Although Globefund is showing an MER of 0.53, I think that is in error as 0.53 is the MER of the Investor Series of the TD US Index Fund. Morningstar lists “TD U.S. Index-e” with an MER of 0.33. As does TD’s own site here: http://www.tdcanadatrust.com/mutualfunds/tdeseriesfunds/mer_diff.jsp

I just recently noticed that “TD U.S. Index (US$)-e” has an MER of 0.33 according to Globefund, but “TD U.S. Index-e” (not currency neutral) has an MER of 0.53. So it looks like you are paying 0.20% per year for the privilege of buying and selling in CAD. Blech.

Also, my understanding is that the cost of hedging in currency neutral funds is considered to be a fund expense, and is not part of the MER. So it’s not necessarily just a small premium to pay for currency hedging.

How is the price on 902 calculated? Is it simply converted to CAD$ daily thus if the value of the index was neutral but the CAD$ dropped by 20% against the USD the unit value would drop 20% as well?

I presume this is the case, thus making the difference between the two more a matter of convenience/preference as opposed to another real strategic decision (like considering hedged versions).

you mention that if the fund is not hedged..
you lose if the canadian currency goes down …

but it’s the other way on an international unhedged fund you lose only when canadian dollar goes up..so our fear in unhedged
fund is that of canadian dollar rising & not the other way around.

thanks
bob

The US has huge budget and current account deficits, both of which have (and will continue) to put downward pressure on their dollar. Until these imbalances are worked out, I would consider it prudent to take out a little insurance against further drops in the greenback.

I am brand new to investing and I constructed a td e-funds portfolio that has 25% of my portfolio in the US currency neutral and 25% in the International currency neutral funds.

My Thought was this: I’ve seen and expierenced effects of a$0.63 dollar and a $1.01 dollar in my everyday life, from employment to purchasing. I wanted to limited risk because my income is low (small factory worker) and I wanted some predictability of expected returns.

I didn’t know how to “predict” possible returns years from now unless there was hedging. I wanted to be conservative even though I am 31 because I have a lower middle class income and was prepared to pay the slightly higher MER for that hedging.

Some will that because I’m younger I should be more aggressive and play the currency cycles but on my income that would be uncomfortable.

Maybe John is onto something about splitting your foreign holding into native and currency neutral funds…?

In this approach you own both hedged and non hedged versions of the same Index 50/50.

So if you aim for 20% total exposure to the S&P 500 in your portfolio just buy 10% hedged and 10% non- hedged.

You can use both I Shares and TD e Funds as part of the mix

US Stocks
XSP – 10%
TD902 -10%

International Stocks
XIN -10%
TDB911 – 10%

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