Switching from Index Mutual Funds to ETFs
The following question is from Ed, who wants to switch from index mutual funds to ETFs:
Many years ago I set up my RRSP using TD’s low MER e-Series index mutual funds. I learned quite awhile ago that most actively managed funds cannot beat the indexes over the long haul. I’m now thinking of moving from index funds to ETFs. Is there a website(s) somewhere with a good list of available ETF’s? I currently have a TD trading account so flipping over from TD index funds to ETF’s should easily be done not forgetting penalties for redeeming within 90 days.
While index mutual funds are a great option for small portfolios, ETFs could be an even cheaper option for larger portfolios. Though hundreds of ETFs are available, most investors need to be aware of only a handful. You can obtain the list of ETFs that track broad indices under the ETF category on this website or the websites of the major purveyors – Vanguard and iShares (Canada and US). I use the ETF Connect website for looking up more obscure ETFs.
The following table lists the TD e-Series Index Fund and the equivalent ETF:
|TD e-Series Fund||ETF|
|TD Canadian Bond Index (TDB909)||iShares CDN Bond Index (TSX: XBB)|
|TD Canadian Index (TDB900)||iShares CDN Composite Index (TSX:XIC)|
|TD US Index (TDB902)||iShares S&P Index (IVV)|
|TD US Index Currency Neutral (TDB904)||iShares CDN S&P 500 Index (TSX: XSP)|
|TD International Index (TDB911)||Vanguard Europe Pacific ETF (VEA) or iShares MSCI EAFE Index Fund (EFA)|
|TD International Index Currency Neutral (TDB905)||iShares CDN MSCI EAFE Index (TSX: XIN)|
Note that a better substitution for the TD US Index (TDB902) could be the Vanguard Total Stock Market ETF (VTI). Also, an initial currency conversion charge will be incurred when buying ETFs that are listed on US exchanges. Throw in an emerging market ETF and REITs into the mix and you’ll end up with a well-diversified portfolio.