[Kimaamighed]

Follow-up question: Currency-neutral or no, for buying US index-tracking funds?

Given the high value of the CDN dollar right now, my gut is telling me to avoid currency-neutral. Yes?

[Dwerfsd]

Cue Kuciwalker, "Asher knows nothing beyond a very narrow specialty of computers!"

Asher, ETF's are a TYPE of mutual fund.

And you have a DEGREE in finance?

[Ettiominiw]

Why is there no banana option?



Anyway, It depends.

[Infellgedq]

Albie, mutual funds and ETFs are both open-ended funds. But an ETF is not a mutual fund.

[toyboy]

Do you want to define what these are? They may be know by different names in other financial systems.

[hrotedk]

I have a snowboard heavy portfolio.

[happyman]

If you twist the definition of mutual funds to mean an open-ended fund, then yes it's a mutual fund.

Anyone with more than $5 to their name wish to join the conversation now?

I said don't mock me. I haven't worked in this field and am 3 years stale.

Don't work in computers at all after receiving your Comp Sci degree and see how much you can remember accurately on the spot after 3 years.

[SallythePearl]

invalid poll

[Edifsdubs]

And it's not all that clear whether this is a valid poll or not. Asher just might have a banana in his depends.

[veizKinquiz]

Calling ETFs mutual funds is an abuse of terminology.

As to the original question, it depends how long you're going to hold the position and how much you're putting in. The standard wisdom is that the ETF costs you less to hold while the fund costs you less to enter and leave.

The biggest difference in asset management land (for investors who do not qualify to buy into hedge funds) is between active management and passive management. Relative to that, the cost difference between an index ETF and the equivalent mutual fund is likely to be pretty small. As always, though, shop around for the best deal.

[Borrinas]

I have a sandwich heavy portfolio.

[anatmob]

Calling ETFs mutual funds is an abuse of terminology.

As to the original question, it depends how long you're going to hold the position and how much you're putting in. The standard wisdom is that the ETF costs you less to hold while the fund costs you less to enter and leave.

The biggest difference in asset management land (for investors who do not qualify to buy into hedge funds) is between active management and passive management. Relative to that, the cost difference between an index ETF and the equivalent mutual fund is likely to be pretty small. As always, though, shop around for the best deal.

Thanks. What about the currency neutral funds? I don't expect the Canadian dollar to rise against the US much more, and if anything to fall a bit. That means avoiding the currency neutral at the moment is prudent, no?

[Stoottnoiciek]

I'm a lazy investor, so my money started in mutual funds and stayed there even when I got enough to possibly justify moving it to ETF's. However, Vanguard (where I have my mutual funds) significantly lowers the management fees once you pass a certain investment threshold, which when coupled with the capital gains I'd have to pay from moving money around justifies keeping the money where it is.

ETF's aren't an option for my 401K - there my only option is whether to put the money in a small, medium, or large-cap index fund, so I went 30/30/40.

[Usendyduexy]

Vanguard Total Stock Index. Vanguard Total International Index. No load and management fee is about the same as ETFs. TSX is really too narrow.

[Pcodaygs]

Total Stock also has a $3000 minimum purchase, which means I wouldn't be able to do incremental monthly purchases.

It's got a 2.45% average return the past 10 years, the TSX fund is 6.02%.
Past 3 years, Total Stock's average was -1.74%...TSX was 3.89%.

[hojutok]

Past performance is no guarantee. Also, I'd look favorably on buying an index fund that had been dropping. That 1.74% drop is more of a discount than a liability.

With a $3000 minimum, what sort of fees do they charge?

They're very low, 0.18%.

I know past performance is no guarantee, but I'm also looking at future potential growth. As Canada is an energy & commodity economy predominately, I see it growing faster than the US in general, just as it has the past decade. China and the developing world has enormous appetite for Canadian goods and energy and the demand will only keep increasing. It's getting to the point that it won't even matter if the US decides they don't want "dirty" Canadian oil, China is begging for more.

I think the US' heydeys are behind it for leading growth. I'd already have a combined 40% invested in the US, I think that's more than enough. Don't want to put all of my begs in one massively indebted basket.

Additionally, US funds carry increased risk for me as I have the currency issue to deal with. The US/Canadian currency is fluctuating significantly these days, which can be very good or very bad. It's needless additional risk to put lots more money into that, I would think. A 20% currency differential one year can wipe out 20% gains...

[regfortruegoo]

In addition to KH's comments, I note that sometimes mutual funds are harder to get into and out of than ETFs because mutual funds settle at the end of the day. During the meltdown a couple of years ago, I was delayed a few days in moving money from one fund to another. Almost always, this is no big deal, but volatility was enormous at the time, and I lost something on the order of 5% by that friction.

Another consideration is that ETFs sometimes act a little strangely if there is low trading volume, if I recall correctly. This argues for keeping to some of the bigger ETFs.

Good luck.

[Erwtbimp]

The $3000 minimum is just for the initial purchase. After that, you can buy in small dollar amounts. I don't know any good funds that track the TSX.

TD Canadian Index-e is what I'm looking at: link

It looks pretty good to me...my dad's had it the past ~6 years and it's treated him very well.

[dexterljohnthefinanceguy]

I'll take a look around, but I don't recall seeing any that're much lower.

I've also been told to pay more attention to the MER than the management fee. Is the management fee more important?

[jPNy2BP5]

I'll take a look around, but I don't recall seeing any that're much lower.

I've also been told to pay more attention to the MER than the management fee. Is the management fee more important?

Same thing.