Many Canadian investors hesitate between VFV and VOO… and often make the wrong choice. At first glance, these two ETFs seem almost identical: they both offer exposure to the U.S. market through the S&P 500.
On one side, the Vanguard S&P 500 ETF (VOO), listed in the United States, is known for its very low fees. On the other, the Vanguard S&P 500 Index ETF (VFV), its Canadian version, allows you to invest directly in Canadian dollars, without conversion.
But behind this apparent simplicity lie important differences, particularly in terms of taxation, real costs, and ease of use.
👉 In this article, you will clearly understand which one to choose based on your situation (TFSA, RRSP, taxes and simplicity), in order to avoid the most common mistakes.
⚖️ VFV vs VOO — Quick comparison
| Criterion | VFV | VOO |
|---|---|---|
| Currency | CAD | USD |
| Listing | TSX | NYSE |
| Fees (MER) | ~0.06% | ~0.03% |
| Currency conversion | No | Yes |
| TFSA taxation | -15% dividends | -15% dividends |
| RRSP taxation | -15% indirect | 0% |
At first glance, VOO seems cheaper… but that’s not the whole story.
In reality, several factors such as currency conversion fees and taxation can quickly cancel out this apparent advantage. That’s why it’s essential to look beyond the MER alone before making a decision.
VFV and VOO track the same index
The most important point to understand is that VFV and VOO both track the same index: the S&P 500. This index includes approximately 500 of the largest U.S. companies, making it one of the most widely used benchmarks to measure the performance of the U.S. stock market.
By investing in VFV or VOO, you therefore gain similar exposure to giants such as Apple, Microsoft, Nvidia, Amazon, and Google. In other words, in both cases, you are betting on the growth of large U.S. companies.
This means that, before fees and taxes, the performance of the two ETFs is practically identical. There is no “better ETF” in terms of raw returns, since both replicate the same index.
👉 Conclusion: VFV and VOO offer the same overall performance… before fees and taxation.
It is therefore on external factors — such as real costs, currency, and taxation — that the difference will truly come into play.
The key difference: currency and conversion
One of the most important differences between VFV and VOO concerns the currency in which you invest. This factor is often underestimated, but it can have a direct impact on your returns.
VFV: simplicity in Canadian dollars
With VFV, you invest directly in Canadian dollars (CAD). There is no currency conversion required, which greatly simplifies the purchase and avoids additional fees.
This is a particularly attractive option for investors who want to keep a simple approach and avoid complications related to exchange rates.
VOO: mandatory conversion to USD
In contrast, VOO is listed in U.S. dollars (USD). To buy it, you must convert your Canadian dollars into USD, which generally results in conversion fees between 1.5% and 2% depending on your broker.
These fees may seem small at first glance, but they apply to each transaction (buying and sometimes selling), which can significantly reduce your returns.
Real impact on your returns
In the short term, these conversion fees have an immediate impact on your invested capital. For example, a 2% cost means you already start with a loss at the time of purchase.
In the long term, this effect can accumulate and reduce your overall returns, especially if you invest regularly.
💡 Key insight: VOO’s lower MER is often offset by currency conversion fees.
In other words, even though VOO appears cheaper on paper, the reality is that VFV can be more advantageous for many Canadian investors due to its simplicity and the absence of conversion.
Currency conversion fees by broker
Comparison of conversion fees (USD/CAD)
| Broker | Fee level | “Norbert’s Gambit” method |
|---|---|---|
| Interactive Brokers (IBKR) | Low | Not necessary |
| Wealthsimple | Medium / High | Yes (New) |
| Questrade | Medium | Yes |
| National Bank (NBDB) | Low | Yes |
| CIBC (Investors Edge) | High | Yes |
| RBC / TD / BMO | High | Yes |
Detailed table
| Broker | Notes and details |
|---|---|
| IBKR | Conversion fees at market rate. Fixed cost of 2 USD per transaction. Fastest and cheapest method. |
| Wealthsimple | Direct conversion fee of 1.5 percent. Norbert’s Gambit option available via web for a fixed fee of 9.95 dollars per request. |
| Questrade | Direct conversion fee of 1.5 percent. With Norbert’s Gambit, the purchase is free and the sale costs about 5 dollars. The transfer is free. |
| National Bank (NBDB) | 0 dollar commissions on buying and selling. Journaling of shares costs a fixed fee of 9.95 dollars per request. |
| CIBC (Investors Edge) | Direct conversion fees between 1.5 and 2 percent. With Norbert’s Gambit, you pay two commissions of 6.95 dollars (total 13.90 dollars). |
| RBC / TD / BMO | Direct conversion fees between 1.5 and 2.5 percent. With Norbert’s Gambit, the total cost is about 20 dollars (two commissions of 10 dollars). |
Important note: Broker policies and fees may change without notice. It is strongly recommended to verify directly with your financial institution before making a significant transaction to confirm current rates and the journaling procedure.
Taxation: TFSA vs RRSP (key point)
Taxation is probably the most important factor when comparing VFV and VOO for a Canadian investor. Depending on the type of account you use — TFSA or RRSP — the optimal choice may be different.
In a TFSA (Tax-Free Savings Account)
In a TFSA, U.S. dividends are subject to a 15% withholding tax, whether you hold VFV or VOO.
VFV → -15% withholding tax (through the fund structure)
VOO → -15% withholding tax directly
In both cases, this withholding tax is not recoverable in a TFSA.
👉 Conclusion: no tax advantage between VFV and VOO in a TFSA.
In other words, from a tax perspective, VFV and VOO are equivalent in this type of account. It is therefore other factors, such as simplicity or conversion fees, that will make the difference.
