Will investment patterns change. Would lower fees attract more investors to the major companies? Frankly, I doubt it.
Although high fund fees have been a favourite target of the media in recent years, I have not sensed a rebellion against them on the part of ordinary investors.
After all, there are plenty of low-fee house they could turn to (e.g. Saxon, Chou, PH&N), yet they all remain relatively minor players.
Moreover, the big fund companies can’t make deep enough cuts in their equity fund costs to make a major difference.
That’s because a large percentage of the expenses goes towards paying commissions and trailer fees to the financial advisors on whom they rely to sell their products.
So the companies are trapped in a vicious circle of their own making.
David Denison’s legacy is to have made the first big move towards forcing the industry to take a fresh look at itself and the way it does business.
Now that he is leaving, it remains to be seen if anyone else will pick up his standard.
Thanks to:
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
© January 2005 Gordon Pape Enterprises Ltd.
Saturday, March 26, 2005
Friday, March 25, 2005
Denison's legacy: fee changes
Denison's legacy: (con't)
Since the news was released, the other major fund companies have been trying to assess whether they should respond and, if so, how.
No one wants to reduce fees if they can possibly avoid it since those dollars will come right off their bottom line and flow to their investors instead.
Of course, investors would welcome such a gift. But unless the result is to attract more money to the industry, the shareholders of the fund companies would lose out – and could become rather testy as a result.
Thanks to:
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators.
He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
© January 2005 Gordon Pape Enterprises Ltd.
Since the news was released, the other major fund companies have been trying to assess whether they should respond and, if so, how.
No one wants to reduce fees if they can possibly avoid it since those dollars will come right off their bottom line and flow to their investors instead.
Of course, investors would welcome such a gift. But unless the result is to attract more money to the industry, the shareholders of the fund companies would lose out – and could become rather testy as a result.
Thanks to:
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators.
He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
© January 2005 Gordon Pape Enterprises Ltd.
Thursday, March 24, 2005
Denison's legacy: fee changes
your portfolio
Denison's legacy: fee changes
December was not a good month for Canada’s mutual fund industry.
The market timing scandal that had been simmering all through the summer and fall finally exploded with huge fines being levied against four fund companies, three big bank brokerages, and Investors Group Financial Services.
And there may be more to come as the Ontario Securities Commission continues to investigate a handful of other firms, including giant Franklin Templeton Investments.
It's a wake-up call for an industry that has experienced large-scale redemptions in the past year in a belated response to the bear market of 2000-2002 and low interest rates, which have prompted investors to dump money market funds.
One company that has not been touched by the scandal, at least so far, is Fidelity Investments Canada.
That made it possible for the Canada Pension Plan Investment Board to appoint Fidelity's president, David Denison, as its new CEO. He'll take over from the retiring John MacNaughton in mid-January.
Clearly, such a move would have been impossible if Fidelity Canada had been tainted by the scandal (although it should be noted that the company's Boston-based parent has come under scrutiny in the U.S.).
The CPP Investment Board is a Crown corporation and the Liberal government, still reeling from the sponsorship scandal, must exercise the utmost discretion in selecting its boss.
What Ottawa may not realize, however, that while Denison’s reputation is untarnished, he has a tendency to stir the pot. In fact, he leaves a growing controversy behind in the fund industry as he departs.
It's all about the fees
In late November, Fidelity Canada announced across-the-board cuts on the management fees it charges on all its funds.
The decision was Denison’s brainchild and he aggressively moved it to the top of his agenda. It may be no coincidence that the announcement was made just three weeks before his departure was revealed.
The result of Fidelity’s unilateral action is to reduce the management expense ratio (MER) on its equity funds by about 0.2 per cent and on fixed-income and money market funds by about 0.3 per cent.
That may not appear impressive at first glance, and on the equity funds it isn’t. But with interest rates looking like they will remain low for several months, a reduction of 30 basis points on a bond fund is significant.
On a money fund, it is huge.
Next:
Will investors move to major companies?
Gordon Pape
Denison's legacy: fee changes
December was not a good month for Canada’s mutual fund industry.
The market timing scandal that had been simmering all through the summer and fall finally exploded with huge fines being levied against four fund companies, three big bank brokerages, and Investors Group Financial Services.
And there may be more to come as the Ontario Securities Commission continues to investigate a handful of other firms, including giant Franklin Templeton Investments.
