Comments on: Strategies for ETFs and Index Funds

By: Using Margin to Lower Trading Costs

Using Margin to Lower Trading Costs — Wed, 06 Jan 2010 13:48:30 +0000

[...] amounts to a stock portfolio I think this would be a reasonable way to do so. Another approach is ETF vs. Index Fund strategy (which involves simple, regular investments in index funds until a set amount is reached, depending [...]

By: Flavors of the Week - Final Four Edition

Flavors of the Week - Final Four Edition — Mon, 31 Mar 2008 20:03:25 +0000

[...] ETF’s and Index Funds – Mike at QFFP has an interesting take on the never ending debate over investing on ETF’s or low cost index funds… [...]

By: Four Pillars

Four Pillars — Sun, 30 Mar 2008 20:07:40 +0000

Yves, I’ll have to look into your example since it doesn’t seem to make sense.

I have also read on the FWR forums that not all of the currency hedging costs are included in the MER and in fact might cost up to 1% per year.

Mike

By: Retirement, Taxes, Homemade Cleaners and More!

Retirement, Taxes, Homemade Cleaners and More! — Sun, 30 Mar 2008 19:25:50 +0000

[...] Strategies for ETFs and Index Fund. Here’s a new strategy to move to ETFs without a lot of extra work. Maybe one of these days I’ll get around to converting some of our index funds to ETFs. [...]

By: Yves

Yves — Sun, 30 Mar 2008 15:42:33 +0000

From what I have seen currency neutral index funds usually have a .15% higher MER. However RBC’s US Index Fund is at 0.78% vs US Index Currency Neutral Fund at .69%. Can anyone explain why this would be? I will be moving some funds to one of these shortly can’t make a decision on which one to choose.

By: Four Pillars

Four Pillars — Sat, 29 Mar 2008 00:21:58 +0000

Alex – Cheap Canuck is right – you need $100k at TD to get $10 trades.

As far as the currency factor, it doesn’t matter if you buy a Canadian etf or US etf, unless it’s hedged to the Canadian dollar then the currency risk is the same.

ie buying the ishares US market ETF is the same as buying the Vanguard US market ETF (VTI) except the Vanguard has a lower mer.
One problem with buying the Vanguard is that you have to make the currency conversion from Cdn$ so that might negate the lower mer depending of course on your situation.

Mike

By: Cheap Canuck

Cheap Canuck — Fri, 28 Mar 2008 21:43:10 +0000

I believe you need at least $100,000 in your TD account or be performing a large number of trades quarterly before the 9.95/trade rate applies. Otherwise it is $29 per trade.

By: Alex Givant

Alex Givant — Fri, 28 Mar 2008 21:12:15 +0000

FP: Why not to buy the same ETF using TD account, it costs only $9.95 ($5 difference with QuestTrade).

Assuming that you have Couch Potato portfolio (4 ETFs: Canadian, bonds, US, International) and you do the purchase them once a year, it’s $20 difference.

Beside that, TD supports DRIP and I’m not sure that QuestTrade does the same.

Last question: why do you hold money in US ETF vs. Canadian, doesn’t it add currency exchange risk to your investments?

Thanks for post.

By: Four Pillars

Four Pillars — Fri, 28 Mar 2008 19:53:41 +0000

Mr C and CC – the differences between the different strategies is not huge but it’s worth looking at once in a while

Kyle – this post pretty much applies to Canada where we have the highest mutual fund fees in the universe – even our index funds are expensive!

By: Kyle

Kyle — Fri, 28 Mar 2008 18:56:49 +0000

In reality, the admiral share classes of most Vanguard index mutual funds are cheaper than most ETFs and are exactly as tax-efficient. If you don’t need an index fund Vanguard doesn’t supply, I find it hard to believe ETFs would be cheaper no matter how much money you’re investing. The admiral shares of their total stock market index fund charge just 0.07% per year, which is the same as the ETF version. I guess the only advantage to owning the ETF is if you wanted to write options or trade during the day.