If you’re a Canadian with U.S. dollars sitting idle in your bank account, you might be wondering how to make your money work for you. Holding USD can be a strategic move, especially as the Canadian dollar (CAD) continues to face depreciation pressures. But what if you could earn interest on those U.S. dollars while keeping them liquid and easily accessible?
That’s where HSUV.U ETF comes in—a U.S. dollar money market ETF designed for Canadians who want to earn interest on their USD savings while avoiding unnecessary currency exchange fees.
In this guide, we’ll dive into what HSUV.U ETF is, how it works, its advantages, and whether it makes sense for your portfolio in the current economic climate.
Table of Contents
What Is HSUV.U ETF?
HSUV.U is the Global X USD Cash Maximizer Corporate Class ETF (HSUV.U) – ETF Shares (formerly Horizons USD Cash Maximizer ETF), a U.S. dollar-denominated money market ETF traded on the Toronto Stock Exchange (TSX). It is designed to provide a high-interest rate on uninvested USD cash, making it an attractive alternative to holding USD in a low-yield savings account.
- Ticker: HSUV.U
- Issuer: Global X Investments Canada Inc.
- Currency: U.S. Dollars (USD)
- Exchange: Toronto Stock Exchange (TSX)
- Type: Money Market ETF
This ETF primarily invests in high-quality, short-term U.S. dollar-denominated debt instruments, such as Treasury bills and bank deposits. These instruments typically yield more than traditional savings accounts while maintaining liquidity and safety.
Why Hold USD as a Canadian?
1. CAD Depreciation Against USD
The Canadian dollar has been volatile in recent years, with downward pressure from various economic factors:
- Interest rate differentials: The U.S. Federal Reserve has maintained higher interest rates than the Bank of Canada, making USD more attractive to investors.
- Commodity prices: Canada’s economy relies heavily on oil exports, and fluctuations in oil prices impact CAD strength.
- Trade tensions: The ongoing trade disputes between Canada and the U.S. add uncertainty to the exchange rate.
For Canadians who frequently need USD—for travel, investing, or cross-border shopping—holding U.S. dollars can protect against exchange rate fluctuations and provide financial flexibility.
2. Avoiding Currency Exchange Fees
Most Canadian banks charge a 2-3% currency conversion fee when exchanging CAD for USD (and vice versa). By keeping your savings in USD and earning interest through HSUV.U ETF, you can avoid repeated conversion costs.
3. Exposure to U.S. Markets
Holding U.S. dollars gives you the option to invest in U.S. stocks and ETFs without converting back to CAD. This is particularly useful if you invest in U.S. dividend stocks, tech giants, or ETFs like the S&P 500 (VOO) or Nasdaq-100 (QQQ).
How HSUV.U ETF Works
1. How HSUV.U Earns Interest
The ETF primarily invests in:
- Short-term U.S. Treasury bills
- Government-backed securities
- High-quality commercial paper
- USD bank deposits earning competitive interest rates
These assets generate interest income, which is reinvested and leads to an increase in its NAV as time progresses.
As of February 21, 2025, the top holdings of the fund are as follows:
| Security | Weight |
|---|---|
| NATIONAL BANK CASH ACCT. | 58.88% |
| CIBC MELLON CASH ACCOUNT | 27.83% |
| CIBC CASH ACCOUNT | 13.26% |
| CASH | 0.03% |
2. Reinvesting the Interest Earned
The HSUV.U ETF is not currently expected to make any regular distributions. Instead, the ETF aims to provide modest capital growth by reinvesting the interest earned from its holdings, which is reflected in the net asset value (NAV) appreciation over time.
3. No Foreign Withholding Tax
Since HSUV.U is a Canadian-listed ETF holding U.S. cash-equivalent assets, it does not trigger the 15% U.S. withholding tax that typically applies to U.S. dividends. This makes it a tax-efficient choice compared to holding U.S. dividend stocks in a taxable account.
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Advantages of HSUV.U ETF for Canadians
✅ Higher Yield Than USD Savings Accounts
Most Canadian banks offer low interest rates on USD savings—typically less than 1%. In contrast, HSUV.U ETF has historically offered yields above 4% (subject to market conditions). The average annual yield of the fund over the last 3 years was 4.17%.
✅ Liquidity and Accessibility
Unlike GICs, which lock in your money for a fixed term, HSUV.U ETF is fully liquid. You can sell your units anytime on the TSX Exchange and access your cash quickly.
✅ No FX Fees
Since HSUV.U is traded in USD, you avoid conversion fees when moving money in and out of your investment.
✅ Safe Investment in a Volatile Market
With rising economic uncertainty—due to trade tensions between the U.S. and Canada, inflation concerns, and geopolitical risks—holding a safe, interest-generating USD asset can be a smart defensive strategy.
Potential Risks of HSUV.U ETF
❌ Interest Rate Risk
If U.S. interest rates drop, the yield on HSUV.U ETF could decrease. However, as a money market fund, it adjusts quickly to rate changes.
❌ Liquidity Risk
While HSUV.U is designed to be liquid, extreme market conditions could impact its ability to maintain high yields.
❌ Alternative USD Investment Options
While HSUV.U ETF is a great way to earn interest on USD savings, you might also consider:
- High-Interest USD Savings Accounts: Some Canadian banks offer USD accounts with slightly higher rates, though still lower than HSUV.U.
- Norbert’s Gambit: A method to exchange CAD for USD at a lower cost.
- USD GICs: Higher fixed returns but with locked-in terms.
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Who Should Invest in HSUV.U ETF?
✅ Best For:
- Canadians with idle USD cash looking for competitive yields.
- Investors wanting USD exposure without exchange fees.
- People seeking a low-risk, liquid cash alternative.
- Retirees who receive U.S. dollars (e.g., from pensions or rental income) and want to grow their USD savings.
For me, I invest in U.S. stocks, and whenever I sell a position, I park some of my USD cash in HSUV.U ETF while waiting for new investment opportunities.
❌ Not Ideal For:
- Those unwilling to hold USD for the long term.
- Investors seeking long-term capital growth (HSUV.U is not an equity ETF).
How to Buy HSUV.U ETF
- Open a Brokerage Account – Use a Canadian brokerage that offers USD accounts (e.g., Questrade, Wealthsimple Trade, TD Direct Investing).
- Search for HSUV.U on the TSX.
- Place a Buy Order in USD.
- Grow Your USD Savings – Interest income generated by HSUV.U is reinvested, causing its NAV to appreciate as time goes on.
Tips: With the market experiencing frequent ups and downs due to interest rate expectations and political tensions between the U.S. and Canada, avoid buying HSUV.U ETF all at once. Instead, consider buying in several tranches to mitigate the impact of market fluctuations.
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How is HSUV.U ETF taxed in Canada?
HSUV.U ETF is taxed based on the interest income it generates, even though it reinvests those earnings rather than distributing them.
In a non-registered account, this interest income is taxable at your marginal tax rate and will be reported on a T3 tax slip at year-end. Since the reinvested interest contributes to the fund’s NAV growth, you won’t receive direct payouts.
However, if you hold HSUV.U inside a TFSA, RRSP, or FHSA, the interest income is sheltered from taxes, making it a more efficient option for long-term savings.
Final Thoughts
If you’re a Canadian holding U.S. dollars, HSUV.U ETF offers a smart, low-risk way to grow your USD savings while avoiding FX fees. With competitive yields and liquidity, it’s a solid option for preserving and compounding your U.S. cash holdings over time.
Would you invest in HSUV.U ETF? Let me know in the comments!
