Mutual Fund & ETF Quotes

Fidelity Investments offers zero-fee index funds for Americans. [2022] - Andrew Hallam

In a 2018 research paper, Vanguard says index funds comprise just a small amount of the investment universe. Vanguard references Morningstar’s data when reporting that 85 percent of the money in the US stock market and 90 percent of the money in the global stock market is actively managed. [2022] - Andrew Hallam

Most financial firms sell expensive products: actively managed funds or (even worse) insurance-linked investment schemes. [2022] - Andrew Hallam

only Americans can buy one of Vanguard’s target retirement funds from Vanguard USA. But British investors can buy similar products from Vanguard UK. Canadian and Australian investors can’t buy all-in-one portfolios of indexed mutual funds. However, Canadians and Australians can buy all-in-one ETFs from one of their home country brokerages. I believe investors behave much better in all-in-one portfolios of index mutual funds compared to investors in all-in-one ETFs. After all, with all-in-one index mutual funds, investors can set up automatic monthly deposits. This makes the process hands-free. [2022] - Andrew Hallam

Several Canadian ETF providers, including iShares, Vanguard, BMO, and Horizons, offer all-in-one portfolio products. They are just as good as each other: no better, no worse. Don’t make the natural and common mistake of comparing their past performances and making a decision based on what you find. Although they’re similarly allocated, their indexed compositions aren’t exactly the same. As a result, the iShares Core Balanced ETF (XBAL) might edge out Vanguard’s Balanced ETF Portfolio (VBAL) over one period. But over the next period, the results could be reversed. Either way, the long-term differences would be far too small to sweat. [2022] - Andrew Hallam

Most socially responsible investment (SRI) indexed mutual funds and ETFs charge slightly higher fees than their traditional indexed counterparts. But their returns don’t suffer. Some studies say they beat traditional indexes. Other studies show they slightly lag. Much depends on the time periods measured. Canadians can buy socially responsible all-in-one portfolio ETFs: iShares ESG Conservative Balanced (GCNS, 40% in stocks, 60% in bonds), iShares ESG Balanced (GBAL, 60% in stocks, 40% in bonds), iShares ESG Growth (GGRO, 80% in stocks, 20% in bonds), iShares ESG Equity (GEQT, 100% in stocks, 0% in bonds). [2022] - Andrew Hallam

Canadian equity index funds are generally cheaper than international equity funds, often by as much as 0.20%. Dividends on Canadian stocks are also taxed more favourably than those of international stocks, especially for people with lower incomes. This holds true even if you're investing in a RRSP or a TFSA: that's because US and international dividends may be subject to foreign withholding taxes even in these sheltered accounts. In most cases, if Canadian, US and international stocks all deliver the same returns before fees and taxes, Canadian stocks will come out ahead after these costs. [2021] - Dan Bortolotti

The Dow Jones Industrial Average was created in 1896 and still widely followed today-although it really shouldn't be. The Dow includes just 30 companies, hand-picked by a committee, and instead of being weighted according to a company's size, it's weighted by share price. This made sense 120 years ago when the calculations were made with pencil and paper, but it's almost useless today, and the Dow Jones Industrial Average is a relic that survives only because it's owned by the same company that publishes the Wall Street Journal. So do yourself a favour: ignore the Dow and avoid index funds or ETFs that track it. [2021] - Dan Bortolotti

In the last few years, it's become increasingly common for ETFs to use indexes created by lesser-known firms, because the big guys like S&P charge high licensing fees. It's a bit like the decision to use generic prescription drugs instead of brand drugs. [2021] - Dan Bortolotti

Cap-weighted indexes are the traditional tool of index investors, and they should be your default choice when comparing ETFs. There are several reasons for this. First, they're the most representative of the overall stock market. Second, in almost all cases they're the cheapest (as little as 0.03-0.06%). Finally, cap-weighted index funds-especially those tracking the broad market-typically have the lowest turnover, which means stocks are rarely sold and replaced. This can result in fewer realized capital gains, making these ETFs more tax-efficient if you hold them outside of TFSAs and RRSPs. [2021] - Dan Bortolotti

Many countries levy a tax on dividends paid to foreign investors. For example, the IRS withholds 15% when dividends from US stocks are paid inside a Canadian-listed ETF. These withholding taxes will reduce the fund's reported performance, sometimes significantly. [2021] - Dan Bortolotti

