VFV vs ZSP: Holding the S&P 500 in Canadian Dollars
August 19, 2026 · 2 min read · by ETFWinner Research
Canadian-listed S&P 500 funds solve a currency-conversion headache and quietly introduce a tax one. Both are worth understanding before you buy.
Canadian investors wanting US exposure face a choice that does not exist elsewhere: buy the US-listed fund in US dollars, or buy a Canadian-listed wrapper holding the same index. The wrappers are enormously popular for good reason, and they carry a cost that is invisible on the fund page.
The two Canadian wrappers
VFV and ZSP both charge 0.09% and both hold the S&P 500 through a US-listed underlying fund. VOO at 0.03% is the US-listed original. The fee gap is real but small; the practical convenience of buying in Canadian dollars without converting currency is what drives the flows.
| Ticker | Fund | Expense | YTD | Yield | AUM |
|---|---|---|---|---|---|
| VFV | Vanguard S&P 500 Index ETF (CAD) | 0.09% | 10.50% | 1.20% | CAD 14.5B |
| ZSP | BMO S&P 500 Index ETF (CAD) | 0.09% | 10.20% | 1.15% | CAD 16.2B |
| VOO | Vanguard S&P 500 ETF | 0.03% | 12.78% | 1.28% | $460B |
The withholding tax layer
US dividends paid to a Canadian-listed fund are subject to US withholding tax, and that tax is generally not recoverable inside registered accounts the way it can be when a US-listed fund is held directly in certain account types.
The effect is small in absolute terms because the S&P 500 yield is low, but it is permanent and it compounds. For large, long-horizon holdings in the right kind of account, holding the US-listed fund directly can be measurably more efficient — at the cost of converting currency and managing US-dollar cash.
Currency exposure is not removed
A crucial and frequently misunderstood point: buying an unhedged Canadian-listed S&P 500 fund does not remove US-dollar exposure. The fund holds US shares, so your return still moves with the exchange rate. The Canadian listing only saves you the conversion at purchase.
If you want the US market without the currency, you need an explicitly hedged version — a different product with its own ongoing cost.
A practical decision rule
- Regular contributions, moderate balance: the Canadian-listed wrapper is simpler and the tax drag is minor.
- Large balance in an account where US-listed funds avoid withholding: the direct US-listed fund is worth the extra effort.
- Want no currency risk: use a hedged product deliberately, and accept its higher cost.
ETFs mentioned in this guide
Vanguard S&P 500 Index ETF (CAD)
BMO S&P 500 Index ETF (CAD)
Vanguard S&P 500 ETF
iShares Core S&P/TSX Capped Composite Index ETF
Frequently asked questions
Is VFV or ZSP better?
They charge the same fee and track the same index through a US-listed underlying fund, so the choice comes down to brokerage preference and trading spreads rather than substance.
Do Canadian S&P 500 ETFs remove currency risk?
No. Unhedged versions still hold US shares, so returns move with the exchange rate. Only an explicitly hedged fund removes that exposure.
What is the withholding tax issue with Canadian-listed US funds?
US dividends paid to a Canadian-listed fund face US withholding tax that generally cannot be recovered in the way it can when a US-listed fund is held directly in certain registered accounts.
Should I convert currency to buy US-listed ETFs?
It can be worthwhile for large, long-term holdings in accounts where withholding tax is recoverable. For regular smaller contributions, the conversion cost and complexity usually outweigh the benefit.