Best US-Listed ETFs to Buy in a TFSA
If you are going to hold US-listed ETFs inside a TFSA, lean into growth. The 15% US withholding tax on dividends is irrecoverable in a TFSA, which means low-yield, growth-tilted funds minimize the drag. Here are six US-listed ETFs worth considering, what they cost, and when the MER savings over a Canadian wrapper actually justify the currency conversion.
Why buy US-listed ETFs instead of Canadian wrappers?
The core reason is fees. A US-listed S&P 500 ETF like VOO charges a management expense ratio (MER) of 0.03%. Its Canadian-listed equivalent, VFV, charges 0.09%. That 0.06% gap sounds trivial, but on a $100,000 position it is $60 per year, and it compounds over decades. US-listed ETFs also offer broader selection.
There is no Canadian-listed equivalent to VUG (Vanguard Growth), SCHG (Schwab Large-Cap Growth), or dozens of other specialized funds. If you want concentrated exposure to US large-cap growth, for example, your only option is the US-listed original.
The trade-off is currency conversion. Buying a US-listed ETF in a Canadian brokerage account requires converting CAD to USD, and that conversion is not free. More on the costs below.
What is the withholding tax catch with US ETFs in a TFSA?
The Canada-US tax treaty exempts "pension" accounts from US withholding tax on dividends. The IRS recognizes the RRSP and RRIF as pensions. It does not recognize the TFSA, FHSA, or RESP. That means every dividend paid by a US-listed ETF inside your TFSA is hit with a flat 15% withholding at source, and you cannot claim a foreign tax credit because TFSA income is not taxable in Canada. The money is gone. You never get it back. On a $100,000 position in VOO with a 1.1% dividend yield, that is roughly $165 per year in lost dividends. On VUG with a 0.4% yield, it is about $60. On a high-yield fund like SCHD (around 3.5%), it would be over $500 per year, which is why dividend-focused US ETFs have no business being in a TFSA. The takeaway is straightforward. If you are going to hold US-listed ETFs in a TFSA, you want the lowest dividend yield possible. Growth-tilted funds with sub-0.5% yields keep the withholding drag to a minimum.
Which US-listed ETFs are best suited for a TFSA?
We looked for ETFs that combine rock-bottom MERs with low dividend yields, broad liquidity, and long track records. These six cover the spectrum from broad market to growth to sector concentration.
A few notes on the picks. VOO and VTI are the workhorses. They track the S&P 500 and total US market respectively, both charge 0.03%, and both yield around 1.1%. The dividend yield is moderate rather than low, but for a broad market core holding, they remain the standard.
QQQM is the cost-conscious version of QQQ. Same Nasdaq 100 index, same holdings, but at 0.15% rather than 0.20%. The lower dividend yield (around 0.5%) also means less withholding drag in a TFSA. If you want Nasdaq 100 exposure, buy QQQM, not QQQ.
VUG is the TFSA standout. At 0.03% MER and a dividend yield of roughly 0.4%, it delivers US large-cap growth exposure with almost no fee drag and minimal withholding tax cost. There is no direct Canadian-listed equivalent. SCHG covers similar territory to VUG but holds about 250 stocks instead of 150, offering a slightly wider net across US growth names. The 0.04% MER is still negligible.
VGT is the conviction pick for investors who specifically want information technology exposure. It has outperformed the S&P 500 over 10 years, but it is a sector bet, not a diversified portfolio. The 0.10% MER is reasonable for a sector fund, and the sub-0.4% yield keeps TFSA withholding drag low.
When does the MER savings actually justify buying US-listed?
This is the math that most "US vs. Canadian ETF" articles skip. The MER advantage of a US-listed ETF gets offset by the currency conversion cost and the irrecoverable withholding tax. Whether you come out ahead depends on how much you are investing and how you convert.
At Interactive Brokers, where FX conversion costs roughly 0.002% (around USD 2 minimum), the math favours US-listed ETFs almost immediately. On a $10,000 purchase of VOO, the one-time FX cost is about $2, and the ongoing MER savings versus VFV is $6 per year.
At Questrade or Wealthsimple using Norbert's Gambit (about $10 per conversion), the breakeven is higher. A single $5,000 conversion costs roughly 0.2% in fees. You need the position to stay invested for at least two to three years before the MER savings overtake that one-time cost.
At standard broker FX rates of 1.5%, the breakeven barely works at all. On $10,000 the conversion cost is $150. It would take over 20 years of MER savings on a VOO-versus-VFV position to recover that. At 1.5%, you are better off buying the Canadian wrapper and skipping the conversion entirely.
Here is the rule of thumb: if your brokerage offers cheap FX conversion, either through near-spot rates or Norbert's Gambit, and you are investing $5,000 or more per conversion, US-listed ETFs can save you money in a TFSA. If you are paying 1.5% on every conversion, buy VFV or ZSP instead and do not look back.
