Exchange Traded Funds
Lately I've been reading a lot about Exchange Traded Funds (ETFs) and am very close to switching a large chunk of my RRSP and Non-RRSP holdings into ETFs. This is a very big change from my current situation.
In my Non-RRSP account, I am currently holding 50% cash and 50% value stocks. In my RRSP account, I am currently holding 25% in fixed income and 75% in various mutual funds.
My RRSP account has been performing very well with very stellar results. The mutual funds I have chosen are all performing well, but the biggest downside is the high MERs that I am paying. For example, one of the funds in my portfolio has an MER of 2.80%. Unfortunately this fund has a DSC, which means that I will not be able to sell it under 4 years from now when the DSC is completely eliminated. At that point, I am looking to switch to either
a) Barclay's iUnit fund (ETF) or
b) An Indexed mutual fund with a low MER.
Which one I choose will depend on two factors:
1. what is tracking error of the fund (ie. how much does it deviate from the actual index)
2. how much is the MER and all associated transaction fees.
For my Non-RRSP account, I plan on adding an ETF to it. It is difficult to pick the winners (especially value stocks). As such adding an ETF that mirrors the large cap or mid cap index should provide some much needed diversification.
In my Non-RRSP account, I am currently holding 50% cash and 50% value stocks. In my RRSP account, I am currently holding 25% in fixed income and 75% in various mutual funds.
My RRSP account has been performing very well with very stellar results. The mutual funds I have chosen are all performing well, but the biggest downside is the high MERs that I am paying. For example, one of the funds in my portfolio has an MER of 2.80%. Unfortunately this fund has a DSC, which means that I will not be able to sell it under 4 years from now when the DSC is completely eliminated. At that point, I am looking to switch to either
a) Barclay's iUnit fund (ETF) or
b) An Indexed mutual fund with a low MER.
Which one I choose will depend on two factors:
1. what is tracking error of the fund (ie. how much does it deviate from the actual index)
2. how much is the MER and all associated transaction fees.
For my Non-RRSP account, I plan on adding an ETF to it. It is difficult to pick the winners (especially value stocks). As such adding an ETF that mirrors the large cap or mid cap index should provide some much needed diversification.
posted by torontoinvestor at
5:54 PM
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