Buying US Mutual Funds from Canada - III
Can someone please advise what is required for a Canadian citizen residing in Canada to purchase US Mutual Funds (Not those offered by Canadian Mutual Fund Companies)
Some of us here are doing it.
I opened an account with Jack White & Co. last summer but switched to Waterhouse Securities (owned by TD Bank) in late December. Three reasons:
As we speak JW&C is still dragging their heels transferring my account. Frankly I'm glad to be leaving them. Just wish the feeling was more mutual so they'd hurry up and get rid of me faster :-)
If you have specific questions, fire away...
I was under the impression that you had to establish an address in the US such as a post office box etc.
What you mentioned above does that allow me to buy any type of US Mutual funds in the US?
Simon, you can't buy US mutual funds directly from US MF companies because archaic US SEC regulations prevent US MF companies from selling directly to non-US residents. However like in Canada, US brokerage houses offer MFs to the public. The brokers buys MFs in "street name", so they effectively insulate the US MF companies from having direct dealings with us foreigners. That evidently keeps the SEC zealots off their (and our) backs.
Obviously the US brokers don't offer their services for free (surprise!) They charge a nominal fee ($25 in the case of Waterhouse) to buy or sell a fund (like Vanguard) which pays them no commissions or trailers. For other funds their fee ranges from zilch on upwards depending on what they can get from the MF company. Either way you still pay.
As one of the threads I referenced above says, call Waterhouse (1-800-934-4443) to get a copy their Fund Family Network Information & Comparison Guide. The book summarises the fees that apply to each fund family. You can also visit their website for more information.
No they don't sell every one of the thousands of US MFs, but they do sell all the popular ones, e.g. Vanguard, Fidelity, Templeton, Janus, T Roe Price, Scudder,...
Bylo, as my favourite internet guru, can I pose a question on the same topic? Could one buy US Funds and include them as part of the 20% foreign contnent in an RRSP?
Bylo, having thought about it for 30 seconds I think I know that the answer must be NO, because the entire account would be 100% foreign. Right?
I'm in the process of opening a Waterhouse account, but I thought others might be interested to know that online trading is not available in BC. -- its availble everywhere else in Canada. Haven't got a reason for this yet but if I ever do i'll post it.
Right! You might also encounter some minor difficulties getting a US broker to open up a SDRRSP :-)
Even if you could buy it and put it into your RRSP, it's not an eligible investment. Any fund that has a prospectus filed in the US (or elsewhere other than Canada) is not an eligible investment for tax deferral plans. That's why Canadian fund companies don't want to make their funds available to US residents. If they had a prospectus approved by the SEC, this would automatically make such funds ineligible for RRSP/RRIF plans.
Thanks for the information on US fund purchases. You've posted this info before but it's always good to have a refresher on how to buy great funds with low fees.
Thank you for all the information. I will persue it and let you know of my results. I am very much interested in buying US MFs. I will be retiring shortly and later expect to spend my winters in the warm part of the world. As the exchange US to Can $ is very poor my thought was to take the hit at the start and invest directly in the US and then draw on the US income while in the US.
This of course leads me to tax issue ie where to report my worldly income.
Thanks Bylo and ONTARIO FA. I know I can always count on you guys (gals?) to give a concise and accurate answer.