Comments on: Yes, you can index using mutual funds

By: Saturday Money Q: Should I liquidate my mutual funds and start from scratch? | Nancy Zimmerman: a canadian money coach (not a financial planner!)

Sun, 29 Mar 2009 00:18:12 +0000

[...] personal finances bloggers have done a lot of research and formed opinions on ETFs – like this by Canadian Capitalist . How do the ETFs you are considering stack up to the mutual funds you currently [...]

By: chat

chat — Thu, 25 Dec 2008 00:48:47 +0000

yeah you ?

By: Canadian Capitalist

Canadian Capitalist — Fri, 15 Aug 2008 17:12:55 +0000

Larry: TD e-Series mutual funds is directly comparable to ETFs because the mutual fund is sold online and cannot be purchased at a local TD Branch.

Forone: Thanks for the link. One of these days, I’ll get around to organizing all the great links I get from all of you.

Rusty: There are two trades — one to sell the mutual fund (typically no fee if it has been held for 90 days) and one to buy the equivalent ETF. The MER savings is = amount invested * MER differential. When this equals the commission paid for buying the ETF, a switch can be made.

EnRock: As a portfolio grows larger, it is possible to give up on mutual funds altogether and buy ETFs directly. Regular savings can be accumulated as cash in the portfolio and once it becomes a decent stash used to purchase an ETF. (Nice blog, BTW).

By: EnRock

EnRock — Fri, 15 Aug 2008 16:34:02 +0000

This is a great reminder that its not the vehicle that matters, but what’s inside that counts. Investors should use all the available tools, including ETF’s and mutual funds, in order to maximize expected return, minimize risk, and REDUCE FEES.

You can see a table I created of average annual costs for ETF’s vs Mutual funds that I use to help decide where to invest my money at http://enrock.net/2008/02/08/should-i-buy-a-mutual-fund-or-an-etf/

By: Rusty

Rusty — Fri, 15 Aug 2008 02:20:37 +0000

I’m not following the math… how many $10 trades per year are there?

By: A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com

A Lap Of The Blogs : WhereDoesAllMyMoneyGo.com — Fri, 15 Aug 2008 02:06:16 +0000

[...] Canadian Capitalist reminds us that you don’t have to use ETFs to track indices, you can use mutual funds to do that as well. (Make sure to check out the article he references in the Globe – it’s bloody [...]

By: Forone

Forone — Tue, 12 Aug 2008 16:28:53 +0000

Here is a nifty calculator for mutual fund fee costs over several variables (ETF costs can be estimated by adding the total brokerage fees as “other fees” at the bottom)

http://www.investored.ca/IefCalculators/Calculators/MutualFundFeeImpact/default.aspx

By: larry macdonald

larry macdonald — Tue, 12 Aug 2008 03:15:04 +0000

I wonder if one thing to consider in the switch from mutual funds to exchange traded funds (and index fund like TD eFunds) is that mutual funds are often sold as part of a financial planning package that includes tax, retirement, estate, children’s education, etc planning. Ostensibly, these ancillary services are provided at no charge but payment in fact occurs through the management expense ratio. Anyone switching to ETFs would likely have to give-up these “free” ancillary services and spend time/effort self-educating/managing these aspect of their finances (or else hire an advisor to handle them). Either way, it’s a cost that perhaps should also be considered in the discussion about switching from mutual funds to ETFs and index funds?

By: Canadian Capitalist

Canadian Capitalist — Mon, 11 Aug 2008 15:26:47 +0000

Doug: I don’t understand why TD Waterhouse will keep track of average cost for the e-Series funds but not for ETFs. I hold both in my personal Waterhouse accounts and the book value is kept track of for all the holdings. Even when I transferred accounts from one broker to another, the book values got ported correctly.

In any case, this isn’t a huge concern. It is a simple matter of recording transactions every quarter or so.

By: Charles

Charles — Mon, 11 Aug 2008 14:56:41 +0000

Doug, Vanguard’s index mutual funds are excellent low-fee vehicles… that are *only available in the US*. Americans have access to lots of funds that are much more competitive in MER than in Canada.

As for keeping track of cost base… yes, record-keeping is necessary. This is the price of complicated tax laws. If you’re not willing to shell out for a copy of Quicken, a properly-designed spreadsheet would do the trick.