Canadian Currency ETFs

Investing in currency-pegged ETFs can be an intelligent way to diversify your portfolio while minimizing risk. These funds are designed to track the performance of a specific currency, allowing investors to capitalize on currency fluctuations without the hassle of actually trading currencies.

You have various options if you want to invest in currency-pegged ETFs in Canada. From Canadian dollar ETFs to US dollar ETFs, there’s something for every investor. But how do you choose the best ones for your portfolio?

In this article, I’ll provide a comprehensive guide to the best currency-pegged ETFs in Canada, including those pegged to the Canadian dollar and the US dollar. Whether you’re a seasoned investor or just starting, this guide will help you make informed decisions and build a robust and diversified portfolio.

Best Canadian Dollar Exposure ETFs

If you would like to gain exposure to the Canadian dollar, here are ETFs which try to replicate the performance of the Canadian dollar.

Horizons Canadian Dollar Currency ETF (CAN.TO)

This ETF aims to provide exposure to the Canadian dollar relative to the US dollar by holding cash and cash equivalents denominated in Canadian dollars.

BMO Canadian Dollar ETF (ZLB.TO)

This ETF aims to provide exposure to the Canadian dollar by investing in Canadian dollar-denominated cash and cash equivalents.

iShares S&P/TSX Canadian Dollar Index ETF (XSP.TO)

This ETF aims to track the performance of the Canadian dollar relative to the US dollar by investing in short-term Canadian dollar-denominated money market instruments.

BMO Canadian Dollar Hedged High Yield Bond ETF (ZHY.TO)

This ETF provides exposure to high-yield corporate bonds issued by Canadian companies while hedging against currency risk by investing in forward contracts.

First Asset Canadian Dollar ETF (CAD.TO)

This ETF aims to provide exposure to the Canadian dollar relative to the US dollar by investing in cash and cash equivalents denominated in Canadian dollars.

Purpose CDN Cash Fund (PCA.TO)

This ETF aims to provide exposure to the Canadian dollar by investing in Canadian dollar-denominated cash and cash equivalents.

Canadian Dollar Hedged ETFs

If you are looking to hedge changes in the Canadian dollar, there are several ETFs that you can consider:

iShares MSCI Canada ETF (EWC)

This ETF exposes Canadian equities while hedging against currency risk by investing in forward contracts.

iShares Currency Hedged JPX-Nikkei 400 ETF (HJPX)

This ETF provides exposure to Japanese equities while hedging against currency risk by investing in forward contracts.

iShares Currency Hedged MSCI EAFE Small-Cap ETF (HSCZ)

This ETF provides exposure to small-cap stocks in developed markets outside of North America while hedging against currency risk by investing in forward contracts.

iShares MSCI EAFE Currency Hedged ETF (HEFA)

This ETF provides exposure to developed market equities outside of North America while hedging against currency risk by investing in forward contracts.

iShares MSCI ACWI ex U.S. ETF (ACWX)

This ETF provides exposure to global equities while hedging against currency risk by investing in forward contracts.

It’s important to note that hedging against currency risk comes with potential costs, such as reduced returns if the Canadian dollar appreciates against the currency being hedged.

Top US Dollar ETF

There are several US dollar-pegged ETFs that you can consider:

Invesco DB US Dollar Index Bullish Fund (UUP)

This ETF aims to track the performance of the US Dollar Index, which measures the performance of the US dollar against a basket of six major currencies, including the euro, yen, British pound, Canadian dollar, Swedish krona, and Swiss franc.

WisdomTree Bloomberg US Dollar Bullish Fund (USDU)

This ETF aims to provide exposure to the US dollar by holding short-term US Treasury bills and forward currency contracts.

iShares Short Treasury Bond ETF (SHV)

This ETF provides exposure to short-term US Treasury bonds denominated in US dollars.

iShares 7-10 Year Treasury Bond ETF (IEF)

This ETF provides exposure to intermediate-term US Treasury bonds, which are denominated in US dollars.

ProShares Ultra Bloomberg Commodity (UCD)

This ETF aims to provide exposure to a basket of commodities while hedging against currency fluctuations by holding futures contracts denominated in US dollars.

Invesco DB US Dollar Index Bearish Fund (UDN)

This ETF provides inverse exposure to the US dollar relative to a basket of six other currencies. This is how you can also go long to short the US dollar.

It’s important to note that these ETFs are designed for investors who want to gain exposure to a particular currency or asset class while hedging against currency risk.

Foreign Currency ETFs

There are a few Canadian dollar-pegged ETFs to gain exposure to foreign currencies that you can consider:

Horizons US Dollar Currency ETF (DLR)

This ETF aims to replicate the performance of the US dollar against the Canadian dollar.

Horizons Euro Currency ETF (HEU)

This ETF aims to replicate the euro’s performance against the Canadian dollar.

Horizons Japanese Yen Currency ETF (HJP)

This ETF aims to replicate the performance of the Japanese yen against the Canadian dollar.

Horizons Australian Dollar Currency ETF (HAD)

This ETF aims to replicate the performance of the Australian dollar against the Canadian dollar.

Horizons British Pound Sterling Currency ETF (GBPP)

This ETF aims to replicate the performance of the British pound sterling against the Canadian dollar.