How do you buy US-listed ETFs in a Canadian TFSA?
Not every brokerage handles this the same way. Here is what to know.
Interactive Brokers offers near-spot FX conversion at roughly 0.002% with a USD 2 minimum. You convert CAD to USD in the account, then buy the US-listed ETF. This is the cheapest route by a wide margin.
Questrade supports Norbert's Gambit natively. Buy DLR (Horizons US Dollar Currency ETF) in CAD, request a journal to DLR.U, sell in USD, then use the proceeds to buy your US ETF. The journal fee is $9.95 plus tax. ETF purchases are commission-free, but selling DLR.U costs $4.95 to $9.95.
Wealthsimple launched a Norbert's Gambit feature in 2026 (web only, still in beta) at a flat $9.95 plus tax. On the Core tier, the standard FX rate is 1.5%. Premium and Generation members ($100,000 and $500,000 household assets) get FX at 0.05%, which is cheap enough to skip the gambit entirely.
Qtrade charges a standard FX markup on currency conversions and does not support Norbert's Gambit. US-listed ETFs are available but the conversion cost is less competitive. If you want to compare brokers side by side on FX costs and US trading support, our comparison table breaks it down.
The bottom line
US-listed ETFs in a TFSA are a smart move for larger portfolios with access to cheap FX conversion, but they are not automatically better than their Canadian-listed equivalents. The withholding tax on dividends is a real cost, and it makes high-yield US funds a poor fit for TFSAs. If you are going to do it, lean into growth. VUG and SCHG offer the best combination of rock-bottom MERs (0.03% and 0.04%) and low dividend yields (around 0.4%), which minimizes the withholding drag. For a broad market core, VOO at 0.03% remains hard to beat. QQQM is the right Nasdaq 100 pick at 0.15%, cheaper than QQQ for identical exposure. The single most important variable is not which ETF you pick. It is how much you pay for currency conversion. At Interactive Brokers' near-spot rates or via Norbert's Gambit at Questrade, the economics work. At a 1.5% standard FX markup, buy VFV or ZSP in CAD and save yourself the hassle. If you are still choosing a broker, make FX costs a top-three criterion. On a portfolio with meaningful US exposure, the brokerage you pick will matter more than the ETF you pick. Broker Guide Canada may earn a commission through affiliate links. This does not influence our editorial rankings. See our full disclosure.
FAQs
Can I hold US-listed ETFs in a TFSA?
Yes. Canadian brokerages that offer US-dollar trading allow you to hold US-listed ETFs like VOO, VTI, and QQQ inside a TFSA. The ETFs themselves are eligible. The only catch is the 15% US withholding tax on dividends, which is irrecoverable in a TFSA.
Is VOO or VFV better in a TFSA?
It depends on your conversion costs. VOO charges 0.03% MER versus VFV's 0.09%, saving you 0.06% per year. But if you pay 1.5% to convert CAD to USD, you need decades to break even. With cheap FX conversion (Interactive Brokers or Norbert's Gambit), VOO wins. At 1.5% FX rates, VFV is the better choice.
Why is VUG a strong TFSA pick?
VUG tracks US large-cap growth stocks at a 0.03% MER with a dividend yield of roughly 0.4%. That low yield means the 15% withholding tax costs only about $60 per year on a $100,000 position, far less than a broad market fund yielding 1.1%. There is no Canadian-listed equivalent offering the same index at a comparable fee.
Should I use QQQ or QQQM?
QQQM. Both track the identical Nasdaq 100 index with the same holdings and the same issuer (Invesco). QQQM charges 0.15% versus QQQ's 0.20%. The only reason QQQ exists alongside QQQM is its deep options market. If you are buying and holding in a TFSA, QQQM is strictly cheaper.
Do I pay withholding tax on capital gains from US ETFs in a TFSA?
No. The 15% US withholding tax applies only to dividends. Capital gains on US-listed ETFs inside a TFSA are not subject to US withholding tax and are not taxable in Canada. This is why growth-oriented, low-dividend ETFs are particularly well suited to TFSAs.
How much does Norbert's Gambit cost at Questrade?
Questrade charges a flat $9.95 plus tax per journal request. ETF purchases (buying DLR) are commission-free, but selling DLR.U incurs a commission of $4.95 to $9.95 depending on your volume tier. On a $5,000 conversion, the total cost is roughly 0.2% to 0.3%, significantly cheaper than the standard 1.5% FX markup.
What is the 2026 TFSA contribution limit?
The annual TFSA contribution limit for 2026 is $7,000. If you have been eligible since 2009 and have never contributed, the cumulative lifetime room is $109,000. Check your available room on the CRA's My Account portal before contributing.
