What are “.U” ETFs? A guide to Canadian-listed U.S.-dollar ETFs

And that applies even if you already hold U.S. dollars and don’t want to eat a hefty brokerage currency-conversion fee. You don’t necessarily need to buy a U.S.-listed ETF. According to Cboe Canada’s ETF screener, there are currently 2,055 ETFs available this side of the border, and 237, or 11.5%, have a U.S.-dollar trading option. You can generally identify these versions by the “.U” suffix attached to their ticker.

These are still Canadian ETFs. They’re offered by Canadian ETF issuers and trade on Canadian exchanges, but their units are bought and sold in U.S. dollars rather than Canadian dollars. That gives investors who already have U.S. dollars a way to put that cash to work without first converting it back into Canadian dollars or crossing the border into U.S.-listed ETFs.

That’s an important distinction, because the currency an ETF trades in, where an ETF is domiciled, and what assets it owns are three separate things. A .U ticker can trade in U.S. dollars and own U.S. stocks, while remaining a Canadian-domiciled fund subject to domestic regulatory and tax frameworks.

This follows up on my previous column examining when it’s worth choosing a U.S.-listed ETF over a Canadian-listed alternative. In short, U.S. ETFs can certainly offer greater selection and, in many cases, lower fees, but crossing the border can introduce additional considerations around tax reporting obligations and U.S. estate-tax exposure.

Canadian-listed U.S.-dollar ETFs offer an interesting middle ground. You can keep your investment and trading currency in U.S. dollars while retaining the administrative and regulatory characteristics of a Canadian-domiciled ETF. Let’s look at how they may simplify matters compared with U.S.-listed ETFs, and some popular options that can serve as core portfolio building blocks.

Trading currency is not the same as fund domicile

One of the most important distinctions with .U ETFs is between trading currency and fund domicile. The currency matters for practical considerations such as whether you need to convert Canadian dollars into U.S. dollars and incur a foreign-exchange fee. 

For certain tax and reporting obligations, however, where the ETF is legally domiciled can be much more important. This becomes particularly relevant when comparing Canadian-listed .U ETFs with U.S.-listed ETFs inside a non-registered account. There are two potential complications with the latter.

The first is Form T1135, formally known as the Foreign Income Verification Statement. If the total cost amount of your specified foreign property exceeds $100,000 at any point during the year, you generally have to file this form with the Canada Revenue Agency (CRA). U.S.-listed ETFs count as specified foreign property for this purpose. 

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Canadian-listed ETFs generally don’t, even when their underlying portfolio consists entirely of foreign securities. That exemption also applies to Canadian-domiciled .U ETFs. The fact that you’re buying and selling the units in U.S. dollars doesn’t transform them into foreign property.

The second consideration is U.S. estate-tax reporting. For a Canadian investor who is neither a U.S. citizen nor a U.S. resident, directly held U.S.-listed ETFs generally constitute U.S.-situs property. If you die holding more than US$60,000 of U.S.-situs assets, your executor may be required to file IRS Form 706-NA, the United States Estate (and Generation-Skipping Transfer) Tax Return for non-resident noncitizens. 

The administrative distinction remains. Shares of U.S. corporations and U.S.-domiciled funds can constitute U.S.-situs property. A Canadian-domiciled .U ETF generally does not, even if it trades in U.S. dollars and the ETF itself invests entirely in U.S. stocks.

That’s one of the main attractions of the .U structure. From your brokerage account, you’re still transacting in U.S. dollars. From a domicile perspective, however, you continue to own units of a Canadian fund, with all the tax and regulatory advantages to boot.

What you still need to keep track of

Trading a Canadian ETF in U.S. dollars doesn’t eliminate every tax consideration. There are still two important details to understand. 

The first is tax reporting in a non-registered account. You’re still dealing with a Canadian-domiciled ETF, so you’ll generally receive the usual Canadian T3 slip for distributions. Even though the ETF trades in U.S. dollars and may pay its distributions in U.S. dollars, the amounts reported for Canadian tax purposes ultimately need to be expressed in Canadian dollars.

Your Canadian brokerage will generally handle the conversion for the amounts appearing on the tax slip. Depending on the circumstances, foreign-currency amounts may be converted using the applicable exchange rate when the income arises, or an acceptable annual average exchange rate. 

The second consideration is U.S. foreign withholding tax, and this is one area where Canadian domicile can work against you. Holding a Canadian-domiciled U.S.-dollar ETF inside a registered retirement savings plan (RRSP) doesn’t provide the same withholding-tax treatment as directly holding a U.S.-domiciled ETF. 

Under the current Canada-U.S. tax treaty, qualifying U.S.-listed investments held directly inside an RRSP can generally receive U.S. dividends without the usual 15% withholding tax, assuming the account and documentation (W8-BEN) are properly structured and filed. A Canadian ETF is different because the fund itself is the shareholder receiving the dividends from the underlying U.S. companies. The withholding occurs inside the ETF before the distribution ever reaches your account.

