Mutual funds or ETFs?

[Felch]

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%.

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?

[Asher]

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...

[Felch]

I wasn't even thinking of the currency issues. That's a good point.

[DanS]

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.

[pchang]

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.

[Asher]

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.

[pchang]

Their management fee is 0.5%. I look for index funds with management fees below 0.3%. However, I am not familiar with the average fees for Canadian index funds.

[Asher]

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?

[KrazyHorse]

Their management fee is 0.5%. I look for index funds with management fees below 0.3%. However, I am not familiar with the average fees for Canadian index funds.

The only thing I own with fees above 30bps is EWC. I cannot own native canadian dollar funds without inordinate difficulty.

[pchang]

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.

[Asher]

Same thing.

But on the fund page, it shows the management fee at 0.50% and the MER at 0.31%.

From what it looks like, the Canadian index funds have higher fees across the board. Haven't found a single one below 0.30.

[pchang]

But on the fund page, it shows the management fee at 0.50% and the MER at 0.31%.

From what it looks like, the Canadian index funds have higher fees across the board. Haven't found a single one below 0.30.

I guess it is a Canadian thing. MER is the total fee which includes management fee, so MER is more important. But in this case, you have an anomaly because MER < management fee. This indicates the fund must have refunded some of the management fee to bring the MER down. Was this a one time thing or do they do this every year? Strange.

[Asher]

I guess it is a Canadian thing. MER is the total fee which includes management fee, so MER is more important. But in this case, you have an anomaly because MER < management fee. This indicates the fund must have refunded some of the management fee to bring the MER down. Was this a one time thing or do they do this every year? Strange.

From what I can tell, the MER's been that rate (or very close) for years. Maybe it's a typo on the page. Or maybe there's something special pertaining to dividends or something that could reduce the management fee? I've no idea.

[Asher]

Found this:

You may have heard the terms "management fee" and "management expense ratio" (MER) mentioned in association with mutual funds, and be wondering what the difference is.
management fee: the fee paid to the fund's manager for supervising the administration of the fund.
management expense ratio (MER): total expenses expressed as an annualized percentage of daily average net assets. MER does not include brokerage fees and commissions, which are also payable by a fund.
Each CIBC Mutual Fund pays its manager, Canadian Imperial Bank of Commerce, a management fee and is also responsible for its own operating expenses.

[pchang]

Gotta look at the prospectus and read all the fine print or call them and ask.