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moneysense.ca, 15/01/08
ING Direct’s Low-Cost Mutual Funds
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.
moneysense.ca, 15/01/08
I was excited when I saw this too, as I like dealing with ING. They are one of the nicer banks.
But I was also disappointed to see the 1% MER. Cmon ING – this is almost a great product….
I’m sure they will make a killing on this. Their website looks very easy to use too. They probably don’t need to lower the MER because even at this price they will earn a lot of market share.
But not available in the Territories or Quebec.
Tsk tsk tsk
Diva: I agree. ING should have done better but then they are just launching. So, I’m hoping fees will go down.
Preet: If this product takes off, I’m sure there will be more competition. Look at what ING has done to high-interest savings accounts.
CTR: Thanks for pointing this out. I didn’t notice that exception.
This looks to be a very promising product for investors who are fans of the passive investing approach, but do not have much capital to purchase blocks of ETFs. By simply choosing the correct Streetwise variant (ie: Balanced Growth if you are young), and regularly purchasing units, you will have a very elegant indexed portfolio and not have to rebalance every quarter.
And it is also worth noting that ING pays 3.75% annually on cash balances inside a Streetwise mutual fund account. Compare that with the peanuts in interest that brokerage firms pay for your idle cash!
Hopefully it won’t take as long though!
Though I don’t have any inside information, I suspect the “not available in Québec” is a temporary issue; products like this go through lengthy scrutiny by the provincial government before they are approved. TD eFunds are available to Québecers so I don’t see any reason why ING’s funds shouldn’t eventually be available as well. At least I hope that’s the case.
I too am a little disappointed with the ING MER on this fund. I wrote about it here.
[...] UPDATE: For a another review on ING’s new fund, check out Canadian Capitalist’s take [...]
fox: While I am in no rush to sell my e-Series funds (which as you rightly point out cost less than half), I’m excited that a major player is going to give lots of publicity to the importance of low costs and indexing. Yes, the fees could be lower and yes, you could do better on your own but still ING deserves a pat on the back for this move.
This is a great move from them – I noticed it the other day as well. After opening my ING account last year I was looking at the mutual funds they sell but the list was disappointing, with high fees all over and no index funds (apart from bonds, I think). It looked like a lineup of generic underperformers. I wonder if they’re still making those funds available for anyone who can’t figure out a better option.
I’m now an e-Series user, and I have a small index fund account with another bank that I opened before hearing about TD.
I currently bank at TD and invest through through their TD e-series funds. I keep my savings and emergency fund in ING savings accounts. Generally speaking TD has been great and has offered great products (like the e-series accounts). The only problem I’ve found after using both services together for about a year is that getting anything done at TD has always been a hassle whereas ING has made everything easy for me. For example, opening up the e-series account took 4 weeks, 3 visits to a branch and 5 phone calls (they messed it up more than once and they’re STILL sending mail to the wrong address). Opening up the ING savings account took a few minutes on the web and a quick phone call.
TD products are very good, but I’d much rather deal with ING’s customer service and their website is much easier to use. The MER on the new ING accounts is too high for me to justify switching my investments there (now that they’ve been set up). But if the MER were at least in the same neighbourhood as the TD e-series funds I would make the switch in a second!
I agree that these funds are a good way to get the idea of “low cost investing” more mainstream. The fact is that a 1% fee is a lot cheaper than 2.5% or so if you go to an advisor.
Don’t count on these fees being lowered anytime soon – they are a lot better than the 2.5% normal alternative and with ING’s high profile, they will probably sell quite well. The fact is that TD e-Series are a bit of work to set up and I don’t think TD pushes them at all. I doubt most of the public even knows they exist.
Mike
Jamie, I shared the exact same experience with TD when attempting to open a Waterhouse brokerage account last year. Long story short, mistakes on their end were made, I was given the runaround, and in the end, I gave up and opened an account with Credential Direct instead.
I also have my short-term cash parked in an ING savings account, and I have been extremely satisfied with their customer service. Their web-site is spartan, easy to use, and devoid of BS. I am certainly going to recommend the Streetwise fund to some friends who have a lot of cash saved up and want to begin a regular indexing investment strategy!
Jamie, interesting to hear you say that about TD’s service. I had no problem setting up and using my e-Series accounts, but I recently set up a Borderless account with them and service was very flaky. I got letters sent to the wrong address, letters asking me to fill out forms I had already submitted, and while the account comes with free chequing it turns out you have to order cheques yourself, they don’t come automatically. But they don’t tell you that, you have to figure it out.
[...] ING Direct’s Low-Cost Mutual Funds [Canadian Capitalist] [...]
Jamie, Jason: It’s interesting to hear your negative experience with TD. For me, the experience has been uniformly positive for both the TD e-Series Funds Accounts and with TD Waterhouse.
I am really excited about this fund, mostly because it will open up index investing to the average consumer. Even though you can construct a similar portfolio using TD e-series funds, many people don’t have the know how to do as such. This is a one step simple fund for retail investors. The MER is unfortunate, but hopefully the ease of use and returns will make up for it.
Hey CC, other than the ’stealing’ (it was accidental) of 2 grand from me my TD E-Fund setup was, well . . . complicated.
