Q: Given the low Canadian dollar and what appears to be an inflated U.S. stock market, is now still a good time to buy U.S. ETFs? It seems to me that someday the Canadian dollar will rise and one could lose much of the value of their original purchase.
—Michael Dillon, Kelowna, B.C.
A: If you’re investing for the long haul and it isn’t a big lump sum amount, now is as good a time as any to buy U.S. ETFs. Why do I say that with such confidence? Because I’m not a market timer. I think it is almost impossible to predict where the market will move in the short term. There are those who cite the Shiller P/E to support the view that the market is inflated. And others, like Terry Shaunessy of Shaunessy Investment Counsel, who disagree. “Both the S&P 500 and large-cap international markets continue to look attractive as the companies that dominate these indexes are global companies that sell their products worldwide, such as Apple in the U.S. or Nestlé in Europe,” he says. The second issue you raise, currency risk, is surprisingly easy to manage with ETFs. The major providers, iShares and Vanguard, both have U.S. ETFs that are hedged, eliminating the effects of foreign exchange, both positive and negative.