What Is A CDR & How Do They Work? - Investing For Beginners In CANADA
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- Опубликовано: 27 июл 2024
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Today I'll cover the new CDRs in Canada! Also known as Canadian Depositary Receipts.
#stockmarket #canada #theinvestingacademy
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Intro (0:00)
Conversion Fee + Currency Risk (2:24)
CDR Examples + Benefits (4:17)
NEO Exchange (8:19)
How Do CDRs Make Money? (11:20)
Considerations (12:30)
Summary/Final Thoughts (14:48)
When To Not Use A CDR (16:05)
Outro (17:30)
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What are your thoughts on CDRs? Leave a comment down below. Thanks for watching! :)
Finally the video I've been requesting for weeks! Thanks for sharing Brandon, much appreciated!
Thanks for sharing, I've been watching your video since the day I opened my TFSA/personal account and started to trade. Gotta say this channel deserves more subscribers !!!
Thanks Brandon - really appreciate you taking the time to explain and clarify these questions people always ask!
Thank you. Exactly what I needed. Subscribed.
Another fantastic video! Great content - thanks Brandon
Thanks for this great vid! Gonna have a look at these now.
Great Insights. Thank you very much for sharing.
Thank you so much Brandon for the information!! I really appreciate it this video was really helpful!!
Always nice seeing new concepts being offered to Canadians. Good ol DIS not on WS missed me 20k sub 100 there. Still stings. Great summary! Brings light to the externalities like volume differentials, currency effects, and knowing your options
Very cool! Thanks for sharing!
Well explained...Thanks Brandon!!
Thank you very much for making this video. Y'all are awesome! :)
Thanks again Brandon.. Been telling my kids these are a great opportunity!… Great topic!
Hi Brandon I really enjoy watching all of your videos with you and/or your dad. I was wondering if you could make a video on LSPD(TSX) explaining its crazy volatility. Thanks! Keep up the great work.
Thanks Brandon. Great video
Thank you so much for this video, I actually asked this question so many times about cdr and even though am following you from the last one year however I missed this video earlier. Luckily i asked about cdr on bloosm and somebody put this video as a reference
Very good and complete explanation. Bravo. 👍
Thanks for this video! I've been with CDRs since they came out. Tesla has so far been the best performer. Very happy to not worry about the conversion rates.
Ty I needed this as so many of my friends just says its bad but can not give any reason why.
Cant go wrong with cdr. I bought some tsla cdr and Google cdr during the dip. I did own tsla in USD and trust me the conversion fee will sting. Like Brandon said, because of the low volume. It takes a little bit of patience to sell/buy this especially if your dollar conscious. But for a long term investment. A no brainer. All Canadians should be using cdr in my opinion. Let's use our own dollar. Let's drive up the volume. We will all benefit in the long run. The more investor uses cdr, the more big companies we're gonna get here.
Thank you Brandon. I am new to Canada and always wanted to invest in US stocks without the risk of getting into the Forex conversion issues. Thank you for simplifying CDR for me. I had already started investing in CDR knowing some aspects of this financial instrument and now things have become a lot clearer.
Very informative, thanks Brandon! 👏
Thanks for the content!
Thank you Brandon for your guidance on the new CDRs /
I kind of like Costco - especially when looking at a 10yr stock performance - at - 25% appreciation per year...on their regular shares 😀
This is very exciting for Canadians, I am definitely gonna be buying some of these !
Excellent video. I have been buying CDRs for more than a year and very happy!
Hello from Vancouver! Thanks for the video it is very informative
Thanks for the info Brando!!! I think their a great product😎
I've got Tesla , Google , and Amazon CDRs ... I don't even think about dividends. I look at these companies as growth entities and whatever dividends I get is just a bonus. They track pretty close to the US ones. ie. If Google jumps 2% , my CDR will jump 1.9% or 2.1% . Very close. CIBC and NEO should be praised for these things. lol
Thanks for you good explanation! I have already in my portfolio some AAPL cdr
great info bud
Thank you Brandon! Such a great content! I do have amazon cdr shares! ^^
Brandon: With the announcement yesterday that banks and insurance companies can now increase dividends and buy back stock, how much off the increases are already priced into the market and what might we expect to see in the next month as results are announced? A short video on how you are analyzing this issue might help investors.
thank you for talking about this
Thank you so much! ❤️
The CDR is a great innovation, but that fee is a big deterrent at the moment. Thanks for posting
Very informative video. I can take all the risk to invest in CDR except the Volume as low volume is a big problem and when you really want to get something or get rid of something, low volume means there are higher number of people from the pool is thinking the same as you are thinking which makes it harder to do the opposite action, Buy or Sell...
