets, both of which are held in the most efficient way possible, however, still suffer from unavoidable FWT that their host countries impose.
Overall, XEQT provides extremely efficient tax management with the avoidable tax drag at less than 3 basis points (0.03%)—so hardly noticeable in practice.
Holdings
| ETF Ticker |
Asset Class |
Allocation |
Account Type |
| XTOT |
US Equity |
30.00% |
RRSP |
| ITOT |
US Equity |
15.00% |
RRSP |
| XIC |
Canadian Equity |
25.00% |
RRSP |
| XEF |
International Developed Equity |
25.00% |
RRSP |
| XEC |
International Emerging Markets Equity |
5.00% |
RRSP |
2. ETF Portfolio - XEQT in TFSA
Description: This portfolio is just XEQT if it were held in a TFSA.
U.S. dividends from both XTOT and ITOT face the 15% FWT since the TFSA is not eligble for FWT exemption under the CA-US tax treaty.
XEQT holds XEF for developed markets and XEC for emerging markets, both of which are held in the most efficient way possible, however, still suffer from unavoidable FWT that their host countries impose.
Overall, holding XEQT in a TFSA is as tax effecient as an all-in-one ETF gets.
Holdings
| ETF Ticker |
Asset Class |
Allocation |
Account Type |
| XTOT |
US Equity |
30.00% |
TFSA |
| ITOT |
US Equity |
15.00% |
TFSA |
| XIC |
Canadian Equity |
25.00% |
TFSA |
| XEF |
International Developed Equity |
25.00% |
TFSA |
| XEC |
International Emerging Markets Equity |
5.00% |
TFSA |
3. ETF Portfolio - XEQT in Non-Registered
Description: This is the most efficient way to hold XEQT, structured to maximize tax efficiency by effectively avoiding foreign withholding tax (FWT). Any FWT imposed by the host country can typically be recovered by offsetting Canadian taxes, assuming there are Canadian taxes to offset, which is generally the case.
Holdings
| ETF Ticker |
Asset Class |
Allocation |
Account Type |
| XTOT |
US Equity |
30.00% |
Non-Registered |
| ITOT |
US Equity |
15.00% |
Non-Registered |
| XIC |
Canadian Equity |
25.00% |
Non-Registered |
| XEF |
International Developed Equity |
25.00% |
Non-Registered |
| XEC |
International Emerging Markets Equity |
5.00% |
Non-Registered |
4. PWL Capital - Model Portfolio in RRSP
Description: This is the PWL Capital model portfolio, if it were held in the RRSP.
It's a straightforward design that has a home bias with broad global exposure.
From a foreign withholding tax (FWT) perspective, U.S. dividends in VUN get hit with the 15% FWT since VUN is CA listed and held in an RRSP.
The tax drag from XEF and XEC are unavoidable and are already held in the most efficient way possible. Just like with XEQT, the avoidable FWT here is tiny — less than 6 basis points overall,
barely noticeable. The main idea is to keep things simple, diversified and tax-efficient.
Holdings
| ETF Ticker |
Asset Class |
Allocation |
Account Type |
| VUN |
US Equity |
43.00% |
RRSP |
| XIC |
Canadian Equity |
33.00% |
RRSP |
| XEF |
International Developed Equity |
17.00% |
RRSP |
| XEC |
International Emerging Markets Equity |
7.00% |
RRSP |
5. International Portfolio in TFSA
Description: This is a basic international portfolio that excludes US and Canadian equity, commonly known as EX-NA
(Excluding North America). This portfolio designed show you how much you could pay
in foreign withholding taxes (FWT) under a suboptimal strategy. The fund holds IEFA and IEMG for international developed and emerging markets, respectively.
Layer 1 of the FWT is unavoidable, since it comes from the host countries at ~8%, and ~10%. However, since we hold these US listed ETFs in the TFSA, it triggers Layer 2 of FWT of 15%.
This portfolio has a massive tax drag of 63bps, many multiples larger than the management fees of the ETFs it consists of!
Holdings
| ETF Ticker |
Asset Class |
Allocation |
Account Type |
| IEFA |
International Developed Equity |
50.00% |
TFSA |
| IEMB |
International Emerging Markets Equity |
50.00% |
TFSA |