In an RRSP (Registered Retirement Savings Plan)
The RRSP benefits from a special tax treatment thanks to a tax treaty between Canada and the United States. This is where the difference between VFV and VOO becomes significant.
VOO → 0% withholding tax (full exemption)
VFV → -15% indirect withholding (non-recoverable)
The VOO fund is listed in the United States. The Canada–U.S. tax treaty recognizes the RRSP as a retirement account, thereby exempting dividends from the 15% withholding tax. In contrast, VFV is a Canadian fund that holds VOO. From the U.S. tax authority’s perspective, the owner is a Canadian entity and not your RRSP. The 15% tax is therefore withheld at source, creating an indirect loss of return for the investor.
👉 Conclusion: VOO is more tax-efficient in an RRSP.
Over the long term, this difference can slightly improve your returns if you hold significant amounts in your RRSP.
💡 Simple summary to remember
TFSA → VFV = simpler and often preferable
RRSP → VOO = real tax advantage
In most cases, VFV remains the simplest choice for a beginner investor, while VOO becomes interesting for optimizing an RRSP with larger amounts.
Fees (MER): VFV vs VOO
At first glance, VOO seems more advantageous due to its slightly lower management fees.
VOO: about 0.03%
VFV: about 0.06%
The difference exists, but it remains very small. On a $10,000 investment, this represents only a few dollars per year.
👉 Conclusion: the difference in fees is minimal and often negligible.
Therefore, MER should not be the main factor guiding your decision between VFV and VOO.
⚠️ Important point to remember
👉 Currency conversion fees generally have a much greater impact than the difference in MER.
In other words, even if VOO is slightly cheaper on paper, this advantage can quickly disappear due to the costs associated with CAD/USD conversion.
Simplicity vs optimization
Beyond fees and taxation, the choice between VFV and VOO also depends on your investment approach. Do you prefer a simple and quick solution, or a slightly more optimized but more complex strategy?
VFV: simplicity first
VFV is designed to offer a simple and accessible experience. You can buy it directly in Canadian dollars, without having to worry about exchange rates or conversion fees.
✔ Purchase in CAD
✔ No conversion calculations
✔ Ideal for beginners
It is often the preferred choice for investors who want an efficient solution without unnecessary complexity.
VOO: a more optimized approach
VOO, on the other hand, allows for interesting tax optimization, particularly in an RRSP. However, it requires a better understanding of tax aspects and conversion fees.
✔ Tax advantage in an RRSP
✔ Slightly lower fees
⚠️ Currency conversion required
This type of approach is more suitable for more experienced investors or those looking to maximize every detail of their strategy.
👉 Conclusion: VFV is simpler, while VOO is slightly more optimized in certain cases.
For the majority of Canadian investors, the simplicity of VFV often outweighs the marginal gains that VOO can offer.
Which ETF to choose based on your situation
The best choice between VFV and VOO depends primarily on your personal situation, your type of account, and your level of experience. Here is a clear summary to help you make a decision quickly.
Beginner or investor looking for simplicity
👉 VFV is generally the best choice.
It allows you to invest easily in Canadian dollars, without worrying about conversion or complex taxation. It is an ideal solution to start investing without complicating your life.
In a TFSA (Tax-Free Savings Account)
👉 VFV remains the most logical choice.
Since there is no tax advantage to using VOO in a TFSA, it is preferable to opt for simplicity and avoid conversion fees.
In an RRSP (Registered Retirement Savings Plan)
👉 VOO can be advantageous, especially for larger amounts.
Thanks to the exemption from U.S. withholding tax, VOO becomes slightly more tax-efficient in an RRSP. However, this advantage becomes truly relevant mainly for larger portfolios.
Advanced investor
👉 A combination of VFV + VOO can be considered.
For example, using VFV in a TFSA for simplicity, and VOO in an RRSP for tax optimization. This approach allows you to benefit from the advantages of each ETF.
In summary, there is no universal solution. The right choice depends on your overall strategy, but in most cases, VFV remains the simplest and most suitable option for a Canadian investor.
Common mistakes to avoid
Even though VFV and VOO are simple ETFs on the surface, many investors make mistakes that can reduce their returns or unnecessarily complicate their strategy.
Choosing VOO without understanding the tax implications
Many investors believe that VOO is always better because of its lower fees, without considering taxes and the type of account used.
Ignoring currency conversion fees
CAD/USD fees can quickly reach 1.5% to 2%, which can cancel out the advantages of VOO’s lower MER.
Over-optimizing for a few dollars
Trying to save a few basis points can lead to a more complex strategy, with no significant impact over the long term.
Unnecessarily complicating your portfolio
Adding layers of strategy can harm investment discipline and increase the risk of mistakes.
👉 The goal is not to find the perfect solution, but a simple strategy that you can follow over the long term.
In many cases, simplicity far outweighs marginal optimization.
Conclusion: VFV or VOO, which one to choose?
In the end, VFV and VOO are two excellent ETFs that allow you to invest efficiently in the U.S. market through the S&P 500. The difference does not lie in raw performance, but rather in simplicity, taxation, and how they are used depending on the type of account.
VFV → best choice for the majority of Canadian investors
VOO → interesting in an RRSP with a more optimized approach
For most investors, VFV offers a simple, efficient solution that is perfectly suited to the Canadian market. VOO, on the other hand, can be used strategically in certain specific cases.
💡 The best ETF is the one you understand and use correctly.
The important thing is not only to choose a good ETF, but to build a coherent strategy and stick to it over the long term.