Comments on: Disadvantages of ETFs http://www.canadiancapitalist.com/disadvantages-of-etfs/ Helping you invest and prosper Thu, 18 Mar 2010 18:50:04 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: dj http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-208528 dj Wed, 13 Jan 2010 17:06:44 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-208528 A stock picker news letter writer is not going to like ETF's....bad for the bottom line, using the time lag of a news letter , can make anyone look good, just ask Sy Harding....time your alerts just right...money in the bank A stock picker news letter writer is not going to like ETF’s….bad for the bottom line, using the time lag of a news letter , can make anyone look good, just ask Sy Harding….time your alerts just right…money in the bank

]]> By: Understanding ETF- What is an ETF and How Does it Work? | Financial Highway http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-194243 Understanding ETF- What is an ETF and How Does it Work? | Financial Highway Thu, 25 Jun 2009 06:09:16 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-194243 [...] Canadian Capitalist discusses some disadvantages of ETFs [...] [...] Canadian Capitalist discusses some disadvantages of ETFs [...]

]]> By: allan skogman http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-166458 allan skogman Sat, 08 Nov 2008 02:14:34 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-166458 Just what I wanted to hear,the pro,s & con,s The best I have heard. THANKS ! Now I can look for an ETF with lots of green in it ? Just what I wanted to hear,the pro,s & con,s The best I have heard. THANKS ! Now I can look for an ETF with lots of green in it ?

]]> By: Everyday Investor http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-18524 Everyday Investor Wed, 24 Jan 2007 04:39:32 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-18524 Speaking of competition in the ETF market. An article in Canadian Business recently noted the introduction of two new ETF's in Canada. The funds, managed by BetaPro Management allow investors to leverage a bullish or bearish opinion on the TSX 60. Speaking of competition in the ETF market. An article in Canadian Business recently noted the introduction of two new ETF’s in Canada.

The funds, managed by BetaPro Management allow investors to leverage a bullish or bearish opinion on the TSX 60.

]]> By: Phil S http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17718 Phil S Mon, 15 Jan 2007 22:02:03 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17718 The ONLY time that I would advocate anybody buying a mutual fund is when their investment portfolio is small. The mutual fund then allows that investor to remain diversified as they work to put more money away. When your portfolio starts to get large (let's use 100K as an example), then a 2% MER means that you're paying somebody $2000 a year to do what? Hold shares of extremely liquid large cap stocks like banks, insurance companies and REITs for you? If it's in a retirement account and your retirement is 20 yrs away, then $2000 a year is $40,000 that you gave to some money manager. Just buy those individual stocks for a one time brokerage fee and hold onto those stocks for decades and then put that extra $40,000 in YOUR pocket! My biggest peeve about mutual funds is their lack of transparency. The reason why I liked the income trust structure for what is essentially an ETF is because they report their financials using traditional balance sheets and cash flow statements. Traditional funds only reports holdings and fees. A lot of the fees are hidden and you have no idea what transactions were made by the fund during the previous quarter. The ONLY time that I would advocate anybody buying a mutual fund is when their investment portfolio is small. The mutual fund then allows that investor to remain diversified as they work to put more money away.
When your portfolio starts to get large (let’s use 100K as an example), then a 2% MER means that you’re paying somebody $2000 a year to do what? Hold shares of extremely liquid large cap stocks like banks, insurance companies and REITs for you? If it’s in a retirement account and your retirement is 20 yrs away, then $2000 a year is $40,000 that you gave to some money manager. Just buy those individual stocks for a one time brokerage fee and hold onto those stocks for decades and then put that extra $40,000 in YOUR pocket!
My biggest peeve about mutual funds is their lack of transparency. The reason why I liked the income trust structure for what is essentially an ETF is because they report their financials using traditional balance sheets and cash flow statements. Traditional funds only reports holdings and fees. A lot of the fees are hidden and you have no idea what transactions were made by the fund during the previous quarter.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17716 Canadian Capitalist Mon, 15 Jan 2007 21:49:36 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17716 ETFs are cheaper to own, so it definitely makes sense to sell the fund and buy the equivalent ETF. Let's take the XBB as an example. The MER is 0.25%. The equivalent eFund charges 0.48%. When does it make sense to sell the eFund and buy the ETF? I would shoot for spending 0.5% in buying commissions or $4000 if you are paying $20 (I am ignoring selling because I am hoping to hold for a long time). ETFs are cheaper to own, so it definitely makes sense to sell the fund and buy the equivalent ETF.

Let’s take the XBB as an example. The MER is 0.25%. The equivalent eFund charges 0.48%. When does it make sense to sell the eFund and buy the ETF? I would shoot for spending 0.5% in buying commissions or $4000 if you are paying $20 (I am ignoring selling because I am hoping to hold for a long time).

]]> By: Canadian Money Blogs Reviewer http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17715 Canadian Money Blogs Reviewer Mon, 15 Jan 2007 21:40:40 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17715 I'm glad we agree :-) My actual question is: does it make sense to store money in a no load/low cost mutual fund only until you have enough to a buy a ETF? In your TD eFund example, why would someone move out of there into an ETF? I’m glad we agree :-)

My actual question is: does it make sense to store money in a no load/low cost mutual fund only until you have enough to a buy a ETF? In your TD eFund example, why would someone move out of there into an ETF?

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17713 Canadian Capitalist Mon, 15 Jan 2007 20:26:37 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17713 Of course, ETFs are not suitable for small amounts. Folks investing a small initial amount or investing small sums regularly should consider TD eFunds. Of course, ETFs are not suitable for small amounts. Folks investing a small initial amount or investing small sums regularly should consider TD eFunds.

]]> By: Canadian Money Blogs Reviewer http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17710 Canadian Money Blogs Reviewer Mon, 15 Jan 2007 19:04:05 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17710 Another caveat: if you invest small amounts at a time in an ETF( 1000$ for example) , you will have to pay a brokerage fee which could be 2% of the amount for a 20$ fee which most small investors pay in regular brokerage accounts). I would think that a good alternative would be to store the money into a no load mutual fund (good quality and low MER) and then move the money to an ETF once a critical amount is reached (5000$?). What do you think? Does that make any sense? Another caveat: if you invest small amounts at a time in an ETF( 1000$ for example) , you will have to pay a brokerage fee which could be 2% of the amount for a 20$ fee which most small investors pay in regular brokerage accounts). I would think that a good alternative would be to store the money into a no load mutual fund (good quality and low MER) and then move the money to an ETF once a critical amount is reached (5000$?).

What do you think? Does that make any sense?

]]> By: Alex Givant http://www.canadiancapitalist.com/disadvantages-of-etfs/#comment-17702 Alex Givant Mon, 15 Jan 2007 15:51:02 +0000 http://www.canadiancapitalist.com/2007/01/14/disadvantages-of-etfs#comment-17702 The only problem to put money to American ETF is currency-risk, so Canadian ETF probably more prefferable. The only problem to put money to American ETF is currency-risk, so Canadian ETF probably more prefferable.

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