Archive for August, 2011

Vanguard to Introduce Six New ETFs

August 23, 2011

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Yesterday, Vanguard Canada filed preliminary prospectus for six Exchange-Traded Funds (ETFs). You can view the preliminary long form prospectus here. The ETFs will cover Canadian bonds, Canadian equities and International equities asset classes. The management fees and the ticker symbols for the ETFs are not known at this point.

Canadian Bonds

Vanguard Canadian Aggregate Bond ETF and Vanguard Canadian Short-Term Bond ETF are the two ETFs under this category. The Vanguard Aggregate Bond ETF will be comparable to the iShares DEX Universe Bond ETF (TSX: XBB) and the Vanguard Short-Term Bond ETF will be comparable to the iShares DEX Short-Term Bond ETF (TSX: XSB).

Canadian Stocks

Vanguard MSCI Canada Index ETF will track the MSCI Canada Index, a free float-adjusted market capitalization weighted index comprised of 100 stocks. This ETF will be comparable to the iShares S&P/TSX 60 ETF (TSX: XIU) or the BMO Dow Jones Canada Titans 60 ETF (TSX: ZCN).

International Stocks

The three international stock ETFs will cover U.S., Europe-Australia-Far-East (EAFE) and Emerging Markets. Two of them – the Vanguard MSCI US Broad Market ETF (CAD-Hedged) and the Vanguard MSCI EAFE ETF (CAD-Hedged) – are currency hedged. The Vanguard MSCI Emerging Markets ETF will cover emerging markets.

Bottom Line

The Vanguard MSCI Emerging Markets ETF will be interesting if the fees are comparable to the US-listed VWO. The other International stock ETFs in the initial line-up are likely to be disappointing for investors wanting currency unhedged exposure to US and EAFE markets. Personally, I was hoping Vanguard would introduce cheaper alternatives to existing REIT and dividend ETFs. Hopefully, these ETFs will be launched in a second wave.

BMO InvestorLine to allow U.S. Dollar Registered Accounts

August 21, 2011

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BMO InvestorLine (read review here) will soon allow clients to segregate their Canadian and US Dollar holdings in registered accounts including RRSPs and TFSAs. The ability to hold US dollars will not, however, be available to RESP accounts. According to client service representatives I spoke with recently, BMO InvestorLine will be rolling out the new feature in the second week of September 2011. Competing discount brokers that offer US Dollar registered accounts are RBC Direct Investing, QTrade and Questrade.

It appears that the BMO InvestorLine registered accounts will work just like RBC Direct Investing’s Dual Currency accounts work today. The US dollar side of the registered account will be available to new and existing clients automatically. However, existing clients will have to phone the broker to transfer current holdings they wish to hold in the US dollar side. BMO InvestorLine will not charge an extra admin fee or extra trading commissions for US Dollar registered accounts.

The ability to keep CAD and USD holdings separately is good news for BMO InvestorLine clients. They can completely avoid forced currency conversion when buying and selling US Dollar securities in registered accounts. By converting currency with the Norbert Gambit they can save on steep conversion charges. And best of all, US dollar dividends will not be converted into CAD for holdings in the USD side of registered accounts.

This and That: Financial Crisis, Taxing the rich and more…

August 19, 2011

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Michael Lewis has a scatological take on the role of Germany in the European financial crisis in Vanity Fair magazine.

In this New York Times article Warren Buffett recommends that US legislators should require the super rich to pay more in taxes.

My Own Advisor is thankful he owns bonds in times of market turmoil like the one we are experiencing now.

Larry MacDonald wonders if the bottom is near in the US housing market.

Michael James on Money offers a strategy for saving up for a new car.

Million Dollar Journey posted a primer on creating a stock watch list in Google Docs.

Money Smarts walks newbies through selling a stock at a discount brokerage.

Squawk Fox wonders what crazy stuff we collect. For me, it’s books. The house is overflowing with them.

Canadian Financial Stuff was not happy that his Bell phone is costing him $88 per month and called to find out if he can get it reduced.

It may be hard to see it now but falling stock prices are great news for long-term investors, says Preet Banerjee.