It's a wake-up call for an industry that has experienced large-scale redemptions in the past year in a belated response to the bear market of 2000-2002 and low interest rates, which have prompted investors to dump money market funds.
One company that has not been touched by the scandal, at least so far, is Fidelity Investments Canada.
That made it possible for the Canada Pension Plan Investment Board to appoint Fidelity's president, David Denison, as its new CEO. He'll take over from the retiring John MacNaughton in mid-January.
Clearly, such a move would have been impossible if Fidelity Canada had been tainted by the scandal (although it should be noted that the company's Boston-based parent has come under scrutiny in the U.S.).
The CPP Investment Board is a Crown corporation and the Liberal government, still reeling from the sponsorship scandal, must exercise the utmost discretion in selecting its boss.
What Ottawa may not realize, however, that while Denison’s reputation is untarnished, he has a tendency to stir the pot. In fact, he leaves a growing controversy behind in the fund industry as he departs.
It's all about the fees
In late November, Fidelity Canada announced across-the-board cuts on the management fees it charges on all its funds.
The decision was Denison’s brainchild and he aggressively moved it to the top of his agenda. It may be no coincidence that the announcement was made just three weeks before his departure was revealed.
The result of Fidelity’s unilateral action is to reduce the management expense ratio (MER) on its equity funds by about 0.2 per cent and on fixed-income and money market funds by about 0.3 per cent.
That may not appear impressive at first glance, and on the equity funds it isn’t. But with interest rates looking like they will remain low for several months, a reduction of 30 basis points on a bond fund is significant.
On a money fund, it is huge.
Next:
Will investors move to major companies?
Gordon Pape
Wednesday, March 23, 2005
investments in your senior years
Here is some information worth looking at.
Before you leap out of mutual funds by Gordon Pape
A few months ago, I wrote about how many investors have grown disenchanted with mutual funds.
Before I tell you about some other fund options worth considering, let's review why mutual funds became the darlings of investors in the 1990s as we poured hundreds of billions of dollars into them.
• Diversification. You need tens of thousands of dollars to be able to create a properly diversified investment portfolio. Mutual funds provide the solution in one neat package.
• Diversity. It's very difficult for an ordinary Canadian to invest in overseas securities. With mutual funds, it's a snap.
• Cost. Many of these funds are offered on a no-load basis, notably those from the banks and companies such as Altamira, which pioneered telephone sales.
With discount brokers still minor players, it beats paying hefty commissions incurred by buying stocks.
• Accessibility. You can buy into most mutual funds for an initial investment of $1,000 or less. For RRSPs, the entry price is even lower.
All these advantages remain. However, the bad taste left by the bear market of 2000-2002 has prompted many people to move on. Here are some options.
Exchange-traded funds (ETFs)This term is generally applied to index-linked securities that trade on stock exchanges.
Their performance tracks an underlying index. Some are tied to major indexes, such as the S&P 500, but most are more specialized, tracking sub-indexes such as energy, gold and income trusts. Some U.S.-traded ETFs track specific country indexes, including small nations such as Austria.
Pros: Low management expense ratios (MERs); variety of choices; returns closely track target index.
Cons: Brokerage commission charged; specialized ETFs can be highly volatile, vulnerable in falling markets.
Closed-end fundsUnlike ETFs, these portfolios are actively managed in the same way as most mutual funds. In Canada, most closed-end funds invest in common stocks or income trusts; however, a few are more specialized. For example, Northwater Market-Neutral Trust (TSX:NMN.UN) holds a portfolio of hedge funds. Some closed-end funds in the U.S. specialize in countries that are otherwise hard to invest in, such as Korea, India, and China.
Pros: Active management provides more flexibility; MERs usually below those of comparable mutual funds; broad diversity of choices.Cons: Brokerage commissions payable; higher MERs than ETFs; volatility in specialized funds.
Index-linked GICsPopular among investors who want some stock market exposure but worry about a repeat of the bear market, these are issued by banks, which guarantee the principal at maturity. However, unlike ordinary GICs, interest is not guaranteed but is based on the performance of the underlying index over the term of the GIC. That means you could tie up your money for three or five years and get nothing back but your original investment at the end of the day.
Pros: Protection of capital; no commissions payable.Cons: Possibility of zero return; some have a cap on the maximum payout.