Thanks Brandon for explaining this CDR. Which account do i have to put this? Since they are US stocks traded in Canadian $s, is there issue with withholding tax? Does it have to be in an RRSP account or can I trade it in TFSA account?
One major drawback is also some of these tickers have very solid option volumes which you will miss with the CDR's
Weooooow you're the best Brandon !!! XD
Great video. TFSA question--> Alphabet for example, realized gains....taxed? What about Apple dividends? How does that work? ADR vs CDR vs RDC with the stocks mentioned above...would I need W-8BEN form? On the flip side, don't know if I'd ever want to but what if I held an ADR in a USD RSP or Cash account?
I love the education towards new products that you're providing. I've been hearing a lot about Fundrise as a great investment option. Are there Canadian options out there to get into something like this? I'd love to hear your spin on it.
Addy. Brandon did a video on them recently.
Could you please make a video explaining the "spread"? What it is, how it works and how it affects the investor?
Hi! I am wondering can you explain what happened to AQN ? Should I continue to hold it?
Since usd is getting lower due to fast rates of inflation, wouldnt it be better to get cdr? what are your thoughts on getting around us inflation through cdr for bigger gains?
I'm wondering what the tax implications are of holding a CDR in a TFSA, and whether the dividends would still be subjected to a 15% tax.
I was wondering exactly the same
as far as i know the 15% tax is only waived inside of an RRSP. My suspicion is with a CDR the 15% would be withheld
Assuming no tax implications other than the 15% on dividends.
@@joeindo9174 Not only, you can skip that from a TFSA account too, but only if you trade Canadian stocks/etf, so probably for this it will apply too, but I haven't been able to find something that confirms it
Taxation for CDR dividends is the same as it is for dividends paid from U.S.-listed stocks. Those dividends are considered regular income if held in a taxable account. The dividend tax credit does not apply.
Within your investment account, expect a foreign withholding tax to be applied to dividends paid by U.S. companies and CDRs. You can normally claim a 15-per-cent foreign tax credit to offset this withholding tax. That’s a federal tax credit, but a provincial credit may also be available.
These CDR’s are exciting! Can we expect to see this for popular ETF’s like US vanguard ones?
You can buy the VFV etf lol
Any idea how hedging works?
Forwards or long dated swaps?
Forwards might have premium/discount risks, that can lead to exchange rate risks.
Swaps might have basis risk building into the pricing.
Hi Brandon, just want to know how they convert these shares. Like a tenth of the US stock or do they let you know.
Thank s
How do stock splits affect CDRs? Like the upcoming googl split… thanks
we have the BDR's here in Brazil. the same as the CDRs for Canadians.
Weak USD against CDN is a buying opportunity for US equities at the moment using Norton Gambit for currency conversion.
Just wondering if the cdr stock price moves in sync with the actual stock price? I ask because if cibc buys a basket of shares and splits them up then perhaps the cdr price will take on a life of its own given the lower trading volume
Can we hold us stocks like apple but cdr .is it good to hold in tfsa and getting my dividend as well there
Given some CDRs pay dividends would you suggest holding these "American" stocks be held in an RRSP? Given that TFSA have a 15% withholding tax?
Hi Brandan I have one question what if my TFSA investment get delisted from NYSE
How does the withholding tax on US dividends work with this product?
CDR's are a game changer especially when you are trying to balance your foreign investment under the 100K mark where you have to declare foreign investments.
Lovely to see you here as well!
@@smdiecast1060 Ha ha, yup. I do try to watch fellow Canadian financial RUclipsrs. You are pretty keen so I am not surprised to see you here :-).
Looks like more CDRs are being added fairly quickly - Berkshire Hathaway, Costco, AMD, Salesforce, and others.
Berkshire Hathaway for $20 will be a very deal for some people!
Question, why did you pick TD Direct Investing for your US brokerage? I see they charge per trade fees of $10 (or if you trade a lot its $7 per trade) where as Questrade only charges $5 per trade and you can hold US dollars. Or if you trade often enough I guess WealthSimple's new $10 per month account could work too. Just curious why you'd go with TD if they charge more?
As for the CDR's 0.6%, is this like an ETF where its removed from your overall holdings? So example if you held $2000 in a CDR you're essentially losing $12 in value per year? If thats the case it could be worth paying $5 or $10 per trade of a stock like Google or Amazon in US dollars if you're holding it for longer than a year.
thx for the videos. It did anwser a lots of questions. But i still have one. I dont fully understand the correlation between the price of the inital stock and the CDR. Exemple: If google goes up 10% tomorrow, will the cdr price jump 10% too? What happen if Iots of the same stock CDR are either bought or sold rapidely? Would that affect the CDR but not the stock price?
