An Alternative to Holding U.S. Stocks Directly
Canadian investors can profit from U.S. giants like the Magnificent 7 — Apple, Microsoft, Amazon, Alphabet, Meta, Tesla, and Nvidia. But getting exposure isn’t always straightforward. Do you buy the U.S. stock directly in USD, or do you use Canadian Depositary Receipts (CDRs) in CAD?
The answer isn’t about which option is better. It’s about which one fits your portfolio, your available funds, and your comfort with currency exposure.
What Are CDRs?
Canadian Depositary Receipts (CDRs) give Canadians exposure to U.S. companies while trading in Canadian dollars. They trade on the NEO Exchange and are issued exclusively by CIBC through the CIBC Depositary Receipts Program.
Here’s what makes them unique:
👉 Backed by Real U.S. Shares
CDRs represent proportional exposure to shares held in trust by the issuing bank. You don’t own the U.S. share directly, but you participate in its performance.
👉 Fractional Exposure
Many U.S. stocks trade at high prices. CDRs offer a lower entry point.
Example:
AMZN (U.S.) trades in the hundreds of USD
AMZN.NE (CDR) trades under $30 CAD
👉 Built-In Currency Hedge
The structure automatically adjusts the CDR ratio to neutralize USD/CAD currency fluctuations.
This reduces currency volatility — but also reduces upside when the USD strengthens.
👉 Trades in Canadian Dollars
You buy and sell CDRs just like TSX stocks.
✔ No USD account
✔ No FX conversion
✔ No Norbert’s Gambit (low cost currency exchange)
✔ No journaling between CAD and USD
💡 Did You Know?
CIBC is the exclusive issuer of all CDRs. No other Canadian bank currently participates in this program.
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Should You Consider CDRs in Your Portfolio?
Whether CDRs make sense depends on your investor stage and your comfort with currency exposure.
One aspect of CDRs that is great for all investors is the price of the shares. Unlike the expensive share price of many of the US conglomerates, CDRs tend to trade in the $30 range. It also makes it appealing for those paying a dividend to have the dividend re-invested. At least until fractional share purchase is a common practice across online brokers .
🌱 New Investor Starting Out
Why CDRs Fit | Potential Drawback |
→ Lower minimum investment | → If the USD strengthens long-term, hedged CDRs will capture less upside than direct U.S. shares. |
🪴 Investor With a Large Portfolio
Why Some Use CDRs | Why Direct U.S. Stocks Fit Better |
→ Want to keep investing entirely in CAD | → Larger portfolios benefit from efficiency |
🌴 Retiree or Income-Focused Investor
Why CDRs Fit | Why Direct U.S. Stocks Can Be More Tax-Efficient |
→ Keep everything in CAD | → CDR dividends still face 15% U.S. withholding tax |
💡 Did You Know?
The RRSP is the only Canadian account where U.S. dividends are fully exempt from withholding tax when the shares are held directly.
CDRs vs. U.S. Stocks: Key Differences
Feature | CDRs | Direct U.S. Stocks |
|---|---|---|
Currency exposure | CAD-hedged (lower volatility, lower USD upside) | Full USD exposure (benefits if CAD weakens) |
Trading currency | CAD | USD |
Share price | Fractional (e.g., AMZN aroudn $30 CAD) | Full U.S. price |
FX conversion | None | Required (or use Norbert’s Gambit) |
Liquidity | Lower (NEO Exchange) | Very high (NYSE/NASDAQ) |
Dividend tax | 15% U.S. withholding | Waived in RRSP if held directly |
Ongoing cost | ~0.6% hedge cost | None after initial FX conversion until further FX conversion |
Available CDRs in Canada (Full List)
Below is a consolidated list of widely available CDRs trading on the NEO Exchange:
Company | CDR Ticker | U.S. Ticker | Sector |
|---|---|---|---|
Apple Inc. | AAPL.NE | AAPL | Technology |
Microsoft Corp. | MSFT.NE | MSFT | Technology |
Amazon.com Inc. | AMZN.NE | AMZN | Consumer Discretionary |
Alphabet Inc. (Class A) | GOOGL.NE | GOOGL | Communication Services |
Alphabet Inc. (Class C) | GOOG.NE | GOOG | Communication Services |
Meta Platforms Inc. | META.NE | META | Communication Services |
Tesla Inc. | TSLA.NE | TSLA | Consumer Discretionary |
NVIDIA Corp. | NVDA.NE | NVDA | Technology |
Costco Wholesale Corp. | COST.NE | COST | Consumer Staples |
Walmart Inc. | WMT.NE | WMT | Consumer Staples |
Johnson & Johnson | JNJ.NE | JNJ | Healthcare |
Coca-Cola Co. | KO.NE | KO | Consumer Staples |
McDonald's Corp. | MCD.NE | MCD | Consumer Discretionary |
Procter & Gamble Co. | PG.NE | PG | Consumer Staples |
Visa Inc. | V.NE | V | Financials |
Mastercard Inc. | MA.NE | MA | Financials |
PepsiCo Inc. | PEP.NE | PEP | Consumer Staples |
Netflix Inc. | NFLX.NE | NFLX | Communication Services |
Berkshire Hathaway Inc. (Class B) | BRK.B.NE | BRK.B | Financials |
Walt Disney Co. | DIS.NE | DIS | Communication Services |
Note: Tickers, ratios, and availability change. Always verify inside your brokerage before trading. The full list is available through CIBC CDR site.
Example: Apple (AAPL) and the Hedge Impact
AAPL (U.S.) — Higher share price, full USD exposure, requires FX conversion.
AAPL CDR (AAPL) — Lower CAD price, easier entry point, but performance is dampened by the hedge when USD rises.
💡 Did You Know?
Hedging removes both downside and upside from currency swings. Over long periods, this can meaningfully change your total return.
Final Take: CDRs Are Not Better — Just Different
CDRs Are Best For:
🌱 Beginners
🌱 Smaller portfolios
🌱🪴🌳🌴 Investors who want to stay entirely in CAD
Direct U.S. Stocks Are Best For:
🪴🌳🌴 Larger portfolios
🪴🌳 Long-term USD exposure