Index Funds

ING Direct’s Low-Cost Mutual Funds

January 15, 2008

42 comments

After innovating and leading in online high-interest savings accounts for years, ING Direct is introducing three low-cost, index-based, mutual funds under the “Streetwise” name. The Streetwise funds offer one-stop convenience for all-inclusive fees of 1% – no minimums, no sales loads and no administration fees. The Balanced Streetwise fund has a classic portfolio split – 40% in Canadian Bonds and the 60% in stocks, split equally between the S&P/TSX 60 index, S&P 500 and MSCI EAFE. ING also offers a slightly more aggressive version with 25% in bonds and 75% in stocks and an income version with a 70% allocation to bonds.

While the MER at 1% is a bit steep and you can construct the same portfolio with TD e-Series Mutual Index Funds for less than half the cost, ING’s mutual funds are even cheaper than TD Bank’s indexed portfolios. It is hard not to get excited when a major player is promising to bring low cost, passive investing for the smallest investor and I hope that costs will only go down from here.

Altamira Precision Series Index Funds

November 28, 2007

11 comments

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%).