Currency exchange fees for Questwealth Portfolios

Exchanging currencies in any account will always carry at least some small fee. Since Questwealth Portfolios are built with both Canadian and U.S. ETFs, that means some of the funds need to be exchanged, in this case at a fee of 100 pips (which is about 1 cent on the dollar). This fee is added to the market exchange rate to cover brokerage costs.

When your account needs to convert Canadian funds to U.S. dollars (or convert U.S. dollars to Canadian funds), we will convert currency on your behalf. 

This typically occurs when converting Canadian contributions to buy U.S. ETFs, when selling U.S. securities to withdraw Canadian funds, or when rebalancing the portfolio to maintain the proper allocation of Canadian and U.S. securities.

Pips (short for “percentage in point”) are used in finance to keep track of small currency exchange values. One pip is equal to 1/100th of 1 cent of value, so 100 pips is one cent.

For example: if your account were purchasing $100 worth of U.S. ETFs at an exchange rate of 1.30 (meaning you need $1.30 CAD for $1.00 USD), it would add that 100 pips (0.01) to the exchange rate, bringing it to 1.31. 

This means, to buy $100 worth of U.S. ETFs, your account would use $131 CAD (including the $1 transaction fee).

Typically, financial institutions will charge currency conversion and foreign transaction fees between 100 to 300 pips, meaning it adds between 1 and 3 cents on the dollar to the exchange rate.

Note: The information in this blog is for information purposes only and should not be used or construed as financial, investment, or tax advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied is made by Questrade, Inc., its affiliates or any other person to its accuracy.