3 Useful Canadian-Listed ETFs That Trade in U.S. Dollars

With the U.S.-Canada trade war continuing and the Trump administration imposing tariffs on Canadian goods, the push to “buy Canadian” has extended beyond groceries, cars and consumer products. For some investors, it can also influence which ETFs they choose to own.

One reason I frequently hear for sticking with U.S.-listed ETFs is that the American market simply offers more choice, often at lower expense ratios. Another is more practical: if you already have U.S. dollars sitting in a brokerage account, you need somewhere to invest them. But the listing domicile of an ETF can have consequences beyond its expense ratio or trading currency.

As I detailed in a previous MoneySense column, U.S.-listed ETFs can make plenty of sense in a Registered Retirement Savings Plan (RRSP), where holding U.S. dollars can avoid repeated foreign-exchange conversions and directly held U.S. securities can avoid the 15% U.S. withholding tax on dividends. In a non-registered account, however, the administrative and tax considerations become more involved.

Investors need to track their adjusted cost base in Canadian dollars, account for foreign tax credits and potentially file Form T1135, the Foreign Income Verification Statement, once the cost amount of specified foreign property exceeds $100,000. U.S.-listed ETFs are also generally considered U.S.-situs property for estate-tax filing purposes, which can impact Canadians with more than US$60,000 in them.

Fortunately, holding U.S. dollars doesn't necessarily mean buying a U.S.-listed ETF. Many Canadian ETF providers offer U.S.-dollar units of their funds, typically identified by a “.U” suffix. These give investors a way to deploy existing U.S. cash while keeping their ETF holdings Canadian-listed.

There are also far more choices than many investors realize. The Cboe Canada ETF screener currently identifies more than 230 Canadian-listed U.S.-dollar ETF units, spanning everything from equities and fixed income to covered calls and cash-management strategies.

Rather than running through the entire menu, I've selected three that I think are particularly useful for different jobs: low-cost broad-market exposure, above-average monthly income and safety of principal. All three come from Canadian-based ETF issuers as well, instead of foreign asset managers.

BMO S&P 500 Index ETF (ZSP.U)

According to Cboe Canada’s ETF screener, ZSP.U is the largest U.S.-dollar-denominated Canadian-listed ETF, with more than $3 billion in assets under management. It does essentially the same job as its Canadian-dollar counterpart, providing straightforward exposure to the S&P 500 Index for a 0.09% MER.

One feature I like about ZSP.U is its physical replication. Rather than using a fund-of-funds structure that simply holds shares of a corresponding U.S.-listed ETF, BMO goes out and owns the underlying S&P 500 stocks directly in approximately their index weights. From an investor’s perspective, you are therefore getting a Canadian-listed wrapper around a portfolio that directly owns the companies in the index.

For newer investors, it is also worth remembering that the S&P 500 is more selective than simply taking the 500 largest U.S. stocks. Companies must satisfy requirements related to market capitalization, liquidity, trading volume and earnings, with final inclusion determined by an index committee.

The portfolio investors receive today is decidedly top-heavy. The largest holdings are dominated by the Magnificent Seven, technology accounts for roughly 37% of the index, and the resulting portfolio has a pronounced large-cap growth tilt.

There is some income, although that is clearly secondary to capital appreciation. ZSP.U currently has an annualized distribution yield of approximately 0.8%, reflecting, among other things, the 15% U.S. withholding tax applied to dividends received by the Canadian ETF, as well as fund expenses.

Hamilton Enhanced U.S. Covered Call ETF (HYLD.U)

If your priority is current income rather than maximizing capital appreciation, HYLD.U takes a considerably different approach with covered calls and leverage.

Covered calls involve owning a stock or ETF and selling call options against that position. The option premiums generate additional cash flow, but in exchange, the seller gives up some potential appreciation if the underlying security rises beyond the option’s strike price. One way to partially offset that reduced market exposure is with modest leverage, which is exactly what HYLD.U incorporates.

HYLD.U is a fund of funds that holds a selection of Hamilton covered call ETFs and applies approximately 1.25 times leverage through cash borrowing. Put simply, for every $100 of investor capital, the portfolio has roughly $125 of exposure, with the additional $25 financed through borrowing. This differs from the daily-reset leverage commonly found in traditional leveraged ETFs using swaps.

The underlying portfolio is designed to provide exposure broadly resembling the composition of the S&P 500, with much of the income generated through Hamilton’s covered call strategies. Its YIELD MAXIMIZER™ ETFs generally write at-the-money calls against only a portion of their portfolios. HYLD.U can also hold Hamilton’s DayMAX™ ETFs, which uses zero-days-to-expiry (0DTE) options.

Income is the main attraction for HYLD. Based on its most recent monthly distribution annualized against net asset value, HYLD.U currently offers an annualized distribution yield of approximately 11.8%. Investors should remember that distributions are not guaranteed, and a high distribution rate should not be confused with expected total return.

There is also a meaningful cost to the additional complexity. Covered call management, the expenses of the underlying ETFs and the cost of leverage make HYLD.U considerably more expensive than a plain index ETF. According to its January 9, 2025, ETF Facts sheet, HYLD reported a 2.35% MER.

Evolve U.S. High Interest Savings Account Fund (HISU.U)

Maybe you want neither equity growth nor double-digit distributions. You might simply have U.S. dollars sitting around and want somewhere relatively conservative to park them while earning more interest than your bank is willing to pay. That is where HISU.U comes in.

Rather than investing in stocks or bonds, HISU.U primarily places U.S.-dollar deposits with major Canadian banks. The advantage is scale. Evolve can negotiate institutional deposit rates that generally exceed what an individual investor might receive from a conventional U.S.-dollar savings account.

Those rates will naturally move with U.S. monetary policy. With the federal funds target range currently at 3.50% to 3.75%, HISU.U's net annualized yield, based on the seven-day period ending August 20, 2026, was 3.38%. If U.S. interest rates rise, the fund's income can increase relatively quickly. If rates fall, investors should expect its yield to decline as well.

HISU.U's net asset value generally stays close to US$100 per unit. It gradually rises as interest accrues and then adjusts downward when the distribution goes ex-dividend. That makes its return profile quite different from a conventional bond ETF, where changing interest rates can cause more meaningful movements in market value.

The important qualification is that HISU.U is still an ETF and should not be treated as a guaranteed deposit. Its units are not covered by Canada Deposit Insurance Corporation (CDIC) insurance in the way an eligible bank deposit or guaranteed investment certificate (GIC) may be. There are still risks associated with the fund structure and its deposit counterparties.

Within the ETF universe, however, HISU.U’s combination of cash deposits, minimal price volatility and floating interest income places it toward the conservative end of the spectrum, while maintaining excellent transparency and daily liquidity.