One question that comes up frequently from investors with small portfolios is whether they should buy low cost index fund such as the TD e-series or by ETFs which have lower
mers than the index funds but you have to pay a minimum of $ 4.95 per trade.
Not exact matches
Index funds typically have lower
MERs than managed mutual
funds because they don't have to pay the portfolio managers as much.
We have other business with Altamira and I have been happy with them because although their
index fund MERs are a bit higher
than TD (most are 0.5 % I think), I find their online system, phone system, and monthly reports much easier to read / use.
The same investor using a 0.25 %
MER exchange - traded
index fund (ETF) with a no - cost automatic contribution option would pay less
than $ 5,000 in costs and have $ 50,000 more in his portfolio.
You should not pay more
than a 0.9 %
MER for an
index fund.
Another option for low cost
index funds is Altimera — last time I checked they had a Precision series which had
mers of less
than 1 % — You will pay a bit more in
mer but I'm positive they can handle the extra grants.
I have switched most of my mutual
funds to
index where it is less
than one percent
MER (about 0.70).
They said they had mutual
funds with lower
MERs than that, and higher returns
than the
index funds, so why didn't they have a wealth management specialist call me?»
Clearly an
index fund has a much lower
MER, but if you have a large portfolio, then even a 0.5 %
MER can be more
than a one - time transaction fee.
While the
MER at 1 % is a bit steep and you can construct the same portfolio with TD e-Series Mutual
Index Funds for less than half the cost, ING's mutual funds are even cheaper than TD Bank's indexed portfo
Funds for less
than half the cost, ING's mutual
funds are even cheaper than TD Bank's indexed portfo
funds are even cheaper
than TD Bank's
indexed portfolios.
Unfortunately, Altamira does not offer a bond
index fund and the bond mutual
funds available have
MERs of more
than 1.5 % but they do offer a decent T - bill
fund to park your cash (
MER of 0.52 %).
If you are at a broker that does not charge a fee, and you have less
than 25k, you might be surprised at how much more expensive the $ 50 fee / e-
funds combination is compared to some low
MER index funds (< 1 %) at a broker that does not charge a fee.
Interesting set of
funds, for those that don't want the «Seat of your pants» feel of the raw
index funds, might be a better option
than the higher
MER (> 2 %) active management
funds offered by others.