I opened a questrade account recently and I forgot to use the link for the bonus. Is it possible to get the discount with that account or it needs to be with another acount?
You snatching up some Manulife shares today, Brandon?
Do CDR’s mirror the underlying shares? There are sometimes discrepancies between the two in daily moves.
If CIBC wants CDRs to be popular, they should offer compagnies traded on the Hong Kong Stock Exchange like Alibaba or Tencent. Alibaba and Tencent ADRs could get delisted in the next 3 years due to new US regulations witch would make Alibaba and Tencent CDRs very attractive.
Very informative video. Do CDRs get stock splits when the non CDR version gets a stock split?
Nope!
Nope!
You can avoid exchange fees by using Norbets Gambit but it will take a few days to complete. I read the spread needs to be about 2 cents for the CDR to be highly liquid. not sure if that's true or not though. new territory for me
The dividend on these CDR’s are declared as U.S income. Therefore, withholding tax is applicable for all types of accounts with the exception of the registered accounts.
yeah, same as ADRs.
How does a stock split work with a cdr. Tesla recently split 3 to 1. Is that reflected in the cdr price?
Does anyone know how stock splits affect CDRs? Like the upcoming googl split? Thanks
I wish I had done this a year ago with Tesla.
USD/CDN exchange was 1.45. Now its 1.25
Real question: which direction will the CDN dollar go? Thoughts?
I have TD eady trady Canada account and us account beacuse im new i went with CDR so fair i like it im not worried if i lose little bit money beacuse u get back so i my keep useing CDR
How's the foreign withholding tax treatment? Is it the same as direct investment in US market?
I am wondering what would happen when US side of these stocks split ? for example amazon is splitting 20 times so CDR will split 20 times?
Would love to see a cdr of Nestle lol.
I know Brandon doesn't care about Norbert gambit, but I highly recommend it if you are converting more than 1k cad at a time. This manuveur reduces your currency conversion to less than .5%. this matters when converting thousands of dollars. I like the idea of CDR, might consider buying them in my kid's RESP, holding usd in that account presents issues, not worth it given the small amounts of contribution allowed.
What does the lower price in a cdr represent? i'm having trouble wrapping my head around this for sum reason.. If Apple is 1000 usd for 1 share & the cdr is Showing price of something like $22 What are you getting for the $22 cad?.045 of a share?
Great video, thank you ! Looking forward to see more CDR companies. Given that we are buying the shares in CAD, would we still be subject to the 15% dividend withholding? Also, would it be possible that the CDRs trade at a significant premium/discount to the real shares or does it always pretty much in line with the original share fluctuation?
Well ultimately the volume is going to drive price fluctuation. If you are comparing 4.7mil volume to say 23k volume they will move independently. If the focus stock was to drastically go up or down I'm sure the sentiment within active volume in the CDR would react accordingly to the focus stock but on a less drastic scale to to significantly less volume
What is this 15% dividend withholding people keep mentioning.
I looked it up in Questrade and something is not matching this explanation. The daily change for today for AMZN stock on NASDAX was +0.15%. But the Canadian AMZN.TO CDR has daily change +0.20% when checked after both exchanges closed of course. So the gains/losses are not following the same % they may still be impacted by currency on daily basis maybe its the rounding of cents as the stock price is for CDR is 160x smaller so any change is rounded. It is something going in favour if its up, but can go against you if its down, and it can be compounded day by day.
Thanks, Brandon. Are CDRs eligible for TFSA accounts? I was wondering what that "Neo" exchange was!
I called CIBC Investors line and they said CDRs are allowed for RRSP and TFSA.
@@sasha20112011 thanks
Ok, so there is something I am not getting with the conversion. GOOG is trading on the NYSE at 2994.48, when I do the conversion ratio of 0.007 and factor in 1.2416 as FX rate. I get a CDR price of 26.04...and it is currently trading at 26.10. What am I missing? Is that extra .06 cents their FX premium...cause that is steep, it would mean they are making approx $8.57 on every Google stock they sell a CDR on. That seems steep. Calculations done based on 4 Nov around 11 am eastern. I would absolutely need to understand how this works to entertain this.
People willing to pay a bit more. Every time you do a fraction it never ends up to a whole. You sees to be concerned om a wrong end. If you pay $8 more and can still for $8 more it is same difference to you.
@Bulldog FM Just buy them be happy and never look back..It is huge advantage for us Canadians.
Wonder why what happen if the real stock associate with the CDR has a stock split. It will do nothing I guess cause the price share is already very low ?