Bond ladders: As an alternative to bond mutual funds, some people have set up bond ladders through their brokers. This is simply a bond portfolio with staggered maturity dates, often one or two years. In this way, some of the bonds mature periodically, allowing for reinvestment, and the investor benefits by averaging up the interest rates (longer-term bonds usually pay a higher rate than those that mature in a year or two).
Pros: No ongoing MERs; easy to understand; relatively low risk, especially if government bonds are used.Cons: Commission payable on bond purchases (usually hidden); lacks diversification of bond fund portfolio; no active management
.
So if you've soured on mutual funds, there are other choices. But remember there is no such thing as a perfect investment.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
© February 2005 50Plus Magazine
Before you leap out of mutual funds by Gordon Pape
A few months ago, I wrote about how many investors have grown disenchanted with mutual funds.
Before I tell you about some other fund options worth considering, let's review why mutual funds became the darlings of investors in the 1990s as we poured hundreds of billions of dollars into them.
• Diversification. You need tens of thousands of dollars to be able to create a properly diversified investment portfolio. Mutual funds provide the solution in one neat package.
• Diversity. It's very difficult for an ordinary Canadian to invest in overseas securities. With mutual funds, it's a snap.
• Cost. Many of these funds are offered on a no-load basis, notably those from the banks and companies such as Altamira, which pioneered telephone sales.
With discount brokers still minor players, it beats paying hefty commissions incurred by buying stocks.
• Accessibility. You can buy into most mutual funds for an initial investment of $1,000 or less. For RRSPs, the entry price is even lower.
All these advantages remain. However, the bad taste left by the bear market of 2000-2002 has prompted many people to move on. Here are some options.
Exchange-traded funds (ETFs)This term is generally applied to index-linked securities that trade on stock exchanges.
Their performance tracks an underlying index. Some are tied to major indexes, such as the S&P 500, but most are more specialized, tracking sub-indexes such as energy, gold and income trusts. Some U.S.-traded ETFs track specific country indexes, including small nations such as Austria.
Pros: Low management expense ratios (MERs); variety of choices; returns closely track target index.
Cons: Brokerage commission charged; specialized ETFs can be highly volatile, vulnerable in falling markets.
Closed-end fundsUnlike ETFs, these portfolios are actively managed in the same way as most mutual funds. In Canada, most closed-end funds invest in common stocks or income trusts; however, a few are more specialized. For example, Northwater Market-Neutral Trust (TSX:NMN.UN) holds a portfolio of hedge funds. Some closed-end funds in the U.S. specialize in countries that are otherwise hard to invest in, such as Korea, India, and China.
Pros: Active management provides more flexibility; MERs usually below those of comparable mutual funds; broad diversity of choices.Cons: Brokerage commissions payable; higher MERs than ETFs; volatility in specialized funds.
Index-linked GICsPopular among investors who want some stock market exposure but worry about a repeat of the bear market, these are issued by banks, which guarantee the principal at maturity. However, unlike ordinary GICs, interest is not guaranteed but is based on the performance of the underlying index over the term of the GIC. That means you could tie up your money for three or five years and get nothing back but your original investment at the end of the day.
Pros: Protection of capital; no commissions payable.Cons: Possibility of zero return; some have a cap on the maximum payout.
Bond ladders: As an alternative to bond mutual funds, some people have set up bond ladders through their brokers. This is simply a bond portfolio with staggered maturity dates, often one or two years. In this way, some of the bonds mature periodically, allowing for reinvestment, and the investor benefits by averaging up the interest rates (longer-term bonds usually pay a higher rate than those that mature in a year or two).
Pros: No ongoing MERs; easy to understand; relatively low risk, especially if government bonds are used.Cons: Commission payable on bond purchases (usually hidden); lacks diversification of bond fund portfolio; no active management
.
So if you've soured on mutual funds, there are other choices. But remember there is no such thing as a perfect investment.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
© February 2005 50Plus Magazine
Tuesday, March 22, 2005
fund investing questions for your advisor
What is the fund's management expense ratio and how does it compare with the average for its category.
Canadians should be more concerned that they seem to be about the annual fees they pay fund managers for looking after their money.
In some cases, those fees are excessive.
Often, a large percentage of the fee goes back to your broker for on-going advice.
Make sure you are getting your money's worth.
What types of units does this fund offer. Fund investors are faced with an ever-expanding array of choices when it comes to which type of units to buy.
Unfortunately, there is no consistency in the way these units are labelled and each company offers its own selections. Some types of units are much less expensive than others. For example, if you can acquire "F" units, they are usually the best value.
