NEO Exchange Shares - Stocktrades Canada

If any, is there any advantage to buying Neo Exchange shares vs. the regular shares on the NYSE. Since they are currency hedged I would assume there is not. Any further explanation on this would be much appreciated. Merry Christmas Dan!

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Asked on December 22, 2024 1:02 pm

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Private answer

Hey there. Merry Christmas!

The currency hedging is actually the "advantage" if you view it as that. The other thing would be the dividends paid from these companies are paid in CAD. This can be an advantage to someone who is in retirement and doesn't really travel abroad that much and utilizes CAD. If one owns USD stocks and doesn't use USD, they have to convert it back to CAD. This has worked out very well recently with the falling CAD, but isn't guaranteed to work out well in the future.

I'd say the weaker the Canadian dollar the more attractive these CDR's become. The hedging has cost investors a lot of currency gains due to the weakening CAD but if the dollar starts to strengthen the hedging will actually help.

Ultimately, it is all a personal decision. I currently hold the USD NYSE listed companies, but if the dollar got weak enough (thinking $0.65~) I would no doubt start buying the CDRs over the USD listings.

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Posted by Dan Kent

Answered on December 26, 2024 9:12 am

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Would love to see a utube video on various strategies that an investor could utilize to hedge against CADUSD currency. Hint hint.

(bpl521@outlook.com at December 26, 2024 11:16 pm)

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Good idea for sure!

(Dan Kent at December 27, 2024 7:49 am)

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Thanks Dan. I totally agree with bpl1521's comments as well!!

(Neil Botelho at December 27, 2024 9:05 am)

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Hi Dan, I'd like to ask the reasoning behind you're still buying USD every week. When the USD is this high, your would've lost almost 20% of your CAD (0.75-0.80 compared to 0.65 now). Unless you 'd expect the US stocks you purchase would gain more than 40%, because the TSX has gained 19% this year. Maybe I'm completely on the wrong track. Could you share your reasoning please?

(fern.y.yang@gmail.com at December 27, 2024 4:21 pm)

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Hey there. When the CAD falls, you actually gain in CAD. So, currency bought at $0.83 compared to now would have gained 17%. If you buy USD now and the CAD drops to lets say $0.65, you'd have a 5.7% gain. This is because as the CAD drops, your USD will buy more CAD. Look at it this way. Lets assume both currencies are at par with one another. You buy $1 USD with $1 CAD. Then the CAD drops to $0.50 relative to the USD. You can now buy $2 CAD with your $1 USD. You've doubled your money on a constant currency basis. Hope this helps

(Dan Kent at December 27, 2024 7:59 pm)

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Thanks for taking your time answering my question and this makes a lot sense! Happy New Year, Dan!

(fern.y.yang@gmail.com at December 30, 2024 11:27 am)

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