I am a big fan of TD e-Series Index Funds but if you already have an account with a discount broker other than TD Waterhouse, the Precision series index funds from Altamira would an acceptable, albeit slightly more expensive option. A couple of readers also mentioned that TD Mutual Funds are not ideal for RESP accounts that are eligible for the Canada Learning Bond (CLB) or the Canada Education Savings Grant (CESG) for low-income families.

The interesting index funds in the Precision series are:

  1. Precision Canadian Index Fund (AIS930) tracks the narrower S&P/TSX Index and would be equivalent to investing the iShares CDN LargeCap 60 Index Fund (XIU).
  2. Precision International Currency Neutral Index Fund (AIS932) tracks the MSCI EAFE Index and hedges the currency exposure.
  3. Precision U.S. Currency Neutral Index Fund (AIS931) tracks the S&P 500 and hedges the exposure to U.S. dollars.

The MER of all the above funds is 0.54%, which is significantly higher for Canadian equities but only slightly higher for U.S. and EAFE equities when compared to the equivalent TD e-Series funds. Unfortunately, Altamira does not offer a bond index fund and the bond mutual funds available have MERs of more than 1.5% but they do offer a decent T-bill fund to park your cash (MER of 0.52%).

This article has 11 comments

  1. I’ve been thinking about investing in an index fund, and have heard such great things about the Vanguard Funds. Since it seems they are not available in Canada, how similar are the TD e-Series Funds? Presumably, the only difference between funds tracking the same index would be the costs from each broker–is this correct? If so, I’ll have to investigate!

  2. nicely summarized here of course: http://www.bylo.org/idxfunds.html

    DC: should you consider Vanguard’s ETFs? : http://www.vanguard.com/jumppage/vipers/

  3. Canadian Capitalist

    Darren: Vanguard mutual funds are not available in Canada. TD e-Series funds are more expensive than Vanguard but are among the cheapest in Canada. You may want to consider ETFs depending on the size of your portfolio.

    DJ: I will link to Bylo’s index funds page.

  4. Can you explain more about RESP’s and TD eFunds not being optimal? I don’t recall reading any posts on that… I have my sons RESP in TD eFund indexes and the CESG comes in no problem…

  5. I refer to that bylo page frequently, as well as that nice Globefund filter which I assume is kept more upto date.

    Using the mutual fund fee calculator it’s easy to see that 0.5% mer is not going to destroy potential returns, esp. if compared to frequent trade commissions on smaller lots .
    http://www.investored.ca/IefCalculators/Calculators/MutualFundFeeImpact/

  6. Canadian Capitalist

    Stefan: Our sons’ RESPs are with TD e-Series funds also and we get the CESG deposited correctly. Some readers commented on this post that the Canada Learning Bond and the extra CESG paid to low-income families are not correctly deposited in TD Mutual funds.

  7. Hi CC,

    What’s the minimum initial investment amount for the Precision Series Index Fund? $2K ? $5K?

  8. Canadian Capitalist

    CD: Good question. The minimum initial investment is $1,000 and subsequent investments are only $50. You can start a systematic investment for just $25.

  9. Just tried to place an order at Etrade and they required 5000 minimum 🙁 No worries though.

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