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We get it – tech stocks are super-popular with investors these days.

But it’s nice to see some non-tech names being added to the list of U.S. stocks that can be bought as Canadian Depositary Receipts. Traded on Canada’s NEO Exchange, CDRs are basically a fractional investment in an underlying U.S. company with a built-in currency hedge. However much the U.S. stock goes up or down, that’s what your CDR does. There’s no static from changes in the Canada-U.S. exchange rate.

A new, money-saving way for Canadians to buy big U.S. tech stocks

The latest batch of eight new CDRs includes some tech companies, but also big names in other sectors. There’s Pfizer Inc. (PFE-NEO), the drug giant behind one of the key COVID-19 vaccines, as well as big box retailer Costco Wholesale Corp. (COST-NEO) and credit card company Mastercard Inc. (MA-NEO). The most intriguing addition for investors with a contrarian view might be Berkshire Hathaway Inc. (BRK-NEO), Warren Buffett’s legendary holding company.

On the New York Stock Exchange, Berkshire shares traded at just under US$280 at the beginning of December. The CDR version traded at just under $22 Canadian. This price comparison highlights how CDRs make the shares of big U.S. companies more accessible to Canadian investors. Another benefit is cost efficiency – retail investors get more favourable Canada-U.S. exchange rate when buying the BRK-NEO than if they used an online broker to buy BRK.B on the NYSE. Foreign exchange for clients buying and selling U.S. stocks is a profit centre for brokers.

The list of BRK’s subsidiary companies is long and varied – insurers, plus makers of brickers, batteries, industrial lubricants, underwear, candy and furniture. There’s not a lot of tech in the mix, which helps explain why the BRK hasn’t in recent years been the S&P 500-beating juggernaut it once was.

Up a total of about 24 per cent over the past two years, BRK isn’t exactly beaten down. But against the tech-heavy S&P 500′s 44-per-cent gain, BRK does seem to be somewhat out of favour. The six-month numbers accentuate this take – BRK was down 4.3 per cent, while the S&P 500 gained 8 per cent.

A legit concern if you’re eyeing CDRs is whether they catch on enough to ensure a tight bid-ask spread when buying and selling. With low-volume stocks and exchange-traded funds, you may find yourself having to pay more than the current market price to complete a purchase of shares, and accept less than the market price to sell.

CIBC reports that the average per-day number of client trades in CDRs has grown from 700 in September to 5,500 at the start of November, and that assets have grown to more than $290-million. This isn’t blow-out growth, but it’s enough to suggest investors are definitely interested in CDRs. Broadening the selection of available stocks can only help.

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