It's not enough to compare ETFs solely on the basis of their MER by assuming a fund that is cheaper by 3 or 4 basis points will automatically outperform a competitor by that same amount. An ETF with a slightly higher fee but consistently lower tracking error might turn out to be a better choice. You can usually learn the fund's tracking error by visiting its web page: the major ETF providers (including iShares, Vanguard and BMO) publish both fund returns and benchmark returns (e.g. XUU lagged its benchmark by 1.52% in 2020). You can also find this information in the Management Report of Fund Performance: this document is typically published twice a year, and you can download a copy on the fund provider's website. [2021] - Dan Bortolotti

ETF investors should always use limit orders-no exception. A good practice is to place a limit order a penny above the ask price. For example, if the ask is $16.94, place your limit order at $16.95. Some investors think entering a value higher than the current ask price is telling the market they're willing to overpay. But that's not true: a stock exchange matches orders from buyers and sellers and fills them at best mutually agreed upon price. If you enter a limit order to buy at $16.95 and there are units available for $16.94, our order will get filled a the lower price. When you're selling ETF shares, enter the limit order at the bid price or a penny below. [2021] - Dan Bortolotti

It's worth paying attention to the bid-ask spread when you buy an ETF. As a general rule, the spread should be no more than 2 or 3 cents, especially if the share price is less than $30 or so. ETFs with high share prices are less expensive to trade. In North America, stock exchanges are open between 9:30 am and 4:00 pm Eastern Time. Never place an order on a stock exchange when the markets are closed. The US market is closed on Martin Luther King Jr. Day in January and Memorial Day in May, while the Canadian exchanges remain open. You could see the bid-ask spread on your ETF much wider than usual, and that should be a signal not to place your trade. To be safe, don't make any ETF trades on days the US market is closed. [2021] - Dan Bortolotti

When you're enrolling in a DRIP (dividend reinvestment program), you'll receive your dividend and interest payments in the form of new ETF units rather than cash. DRIPs are a great way to keep your investments compounding in a TFSA, an RRSP or another tax-sheltered account. But I generally don't recommend them in non-registered accounts, as they can complicate your recordkeeping. [2021] - Dan Bortolotti

US-listed ETFs have lower fees and may also be more tax-efficient in RRSPs (US securities held in a RRSP are exempt from withholding taxes, thanks to a tax treaty between the two countries). Unfortunately, the currency exchange rates charged by online brokerages are usually terrible, especially on smallish amounts, and these costs can erode much or all of the benefit of using US-listed funds. If you're investing in a non-registered account, you need to report their capital gains and losses in Canadian dollars and report to the Canada Revenue Agency using Form T1135 if your non-registered account includes US-listed ETFs with a cost of more than $100,000. For these reasons, I recommend that do-it-yourself investors stick to using ETFs that trade on the Toronto Stock Exchange. [2021] - Dan Bortolotti

A deferred sales charge (DSC) is a rather large commission that a mutual fund salesperson receives upfront. If you change your mind and try to move to another fund family within a certain period (about six years), you are charged a hefty redemption penalty. On $500,000 of investments, the fee could be $20,000 or more. [2020] - Frederick Vettese

Hedge funds are privately managed funds for wealthier investors and are generally riskier than a typical mutual fund. The fees can be steep - typically 20% of the hedge fund's annual returns, as well as annual management fee of 1% or so. They're also generally illiquid - there are usually lockup periods, and it can still be difficult to get your money back out later when needed. We generally don't recommend them. [2019] - Eric Tyson

Here are the lowest-cost providers of index funds and ETFs: 1) BlackRock, whose funds go by the iShares name (www.blackrock.com/ca) 2) Horizons Exchange Traded Funds (www.horizonsetfs.com) 3) TD e-Series Funds (www.td.com) 4) Vanguard (www.vanguardcanada.ca) [2019] - Eric Tyson

Stock dividends and capital gains do benefit from lower tax rates. Additionally, increasing numbers of fund companies offer tax-friendly stock funds, which are appropriate if you don't want current income or you're in a high tax bracket and you want to minimize receiving taxable distributions on your funds. Index funds tend to have the best returns after taxes are accounted for. [2019] - Eric Tyson