Originally I went in to open a mutual fund account to start. I gave them a $1000 cheque, which was cashed. The only problem is the person who set up the account went through their ‘asset allocation model’ thing to put me in their set it and forget it kind of plans that I didn’t want, so she went back and set it up all manually. It just so happens, that each one that was set up since she typed my bank info into the software and also said I was making a $1000 deposit that it debited my account. They cashed the cheque and they debited the account twice. Honest mistake and they fixed it fairly quickly.
So then I send in my forms to switch to an E-Fund account and get my card for easy web access. I call a few numbers on the site but for some reason I keep being told to goto a branch since they can’t help since I have no account. I never did go, I just gave up for a month and started calling again (Lazy). After call 3-4 I got a guy that set up the account fine and I was in and moving money around like a pro.
So, all in all, a very rough start, but now my sons RESP is on track just as I thought it would be.
Setting up e-Series accounts the standard way (online, no phone calls) is pretty straightforward and I didn’t have any problems when I set up my RRSP with them in 2003. The one weird thing I’ve noticed, though, is that whenever I purchase more shares, the purchase shows up in my e-Series account within a couple of days but the money isn’t actually withdrawn from my bank for two to three weeks. I don’t have a regular bank account with TD, so my transfers to the e-Series are between banks, much as is done with ING Direct, for example. I find it odd that it takes TD so long to move the money, it seems like the share price could change a bit during that time.
Traciatim: Now that you mention it, since I don’t have a TD bank account, I didn’t have an access card either. I called their e-fund number and they asked me to go to a branch to get an access card too. I was actually confused too but I did just that and that’s how I got access to my account.
brad: That’s strange. I have the opposite experience. Whenever I put a cheque into my TDW account at a local TD branch, they take the money from my RBC chequing account the very same day!
My TD e-Series transfers are between banks too and though I can’t recall how long it takes, it certainly doesn’t take weeks to clear.
Sounds like it might just be easier to buy the e-funds through a discount brokerage account.
On that front, I had no trouble setting up my discount brokerage account with TD (years ago though, and already had a chequing account with them), but wish there was more in the way of online help to buy mutual funds. Eventually I figured it out just fine, but still don’t know what “NL’FRAC” means beside the funds in my holdings list.
Can someone please tell me what I am missing? I read over the prospectus (http://www.ingdirect.ca/pdfs/prospectus.pdf) and it explicitly states that Management Fees == 0.80% per year of each Fund’s NAV. It seems like we are still talking about a 60% increase over the eSeries MER but its still better than 100%
Where can I track the price of this new index fund?
Investing 911….ive been searching online and it appears no one is tracking it. It’s not anywhere on ING’s website, i asked them about it and they said it can be found on globeinvestor.com but i couldnt find it…heres what i know
Street Wise Balanced fund
jan14 $10.4
jan 21 $9.54
jan 22 $9.57
jan 23 $9.59
The only place I can find it is the last days price on their site. But it doesn’t appear to be being kept.
If anyone is able to find it on globeinvestor, can you let me know?
This page contains the previous day’s price:
Link
A search on GlobeFund came up empty.
When I opened my E-series account I had no problems at all. It was a straight forward process.
PWilder:
Take a look at the “Operating Expenses” box on p. 13 of the prospectus. I think in addition to management fees (0.8%), there are also operating costs, which I think are capped at 0.2%. It’s worded pretty confusingly though.
Last time I called ING Direct I was told that soon the website will provide more account history (like purchase price and price history).
I just talked to ING and they told me that it was against the law to report any performance data(track the fund) until it was at least 1 yr old. That is why you won’t see it listed in the paper or on their website. I asked if I could track it on my own website, as help for others, and he told me that this would be illegal. The one thing he did say is that all 3 funds started at $10 on Jan 2.
How can we know exactly which bond and index the ING Streetwise Fund invested into?
Does it buying and selling as the market changes?
Do we need to know what the management is doing? how?
PWilder: MER = Management fees + operating expenses. MER for ING funds = 0.80% + 0.20%. TD e-Series funds report MER, so that’s the correct comparison.
hoser: Thanks for the info. I didn’t know the 1 year rule. This page (Link) reports the previous day’s price.
nice: The bond portion tracks the DEX Universe Bond Index. I’ve noted the indices that the equity portions track: TSX Composite, S&P 500 and MSCI EAFE. The fund is rebalanced back to the target quarterly based on how much the actual allocation deviates from the target.
Try http://www.adviceforinvestors.com/, Under mutualfunds for tracking. Not exact but better then what ING is providing.
Thanks Saran, that’s exactly what most of us were looking for. Hopefully this stays up.
Can anybody reccomend some good books for a newbie like myself who wants to invest in more than just regular RRSP’s?
Thanks
Kris: Check out the recommended reading page:
http://www.canadiancapitalist.com/recommended-reading
Thanks!!
[...] portfolio ETFs are slightly less than portfolio mutual funds available through TD e-Series Funds or ING Streetwise Funds but the same criticism directed towards the mutual funds applies here: investors could assemble the [...]
PC Financial MER is aroud 0.88%-0.86% for the Canadian Index fund. You have also more choices than just the 3 streetwises Funds from ING Direct. Their saving account is at 3.05%, compared to 2,7% at ING (Nov 28, 2008). PCFS also offer a free chequing account. So, I’m not a big fan of ING anymore.