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Norbert’s Gambit at BMO InvestorLine

US-listed ETFS are the most tax-efficient way to invest in foreign equities within your RRSP account.  The funds also tend to have lower annual fees than Canadian-listed ETFs.  However, they must be bought and sold in US dollars, and if you have to exchange your Canadian dollars for greenbacks, it can be extremely costly.  Many discount brokerages charge about 1.5% – or a whopping $150 on a $10,000 conversion.  If you’re going to use US-listed ETFs, you need to find a way to mitigate these high costs.

If you need to convert loonies to US dollars, I’ll show you a technique that can save you hundreds of dollars per transaction.

Introducing Norbert’s gambit

Savvy DIY investors have long used a technique called “Norbert’s gambit” to sidestep these steep currency conversion costs.  The name comes from Norbert Schlenker, an investment advisor in B.C. who was the first to popularize it.

Norbert’s gambit with DLR and DLR.U

The simplest way to do Norbert’s gambit is with the Horizons US Dollar Currency ETF.  This ETF – which is equivalent to holding US cash – is available in two versions.  Both trade on the TSX, but the first, with the ticker symbol DLR, is bought and sold in Canadian dollars, while the second, DLR.U, trades in US dollars (Note: Some investors prefer to use interlisted securities to implement the gambit, as this avoids the need to speak with a trader at BMO InvestorLine).

You can use these ETFs to exchange Canadian dollars for US dollars and then use the proceeds to buy US-listed ETFs.  Norbert’s gambit can be confusing, so I’ve put together a video tutorial that you can follow along with.  For more information on this strategy, please refer to our white paper.


By |2017-03-28T23:29:33+00:00February 7th, 2017|Categories: DIY Investing, Norbert's Gambit|5 Comments


  1. Akshay Kalaria April 17, 2017 at 7:50 pm - Reply

    These videos are great too bad no Questrade. If I was to complete a conversion using norbert’s gambit is there extra information I need to keep for tax purposes? I know in other articles I have read here and dans blogs it’s hands on but this seems pretty straight forward. Also is it worth someone who is just starting out to have US etfs in RRSP compared to Canadian in TFSA ? I would like to start to build a good foundation. Other articles say just keep it simple but to me it doesn’t seem complicated to keep US etfs in RRSP and Canadian in TFSA. Also bond etfs in RRSP. I will be using simple portfolios for both don’t wanna get crazy that but using two different country etfs in proper accounts doesn’t seem to complicated. Any tips would be advice would be great.

    • Justin April 21, 2017 at 5:01 pm - Reply

      @Akshay Kalaria: I am working on a Norbert’s gambit video for Questrade – it should be released in the next month or so.

      If you complete the Norbert’s gambit in a taxable account, you need to convert the purchase cost / sale proceeds or DLR.U to Canadian dollars using the Bank of Canada noon exchange rate on the settlement date of the trade. If you implement the gambit in an RRSP, there are no tax consequences.

      I tend to hold US-listed foreign equity ETFs in RRSP accounts and Canadian-listed foreign equity ETFs in TFSA accounts. If you’re not comfortable using the Norbert’s gambit strategy in order to purchase US-listed foreign equity ETFs in an RRSP account, that’s fine too. Even my most aggressive model ETF portfolio (100% equities) would only have a foreign withholding tax / product cost drag of about 0.20% per year (if you didn’t hold the US-listed foreign equity ETF counterparts). For smaller RRSP accounts, the additional savings may not be worth the trouble.

      Most investors tend to hold equity ETFs in their TFSA account, and any bond ETFs in their RRSP account.

  2. Michael James February 7, 2017 at 11:52 am - Reply

    I’ve done this a dozen or so times at BMO Investorline, the first few with DLR, and the remainder with RY (in Canada and the U.S.). It’s true that Investorline will clean up the positive and negative position, but always one business day late. This generates an interest charge that gets applied toward the end of the month. Investors who use this gambit in a cash account might not see this interest charge because Investorline says they don’t charge or pay interest of less than $5 in a month inn cash accounts.

    • Justin February 7, 2017 at 11:58 am - Reply

      @Michael James: Thank you for sharing your experience (it sounds like it is very similar to the process at RBC Direct Investing, where you generally have to call an RBC representative to reverse the debit interest charges).

    • Aleks February 7, 2017 at 3:04 pm - Reply

      By RY you mean Royal Bank, correct? So you by RY.TO and sell RY.NYSE? Do you need to ask for journaling? Sorry I’m just at the beginning of my journey 🙂

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