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Posts Tagged ‘MER’

Moving to Low-cost TD e-series Funds

July 8th, 2010

As you might know, that our Lazy Portfolio currently uses CIBC Canadian Index. It is not really the best option to invest in Canadian index, as we discussed in our previous posting, Comparing Canadian Index Fund.

Why did we choose CIBC Canadian Index fund then? It is just a historical reason. When we first came to Canada, we opened our first bank with CIBC. The reason is because CIBC has a “small branch” in Singapore, where we used to live. We opened our bank account when we were still in Singapore. Since then, we have been happily doing all our financial needs with CIBC. This includes investing our money in CIBC’s index funds.

Recently, we tried to do a simple calculation. Currently we have about $20K invested in CIBC index funds. We pay a little bit more than 1% of management fee. It means we have to pay about $200 every year to CIBC for managing our money.

If we looked at TD e-series funds; most of them have management fee of less than 0.5%. It means we can save more than $100 every year just to convert our investment to them.

If we look further, there is a performance difference between CIBC Canadian Index and TD Canadian Index. CIBC Canadian Index is lagging by more than 5% compared to TD Canadian Index in the last 10 years. Although it doesn’t mean that TD Canadian Index will always outperform CIBC Canadian Index; we think that paying less fees is still better.

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Comparing Canadian Index Fund

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Tags: canadian cibc e-series index low cost MER mutual fund td

Searching for Low-cost Emerging Market Funds

June 26th, 2010

We have been looking for a low-cost emerging market funds recently. Yes, we would like to increase our emerging market exposure by buying mutual funds regularly, either biweekly or monthly.

Why not emerging market ETF? Well, it is unfortunate that we cannot buy commission-free ETFs in Canada yet. We just hope that this will come soon.

We read about Claymore’s Pre-authorized Contribution Plan (PACC). It sounds like a very good plan. Unfortunately, our bank is not in the participating list yet. It is either we have to move our funds first to one of the participating institutions; or just wait until our bank is supported.

Anyway, we are using fund filter from The Globe and Mail to do our filtering. Here is the filter that we use:

Asset class: Emerging Market Equity
MER: 2.5% –> we don’t want to pay funds that have very high MER
Load Type: No Load
Fund Type: Open-Ended

As of today, the filter gives 19 funds. Some of them are actually ETF; so they can be eliminated. Some others are for advisors that charges fees; so they can be eliminated as well.

After eliminating some of the funds, here is the list that we got:

Fund name	MER
CIBC Emerging Market Index	1.35%
Mackenzie Univ Emerging CI-M	2.23%
RBC Emerging Market D	1.42%

It seems that our options are only CIBC Emerging Market Index or RBC Emerging Market D. We just eliminate Mackenzie fund because the management fee is just too high. Besides we don’t quite understand what “-M” at the end of the fund name means.

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Tags: emerging market globefund low cost MER mutual fund

Searching for “Good” Canadian Mutual Funds

May 16th, 2010

There are more than 4,500 mutual funds in Canada as of today. As comparison, there are only about 2,200 stocks listed in Toronto Stock Exchange. In other words, the number of mutual funds is two times more than the number of stocks. Just for your information, we got those numbers from The Globe and Mail stocks and fund filters.

How about us? Are we still investing in mutual funds? If yes, how do we select which mutual funds to choose from?

First of all, we still have some investment in mutual funds. Some of you may be asking why? Canada has been rated as one of countries with high mutual funds fee in the world. There are two main reasons why we are still investing in mutual funds:

There is no commission for buying or selling mutual funds in most brokers. On the other hand, most Canadian brokers (if not all) still charge money for ETF transactions.
It is easier to apply dollar-cost averaging strategy. Again, this is related to the first reason. Since there is no fee involved for mutual fund transaction, we can setup automatic contribution without additional cost.

Now for the second question, how do we choose good mutual funds? We usually use funds filter from The Globe and Mail. Then we use the following criteria:

Total assets > $25M. It is just for a peace of mind that the fund has some amounts of money. We don’t want to invest in a fund that has to be liquidated next month or next year.
Minimum investment < $5,000. We are currently still managing a small amount of money; so we have to find funds that don’t require a huge amount of money, like minimum $25,000 to invest.
MER < 1.5%. This is the most important one. Management expense ratio has to be less than 1.5%. Ideally, we want to put < 1.0% here. Unfortunately, we will miss some of “good” Canadian mutual funds if we do that.
Load type = No Load. This is another important criteria. We don’t want to pay money to buy or sell mutual funds.
Fund type = Open-Ended. Since we are not looking for insurance-type mutual funds (a.k.a. segregated mutual funds) or pooled mutual funds; then we just enter open-ended mutual funds here.