I am a big fan of the iUnits series of index funds offered by Barclays and listed on the TSE. Two of the funds, the i500R (TSX: XSP) and iIntR (TSX: XIN) use futures contracts to track the performance of the S&P 500 and MSCI EAFE index respectively, while still qualifying as Canadian content for retirement accounts. Since the recent federal budget eliminated foreign property rule restrictions, investors can directly own the underlying ETFs far more cheaply.
In response, Barclays has announced that it plans to make changes such that the funds will invest in the corresponding iShares ETFs and hedge the currency risk to reduce exchange-rate fluctuations. The funds will have an expense ratio of 0.15%, presumably, in addition to the fees charged by the iShares ETFs. So, the expenses for the i500R and iIntR will be 0.24% and 0.50% respectively.
Investors now have a choice: invest directly in the iShares and accept exchange-rate risk in return for lower expenses or invest in the i500R and iIntR to hedge currency risk in return for higher fees.