A Canadian investor who holds US securities is making, without always seeing it, two investments at once: an investment in the security, and an investment in the US dollar. Their real return — the one that counts, in Canadian dollars — depends on both.
The mechanism
Buying a US security happens in US dollars. Your real cost in Canadian dollars therefore depends on the exchange rate at the time of purchase; and the value of your position today depends on today's rate. Between the two, the currency has moved — and that move adds to the security's, one way or the other.
Two symmetrical situations:
- The US dollar rises against the Canadian dollar: your US securities are worth more in Canadian dollars, even if their price has not moved.
- The US dollar falls: they are worth less — even if the security itself went up.
A neutral worked example
Suppose a purchase of 10 shares of a fictional US company at US$200, with a rate of C$1.39 per US dollar.
- Cost: US$2,000, or C$2,780.
- Later, the security is at US$210 (+5%) and the rate at 1.38.
- Value: US$2,100 × 1.38 = C$2,898.
- Real gain: C$118, or about +4.2% — not +5%.
The security returned 5%; the currency took part of it back. The exact breakdown separates the two effects: what the security did (at today's rate), and what the currency did (on your cost). The two add up precisely to the total gain — that is an accounting identity, not an approximation.
The "average rate of your purchases"
When several purchases were made at different rates, you can compute an average rate weighted by the cost of each purchase — exactly the same mechanics as a position's average cost. It is a descriptive marker: it says at what rate, on average, your money entered the currency. It says nothing about what the rate will do next, and it does not necessarily match the rate of an actual conversion you made at your broker.
What this changes for your tracking
Prices are not yet shown in the app; they will be at launch.
The report of a Canadian-dollar portfolio holding US securities shows this breakdown: total gain in Canadian dollars, the security's share, the currency's share. The rates used are those published by the Bank of Canada — one reference rate per business day, for statistical purposes. The Operations page also lets you compare your actual conversions to that reference.
Official sources
The reference rates used by the report are those published by the Bank of Canada — one rate per business day, for statistical purposes.
- Bank of Canada — exchange rates: https://www.bankofcanada.ca/rates/exchange/
Informative, general content — not personalized advice. For your situation: your institution or an advisor.