Capturing U.S. Equity Income with CAD Hedging: QAH's Post-Liquidation Opportunity

Amid heightened uncertainty over U.S. dollar volatility and shifting market dynamics, income-focused investors are increasingly turning to structured solutions that balance exposure to large-cap U.S. equities with protection against currency fluctuations. The CAD-hedged Mackenzie US Large Cap Equity Index ETF (QAH) has emerged as a compelling choice, particularly following the June 3, 2025, liquidation of its USD-class counterpart (QUU.U). This article explores how QAH's strategic features—its hedged structure, low cost, and stable dividend—position it as a resilient income generator in a post-liquidation landscape.

The Case for CAD Hedging in a Volatile USD Environment

Investors in U.S. equities often overlook the impact of currency risk. When the U.S. dollar weakens, gains in USD-denominated assets can evaporate when converted back to Canadian dollars. QAH's hedging mechanism actively offsets this risk by using foreign exchange derivatives to lock in the USD-to-CAD rate. This ensures that returns are denominated in CAD without the volatility drag, a critical advantage as the U.S. Federal Reserve's policy path remains uncertain and the Canadian dollar seeks stability.

The ETF's recent June dividend declaration of $0.50677 CAD per unit underscores its income reliability. With a quarterly payout schedule, QAH provides predictable cash flows for retirees or income seekers, all while shielding against forex swings.

Post-Liquidation Dynamics: QAH as the Remaining Hedged Option

The liquidation of the USD-class units (QUU.U) on June 3, 2025, marked a strategic consolidation by Mackenzie Investments to streamline its ETF lineup. While the CAD-hedged QAH remains unaffected, this move reduces direct competition in the CAD-hedged U.S. equity space. Investors previously holding QUU.U must now reallocate, and many are likely gravitating toward QAH due to its:
- Low total expense ratio (TER) of 0.07%, making it one of the cheapest options for broad U.S. large-cap exposure.
- Diversification through the Solactive US Large Cap Index, which tracks 100 of the largest U.S. companies, including tech giants, healthcare leaders, and financial institutions.
- ESG integration, as the index excludes companies with significant involvement in controversial activities, aligning with modern portfolio preferences.

The redemption proceeds from QUU.U (finalized at $172.998396 USD per unit) have already been distributed, but investors seeking ongoing exposure to U.S. equities in CAD terms now have fewer alternatives. QAH's survivorship advantage could attract inflows, potentially boosting its liquidity and pricing efficiency.

Dividend Yield and Tax Efficiency: A Structured Income Play

While QAH's forward dividend yield isn't explicitly stated in recent disclosures, its June payout implies an annualized distribution of approximately $2.027 per unit, assuming consistent quarterly payments. Pair this with the ETF's net asset value (NAV), and the yield becomes clear. For context, .

Investors should note that distributions may include a return of capital, which reduces the adjusted cost base (ACB) but defers tax liabilities until the ACB reaches zero. This structure makes QAH tax-efficient for long-term holders, though investors must monitor their ACB carefully.

Strategic Timing and Portfolio Considerations

The liquidation of QUU.U has created a two-pronged opportunity:
1. For existing QUU.U holders: Redirecting proceeds to QAH eliminates currency risk while maintaining exposure to the same underlying index.
2. For new investors: QAH offers a low-cost, hedged entry into U.S. large caps at a time when the S&P 500's valuation appears reasonable post-2023 highs.

The ETF's historical resilience—evident in its consistent performance through market cycles—is another selling point. .

Conclusion: QAH as a Core Income Holding

QAH combines three critical elements for income-focused investors:
- Currency hedging to protect against USD volatility.
- Low costs that maximize net returns.
- ESG alignment and broad diversification for risk management.

With its dividend reliability and post-liquidation uniqueness, QAH is well-positioned to attract investors seeking steady CAD income while avoiding forex headwinds. For portfolios needing a “set-and-forget” U.S. equity income stream, QAH offers a compelling, low-maintenance solution.

Final Note: Always review tax implications and consult the ETF's prospectus before investing.