They are traded on the NEO exchange
How is a cdr hedged to currency fluctuations if when the currency fluctuates so does the ratio of shares you hold? Am i missing something? if usd goes down does our share count go up or down? Also, is the .6% fee charged annually or at time of purchase?
Annually
I noticed that too. They say its CAD hedged but if USD goes down the share ratio goes down too and when the ratio goes down ofcourse the value goes down too.
Hi Brandon, thanks for explaining how CDR works. Is it not better to buy, say for example, individual Costco shares and pay, may be 1-1.5 % ONE TIME currency exchange fee compared to paying around 0.6% ANNUALLY to CIBC for owing Costco CDR. Please and thanks
I think it really comes down to whether you trust the currency you are converting to/from. For example, you may buy a US company worth $100 but with the exchange rate it cost $120 CAD . But if in 2 years when you go to sell the company the US company has gone up to $110 but the Canadian dollar has also improved so it now sells for $115 CAD since the Canadian dollar is almost at par with the US dollar. Essentially you have lost money since the Canadian dollar has increased. Buying a CDR removes the exchange fee meaning you don't lose money if the Canadian dollar increases in value. Therefore, if you think the Canadian dollar will increase over time and become more on par with the US dollar, buying CDRs are more beneficial despite the 0.6% annual fee. If you think the CAD will drop during the time you hold the company, then it makes sense to simply buy the US share with the currency exchange fee.
@@joshkimmerly5568 Thank you for the explanation
@@karthikshan8538 No problem!
I am putting money in my granddaughter resp and am wondering if this would be good for
if you buy a CDR how many shares you own of the company ???? if for example you own 0.2 share will it always stay 0.2
I smell an ARB heaven for these CAD banks.
Do all CDRs pay a dividend, or does it depend on the underlying asset?
Depends on the underlying asset! :)
If you already hold USD, just buy in USD. If you only hold CAD, the CDR is a great way to invest, especially for beginners at lower volumes.
Just bought my first CDR in google. Noticed that the google stock went up, but my cdr went down. Why would that be?
If I buy CDR stocks over 100000$ value, do I have to submit Form T1135 to CRA, does anyone know? Thank u~
the performance on the CDRs compared to the actual US Stock, seems pretty weak. I don't see the attraction but am open to other opinions.
In your opinion, would holding CDRs in a TFSA be a good idea?
yes if no dividend are paid like Amazon or google
Not sure how this will be handled but typically in a TFSA, you pay taxes on US dividends(but not on dividends fro Canadian companies) .how will this be treated from a taxman's perspective since the company distributing this dividend CIBC/neo is a Canadian company
Why not index invest? CDRs have high MER
What happens if the bank goes under?
Thanks Brandon, this was a really an informative video. Never heard of CDRs until just now. Can you clarify a possible advantage? As you know, Canadian investors who hold over $100,000 in foreign property, including stocks have additional reporting requirements for the CRA. Does buying these companies on NEO, a Canadian exchange thereby make the holding domestic. For instance, if you hold American stocks such as the S&P 500 through a Canadian ETF provider, the same holdings are no longer treated as foreign. Would you assume the same is true with CDRs and if so I would consider it an advantage for those of us who still do our own taxes. The additional tax reporting burden and the Canadian dividend tax credit have prevented me from investing in many individual US stocks in thethe past, but having this option will allow me to start in the future. Also, can we purchase these CDRs through any DIY brokerage or only through CIBC. Once again, thanks passing on such important information, and also, I thought you and your father did a great job on the TD Direct Investing video last week.
I found I was able to look up the quote of any of the CDRs through my TD Direct Investing Account, but I am still curious about domestic/foreign holding question.
Why not open a USD account instead in Canada instead of going through this process?
ADR or CDR prices must be fixed direct proprtion of 1/10th or 1/20th or 1/50th to be fair so that investor is placing orders based on One Share price. This does not makes sense one DR is is 1/23rd or one CDr equals to 1/37th for another stock. Developers must use brain to keep symmetry for sake of Clients as well as biddings.
I will say same situations in Call Options etc it should be 1/30th or 1/50th of share price fixed for every equity. Exchanges are coming up with funny ideas but do not makes sense for aan investor as they are trading on option price but hard to figure out option price vs stock prices for putting orders or biddings.
I hope my message is very clear for Security commissions.
BRADON/SILVER FOX: Do you prefer buying the actual stock or CDR's?
Hi Rocky. My preference is actual stocks, and I've never owned a CDR. But I know a lot of people have, and that can work for them. Thanks for watching. - Marc
@@beaviswealth any particular reason? Thanks Marc.