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Norbert’s Gambit at RBC Direct Investing

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.  At RBC Direct Investing, there is no need to even pick up the phone:  the entire process can be completed online.

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.

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 | 2017-01-10T09:17:20+00:00 January 10th, 2017|Categories: DIY Investing, Foreign Withholding Tax, Norbert's Gambit|15 Comments


  1. John Smith March 11, 2017 at 9:38 pm - Reply

    Hi Justin,

    Any chance you can make this same exact using rbc direct investing converting USD–CAD ?

    Also is in this video you don’t mention the settlement dates? are the trade settlements done in real-time ?

    • Justin March 12, 2017 at 12:59 pm - Reply

      @John Smith: I have no plans to make a video for converting USD to CAD at RBC Direct Investing (the process is just the opposite to my posted video: buy DLR.U in the USD account, sell DLR in the CAD account). All of the trades can be completed on the same trade date (as long as there are no holidays between the trade date and settlement date that differ for the US and Canadian stock markets – this caveat is only relevant if you are buying/selling US-listed ETFs on the same trade date).

  2. Aleks January 16, 2017 at 9:59 pm - Reply

    Thanks for such great tutorial! Do you have any hints on doing such Gambit at discounted brokers? (I have account with Questrade but never traded in USD). From what I know there is no separate USD accounts…

    Thanks again!

  3. Maximus January 11, 2017 at 12:45 pm - Reply

    Hi Justin, thanks for the great video. Considering there would be a ~$10 fee to buy and another to the sell the ETF (~$20 total), what would be the minimum amount of money that you would suggest converting before using Norbert’s gambit? $2000? Thanks again for the video, very useful.

    • Justin January 11, 2017 at 4:41 pm - Reply

      @Maximus: I would generally recommend a minimum conversion amount of between $5,000 and $10,000 CAD. With these minimums, the additional trading commissions and bid/ask spreads should be offset by the reduced foreign withholding taxes and expense ratios within 1-2 years.

      • Maximus January 11, 2017 at 6:52 pm - Reply

        @Justin: Thanks again for the advice. Much appreciated.

  4. Kyle January 11, 2017 at 10:00 am - Reply

    Thanks so much!

  5. Kyle January 11, 2017 at 9:46 am - Reply

    Can this also be done in non-registered cash accounts (US and Canadian) or does it have to be in RRSPs? I live in Canada but earn my income in US dollars it might be cheaper to convert my money this way than with a foreign exchange service like Knightsbridge.


    • Justin January 11, 2017 at 9:50 am - Reply

      @Kyle: To convert USD to CAD in a taxable account, the process would be very similar. In this case, you would buy DLR.U with your US dollars on the US-dollar side of your non-registered account, and sell DLR on the Canadian-dollar side of your non-registered account.

      • Kyle January 11, 2017 at 11:45 am - Reply

        Hi Justin, just another thought. Would there be tax implications here? Would the bank indicate I’ve earned a profit from selling DLR?

        • Justin January 11, 2017 at 4:45 pm - Reply

          @Kyle: You would need to obtain the Canadian dollar cost of purchasing DLR.U (generally, you can use the Bank of Canada FX rate available on the settlement date of the trade), and subtract this amount from the Canadian dollar proceeds from selling DLR. The banks usually calculate this gain/loss incorrectly, so you will be required to manually do so.

  6. Sebastien January 10, 2017 at 12:07 pm - Reply

    Will there be video tutorials about Norbert’s Gambit for TD Direct Investing and other banks?

    • Justin January 10, 2017 at 12:34 pm - Reply

      @Sebastien: There sure will be – stay tuned for more 🙂

      • Sebastien January 10, 2017 at 1:34 pm - Reply

        I sure will do !

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