Index Fund Investing

[danibbler]

Hi all,

I'm trying to find out who (online broker, bank, whatever) has the largest selection of index funds available from which to purchase. I'm currently an E-Trade customer and all I am seeing are ETFs. I could purchase those I guess but if anyone has another suggestion I'd appreciate it. Thanks.

 

[danibbler]

If you're looking for index funds, ETFs (Exchange Traded Funds) are the way to go. ETFs are index funds traded as any other stock. Go to www.moneysense.ca and look for "couch potato" portfolio. If I remember correctly, they suggest: XIC 20%, XSP 20%, XIN 20%, XBB 40%. You can get them all through e-trade.

Thanks smiley; I had a brainfreeze last night and should have simply done a filter on Globefund in order to find the funds with the lowest MERs. ETrade has access to 3200 mutual funds so I should have been able to find something.

As for ETFs versus true index funds...hrmmm...I'll have a look around some more before deciding.

 

[Stockboy]

Try iunits.com. They are the major supplier in Canada. Claymore also has some interesting sector etf's as well. Here is a word of caution. There is a belief widely held that the indexes could be looking at mid to high single digit returns this year in Canada. You may be better off to consider individual securities.
Cheers!

 

[danibbler]

Thanks stockboy. This is all for my RRSP...tired of mutual funds that can't even make the average let alone pay for the fees that they charge.

 

[fuji]

Fees on ETF based index funds are WAY lower than fees on "conventional" index funds, provided that you buy enough of it to make the flat $10 stock trade commission irrelevant and hold them for a long while.

Conventional funds have much higher MER's and are only really good if you plan to churn them, or buy in very small amounts.

 

[elmufdvr]

o.k stupid question... I am looking to start putting some money into investing... i am not a big player..i would have about $200-300 to invest monthly... how or what should i look at? should i just put it into rsp's? i don't have significant amount put away yet..but i don't mind some risk... any recommendations would be of great help..thank you...

 

[danibbler]

o.k stupid question... I am looking to start putting some money into investing... i am not a big player..i would have about $200-300 to invest monthly... how or what should i look at? should i just put it into rsp's? i don't have significant amount put away yet..but i don't mind some risk... any recommendations would be of great help..thank you...

Too many factors to consider here...such as your age, monetary needs, current and future incomes and so on. You either need to brush up on your investment knowledge and/or get yourself to an advisor.

 

[JohnLarue]

o.k stupid question... I am looking to start putting some money into investing... i am not a big player..i would have about $200-300 to invest monthly... how or what should i look at? should i just put it into rsp's? i don't have significant amount put away yet..but i don't mind some risk... any recommendations would be of great help..thank you...

Check this out
You will not regret it
http://www.investments.shareowner.com/home/v1/index.html

 

[elmufdvr]

i know i need to do some home work..just wanted a nudge in the right direction.. thank you of your thoughts...

 

[21pro]

don't just buy them, make sure you buy them on corrections.

example: i bought HYG in august at $95, so with the monthly dividends I inherit over an 8% yield... if you buy today, the yield will only amount to 6%... not worth it when you have to pay commissions on your trade.

 

[Stockboy]

Index Investing

To deal with individual securities you need to have some critical mass built up.
Personally, I have never been a fan of indexing investing. I am sure that everyone can remember Nortel and the unbalanced weighting that it had in the index. When the shit hit the fan Nortel also led the way down.

Even in bad markets there are winners. Indexing most often does not allow for this.

Mutual funds could be an answer. You have to do your homework but there are some exceptional managers in the marketplace. Also, if you are using a discount broker always use the F Class version. Advisor trailer fees are cut right off of the MER.
Cheers

 

[Rockslinger]

Mutual funds could be an answer.

Isn't it true that with mutual funds you start every year 2% "underwater" because of MER? I think there are stats that show mutual fund performance on average is no better (probably worse) than the overall market. It probably takes more skill to pick a good mutual fund than to pick a good stock. Mutual funds are great at making their managers rich but maybe not you.

 

[Stockboy]

There are some outstanding managers out there and they do run funds. Take a look at Sprott Canadian Equity. Sure the MER is a bit higher but if historical trends continue the MER is warranted. Rohit Sehgal from Dynamic is another outstanding manager. Yes there is a cost but that shouldn't be a deterrant if the performance is there.

 

[danibbler]

The vast majority of funds are not able to maintain even market average. Yes, there are managers who can beat the market but whether or not they can consistently do so is something else entirely. They may have had a good run over the past five, ten or even fifteen years but if you're planning to invest for the long-term do you really believe that those managers are going to be able to keep on going? As the mutual funds themselves says, past performance is not an indicator of future returns.

 

[Stockboy]

You are right there. However, historical performance is really the one major evaluation tool that there is. Case in point...Canadian Banks. Historically, they have returned 8 - 10% per annum including dividends. No guarantee for the future but a solid trend has been established.

Don't get me wrong. I am not behind mutual funds 100%. They do serve a purpose however and with the proper homework being done can contribute to the success of a portfolio.

 

[jp61]

Anyone have any experience with CI funds, like CI Global Opportunities it has been in top funds for 10 years? Over 9% last month alone...

 

[fuji]

Trying to figure out which stock to buy, or even which mutual fund to invest in, is a full time job. Anything less and you are doing a half-assed job and you would be better off in index funds. By that I mean someone with the appropriate education in finance (formal or street learning) who puts in eight hours a day five days a week, with access to sophisticated tools and data feeds, and who is a little smarter than most, can likely make money at it. Everyone else is a sucker.

There are a LOT more people out there who think they can pick stocks or identify a skilled fund manager than there are people who really can do that.

Hint: Past performance, track record, is a suckers game. The fund companies know this. They keep 10 or so funds on their roster and at any given time one of them will by luck be doing well. So they plug the one that is doing well but guess what? It doesn't do well next year, some other one does, and then they plug that.

There was a study done recently about how the average performance of the stock market means the market should currently be worth hundreds of billions more today than it is--the actual value invested did not increase by the gains! That conundrum was resolved--the different went into brokerage and fund fees, all the dumb monkeys pretending to be stock pickers selling this to buy that pissed a massive chunk of their savings away on trading cost.

I do think there are skilled investors out there. I think there are skilled fund managers. I don't think your odds are very good of figuring out who is one, or of being one yourself. I'm not even sure the really skilled fund managers are working in the mutual fund market, I think they're pension fund managers and private equity guys, since that's where the big bucks are.

MAYBE you could just invest in Berkshire, but then again, Warren's getting old, so who knows if he can keep up the good work for another 10.

Like I said, full time job picking stocks or evaluating fund managers, so, if you are only putting in a few hours a month or less, just stick to index funds. You won't beat the market, but then again, you won't lose to it either. Not a bad result for 5 minutes of effort.

 

[dunkula]

There are some outstanding managers out there and they do run funds. Take a look at Sprott Canadian Equity. Sure the MER is a bit higher but if historical trends continue the MER is warranted. Rohit Sehgal from Dynamic is another outstanding manager. Yes there is a cost but that shouldn't be a deterrant if the performance is there.

Yes Rohit Seghal @ Dynamic Funds is a very good fund manager who has consistently outperformed TSX benchmark in up & down markets over the last 10 years, although Dynamic Power Canadian Growth ( which is a core holding in my rsp ) is a volatile fund as he tends to overweight momentum sectors eg base metals & materials. The hedge fund he manages ( Dynamic Power Hedge ) was I believe the number 1 or 2 fund ( other being I believe one of the Sprott funds managed by Peter Hodgson ) for 2007. Power Hedge is a 10 bagger since its inception.