How do I transfer the funds from a mutual fund to an ETF? Do I have to sell it first?
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Our response:
Mutual funds and exchange-traded funds (ETFs) are two distinct products – there is no way to transfer funds directly from one to the other. You must first sell your mutual funds and then purchase ETFs.
You may not be able to purchase ETFs at the same financial institution as you currently hold your mutual funds – this is because ETFs trade like stocks. You need to open a trading account with a full-service or online investment dealer to trade them. Learn more about buying and selling ETFs.
If you are holding the mutual funds in a registered plan, such as an RRSP, you will not need to pay tax on any capital gains from the mutual funds as long as the funds stay within the plan (i.e. you plan to hold the ETFs in the same registered plan). If you are moving funds between two financial institutions, the transfer must be made directly by the financial institution to avoid a tax bill. There may be fees associated with the transfer.