Archive for January, 2010

BMO expands its ETF line up (again)

January 25, 2010


Last Fall, BMO expanded its lineup of ETFs by 9 new funds. Recently, BMO has once again added nine new ETFs to its lineup. They are:

BMO Mid Corporate Bond Index ETF (ZCM). MER: 0.30%
BMO Long Corporate Bond Index ETF (ZLC). MER: 0.30%
BMO Aggregate Bond Index ETF (ZAG). MER: 0.28%
BMO Global Infrastructure Index ETF (ZGI). MER: 0.55%
BMO China Equity Hedged to CAD ETF (ZCH). MER: 0.65%
BMO India Equity Hedged to CAD ETF (ZID). MER: 0.65%
BMO Equal Weight Utilities Index ETF (ZUT). MER: 0.55%
BMO Nasdaq 100 Equity Hedged to CAD Index ETF (ZQQ). MER: 0.35%
BMO Junior Gold Index ETF (ZJG). MER: 0.55%

Apart from the fixed-income ETFs, which track the DEX bond indices, and perhaps the infrastructure ETF, it is hard to see any of these new ETFs appealing to long-term, buy-and-hold type investors. ZAG, which tracks the broad Canadian bond market might be equivalent to the iShares CDN Bond Index Fund (XBB) but it fills a huge gap in BMO’s existing ETFs that track broad markets. The two corporate bond ETFs might appeal to fixed-income investors who want a little more yield in exchange for credit and interest rate risk but personally, I prefer to take risk with the equity portion of the portfolio especially since corporate bonds are highly correlated with stocks.

I’ve heard arguments that infrastructure is a separate asset class that merits its own allocation in a portfolio but it simply sounds like a fad to me. Besides, infrastructure stocks such as TransCanada (TSX: TRP) and Enbridge (TSX: ENB) are already part of the broad Canadian market.

You can confidently bet that the China and India ETFs will see a good uptake among the investing public because China and perhaps, India, are among the hottest BRIC markets. Still, it is worth asking: what investing rationale could there possibly be for adding exposure to American Depository Receipts from a single, far-away emerging market in one’s portfolio? Or to a single sector such as utility, technology or junior gold for that matter. The answer is not much but I won’t be surprised if these ETFs are popular with the speculating public.

You may also be interested in reading Jon Chevreau’s take on BMO’s new ETFs.

What’s new in QuickTax 2009 (and Giveaway)

January 25, 2010


QuickTax is Canada’s leading tax software product and it is easy to see why. When compared with all its competitors, QuickTax has the slickest and most intuitive interface and provides the maximum flexibility by allowing users to prepare their taxes with either the interview method or directly using forms or switching back and forth between the two. As in previous years, QuickTax Desktop software comes in four main flavours: Basic ($19.99), Standard ($39.99), Platinum ($69.99) and Business Unincorporated ($99.99). All flavours allow you to file eight income tax returns (same as last year) and the main difference between the various product tiers lies in the range and sophistication of the interview process. If you are comfortable preparing your taxes directly with the forms and don’t need any guidance, Basic should be sufficient for your purposes.

I asked QuickTax executives to give us a rundown on what’s new this year. Here’s what they told me (my comments are in italics):

  1. Life Changes Profiling, available on Standard and higher tiers, guides tax filers through life changes that affect their tax return such as a marriage, a new baby, starting a business or going back to school. In my limited test drive of QuickTax Standard so far, I found this feature to be well integrated within the interview process.
  2. You can now import 2008 tax data from UFile or H&R Block and automatically import tax slips from, and RRSP providers. A lot of tax filers seem to demand an import feature but I find this to be of marginal use. After all, how long does it take to type in your name, date of birth, address and SIN number? However, I can see directly importing tax forms being useful in eliminating input errors.
  3. QuickTax has expanded its support options and offers free technical support through phone, chat and email for all product tiers. A new feature called “Ask a Tax Expert”, which costs $15, allows tax filers to ask unlimited questions and receive responses directly from a taxexpert. I found that QuickTax has integrated its community within Standard, which might be useful if you are stuck. For example, the screen where you enter your income slips has, on the right sidebar, useful questions like “Where do you enter union and professional dues?”, “I’ve cashed bonds. Where do I enter them on my tax return?”, etc. The answers come from QuickTax community of users but a quick check revealed that the quality of responses is very good.
  4. Audit defence was successful last year and is once again available for $39.99 this year. I wrote about this last year and have little to add to my comments. See post What’s new in QuickTax 2008.
  5. The online version of QuickTax has two free options. QuickTax Free Online and QuickTax Student Online. If you are preparing just one return and are comfortable preparing taxes over the Internet, the online versions of Standard ($16.99) and Platinum ($29.99) are much cheaper.

Giveaway: I received copies of Standard and Platinum versions of QuickTax 2009 for review purposes. I have installed and test driven the Standard version but I don’t think I’ll have the time to check out the Platinum version. That’s where you come in. I’m giving away one copy of QuickTax 2009 Platinum (retail value of $69.99) to a lucky reader. You can enter by simply leaving a comment in this post (please do not send an entry via email) and don’t forget to include your email address. If you are reading this through your favourite RSS Reader, you have to click through to the website and scroll to the bottom of the page and type in your comment. Some quick rules: (1) Deadline for entries is 8 p.m. EST on Tuesday, January 26, 2010. (2) One entry per person. (3) Canadian residents only. (4) I treat your privacy very seriously. Your email will be used for the sole purpose of contacting you if you happen to win. (5) I’ll pick one entry at random and announce the winner after the deadline.

This and That: Interest rates, Couch potato blog and more…

January 22, 2010

  1. The Bank of Canada decided this week to keep interest rates steady until the end of the second quarter of 2010. In contrast to widespread opinion that inflation will be higher, the Bank notes that “the overall risks to its inflation projection [ed: 2 percent in the third quarter of 2011] are tilted slightly to the downside”.
  2. MoneySense writer Dan Bortolotti grew tired of active management and became a couch potato investor. Now, he is hoping more Canadians will follow his lead and become couch potatoes with the help of information available on the brand-new Canadian Couch Potato Blog.
  3. Canadian Money Forum members share where they are investing their money these days.
  4. You know it is RRSP season when banks and mutual fund companies come out with a dizzying number of polls, surveys and studies. Jon Chevreau has been covering these surveys on the Wealthy Boomer blog. I found the survey by Franklin Templeton that many Canadians are blissfully unaware of a market rally to be interesting.
  5. Frugal Trader explains the process involved in claiming extended warranty with your credit card.
  6. Invest in a RRSP or in a taxable account? Michael James shows that the ability to defer taxes confers a significant advantage to saving inside a RRSP.
  7. Canadian Personal Finance Blog reminds us that you can calculate how much a person makes based on when their EI and CPP deductions end.
  8. Mr. Cheap and Mike had a friendly wager on a low capital, high labour strategy of becoming a general contractor for your principle residence.
  9. Preet pointed out that a new paper is challenging the Fama-French Three Factor Model.
  10. Chaya Cooperberg writes that wealth managers are gearing up to meet the investment needs of high net worth households (those that have $500,000 to $1 million in investible assets).

I’m unable to highlight all the articles worth checking out in my weekly round up but you can check them out through my Twitter feed. Hope everyone had a great weekend!