Take the BMO S&P 500 Index ETF (ZSP.U) as an example. Its 2025 tax characteristics show $0.898283 per unit of foreign income and $0.127653 of foreign income tax paid. Putting ZSP.U inside an RRSP doesn’t make that first layer of withholding disappear. By the time the ETF distributes income to you, the tax has already been withheld at the fund level. By contrast, directly owning a U.S.-domiciled S&P 500 ETF such as the Vanguard S&P 500 ETF (VOO) inside an RRSP can avoid that 15% U.S. withholding on dividends.

This highlights the trade-off created by domicile. Canadian domicile can simplify matters such as T1135 reporting and potential U.S. estate-tax administration for non-registered accounts, while U.S. domicile can be more tax-efficient for U.S. dividend-paying securities held directly inside an RRSP.

For investors with a smaller portfolio primarily using an RRSP, a U.S.-listed ETF may be the more attractive format to avoid the 15% withholding tax. Conversely, an investor with a larger portfolio, particularly one investing U.S. dollars through a non-registered account, may place greater value on the .U structure. They can keep trading in U.S. dollars while avoiding having the ETF count as specified foreign property for T1135 purposes or as U.S.-situs property for U.S. estate-tax purposes. The better format therefore depends on portfolio size and account placement.

Either way, the “.U” suffix doesn’t change either result. It simply tells you that you’re transacting in U.S. dollars. For tax purposes, the Canadian domicile of the ETF remains the more important distinction.

Notable Canadian U.S.-dollar ETFs to watch

ZSP.U is currently the largest U.S.-dollar-denominated Canadian ETF, with more than $3 billion in assets under management. It provides a straightforward way to invest U.S. dollars across 500 large-cap American companies without buying a U.S.-listed fund.

But I would consider ZSP.U a portfolio component rather than a complete portfolio. The S&P 500 gives you substantial exposure to the U.S. stock market, but you’re still missing international developed markets, emerging markets, and fixed income.

For broader equity exposure, I personally prefer the iShares Core MSCI All Country World ex Canada Index ETF (XAW.U). XAW.U uses a diversified fund-of-funds approach spanning thousands of underlying stocks and charges a 0.22% management expense ratio (MER).

It does essentially what its name suggests, providing market-cap weighted exposure to stocks around the world while deliberately excluding Canada. That includes the U.S. alongside developed markets such as Japan, the U.K., France, and Switzerland, plus emerging markets such as China, Taiwan, India, and Brazil. 

Excluding Canada can actually be useful because it lets you decide exactly how much Canadian exposure you want elsewhere in your portfolio. This can be particularly helpful for asset location. For example, you might prioritize foreign equities such as XAW.U inside registered accounts while holding more tax-efficient Canadian equity ETFs generating eligible Canadian dividends in a non-registered account.

If your U.S. dollars are intended more for capital preservation, another option is the U.S. High Interest Savings Account Fund (HISU.U) from Evolve ETFs. It charges a 0.16% MER and has a simple mandate: depositing U.S. dollars into institutional high-interest savings accounts with major Canadian banks.

Individual investors generally can’t access the same institutional deposit rates directly, but Evolve can aggregate investor assets, negotiate those rates, deduct the fund’s expenses, and pass the remaining interest income through to unitholders. As of September 2026, HISU.U has a net annualized yield of 3.47%, paid through monthly distributions.

You can even obtain commodity exposure while keeping everything denominated in U.S. dollars. One example is the BMO Gold Bullion ETF (ZGLD.U). The ETF holds unencumbered 400-troy-ounce gold bullion bars in audited custody, giving investors direct exposure to physical gold through an ETF that trades like a stock. It charges a 0.22% MER.

Finally, there’s the long-standing Global X U.S. Dollar Currency ETF (DLR.U). This one has a somewhat different use case. Rather than serving primarily as a long-term portfolio holding, DLR.U is well known among Canadian investors as one of the ETFs used to execute Norbert’s Gambit.

The strategy involves purchasing ETF units on one side of the Canadian/U.S.-dollar pair, journaling the units to the corresponding ticker denominated in the other currency, and then selling them. At brokerages that support Norbert’s Gambit, this can allow investors converting sufficiently large amounts of money to avoid the conventional, percentage-based foreign-exchange spread, although commissions, bid-ask spreads, settlement time, and price movements still need to be considered.

Ultimately, .U ETFs are less a separate asset class than another portfolio tool. For Canadians who already hold U.S. dollars, they can provide access to a surprisingly broad range of investments while retaining the tax, regulatory, and administrative characteristics of a Canadian-domiciled ETF.

Read more about investing with ETFs:

• Dividend ETFs make you money, just not for the reasons you think
• Are currency-hedged ETFs a good idea?
• What Canadian investors need to know about ETF closures
• BMO eliminates trading fees to compete with discount brokerages

About Tony Dong, MSc, CETF

Tony Dong has been published on USA Today, U.S. News & World Report, TheStreet and more. He is also the lead ETF analyst for ETF Central, and he holds The ETF Institute’s Certified ETF Advisor designation.

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