Some funds now also have "D" units which are also worth investigating.
Ask for a complete explanation of all the choices available.
What compensation will you receive if I invest in this fund.
You have every right to know this since ultimately it is your money that will be used to pay the advisor. So don't be shy about it.
Also, ask how the compensation will change depending on the type of units you buy. Of course, it will take some time to go through all these questions with an advisor. But every one of them is important and you have the right to some clear answers.
If the advisor seems impatient or fudges, it's time to look elsewhere for help.
This article originally appeared in Mutual Funds Update Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters. © June 2004 Gordon Pape Enterprises
Canadians should be more concerned that they seem to be about the annual fees they pay fund managers for looking after their money.
In some cases, those fees are excessive.
Often, a large percentage of the fee goes back to your broker for on-going advice.
Make sure you are getting your money's worth.
What types of units does this fund offer. Fund investors are faced with an ever-expanding array of choices when it comes to which type of units to buy.
Unfortunately, there is no consistency in the way these units are labelled and each company offers its own selections. Some types of units are much less expensive than others. For example, if you can acquire "F" units, they are usually the best value.
Some funds now also have "D" units which are also worth investigating.
Ask for a complete explanation of all the choices available.
What compensation will you receive if I invest in this fund.
You have every right to know this since ultimately it is your money that will be used to pay the advisor. So don't be shy about it.
Also, ask how the compensation will change depending on the type of units you buy. Of course, it will take some time to go through all these questions with an advisor. But every one of them is important and you have the right to some clear answers.
If the advisor seems impatient or fudges, it's time to look elsewhere for help.
This article originally appeared in Mutual Funds Update Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters. © June 2004 Gordon Pape Enterprises
Monday, March 21, 2005
investing in a fund
Ask hard questions of your advisor. Don't be shy, it is your money!!
What are the tax implications of investing in this fund?
If you are buying the fund for a non-registered portfolio, ask about its tax history.
If it is an equity fund, does it have a record of paying high annual distributions, which will be taxed in the year received.
If it is an income fund, what percentage of the distributions is tax-deferred or tax-advantaged.
If I invest in this fund, how will it change the asset mix in my portfolio.
Will the revised asset mix be consistent with my overall objectives.
You need to know whether the addition of one or more new funds will create a significant change in your portfolio balance.
Ask for a break-down of your current asset mix and for a projection of what it will look like if the recommendation is implemented.
If there is a change, ask the advisor to explain why he believes this is to your advantage and whether it will add more risk.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators.
What are the tax implications of investing in this fund?
If you are buying the fund for a non-registered portfolio, ask about its tax history.
If it is an equity fund, does it have a record of paying high annual distributions, which will be taxed in the year received.
If it is an income fund, what percentage of the distributions is tax-deferred or tax-advantaged.
If I invest in this fund, how will it change the asset mix in my portfolio.
Will the revised asset mix be consistent with my overall objectives.
You need to know whether the addition of one or more new funds will create a significant change in your portfolio balance.
Ask for a break-down of your current asset mix and for a projection of what it will look like if the recommendation is implemented.
If there is a change, ask the advisor to explain why he believes this is to your advantage and whether it will add more risk.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators.
Sunday, March 20, 2005
Ask hard questions of your advisor.
Ask hard questions of your advisor says Gordon Pape
When you visit your family doctor, does she always immediately remember all the facts about your medical history? Probably not. More likely, she has a file folder of information on the desk in from of her which she hasn't had time to even glance at because she's so busy. After all, she sees scores of patients every week. You can't expect her to keep them all straight in her mind, competent though she may be.
So you will probably find yourself reminding her of some things during the consultation. She'll then check back in the files, find the relevant note or prescription, and move forward from there.
Financial advisors are no different. They too have scores of clients, perhaps hundreds. In some cases, they may review the file thoroughly before a meeting. But you shouldn't take that for granted.
Every advisor is required to have you fill out a "know your client" form when you open an account. But that's no guarantee that the form will be frequently reviewed or updated.
Financial advisors, like other professionals, have heavy workloads and can't stay on top of every detail. So, as with your doctor, it's up to you to show some initiative and make sure the advice you are receiving is actually appropriate for your needs and priorities.
That means asking probing questions before finalizing any investment decision. Always remember: it's your money.
This may seem like very basic advice. But we continue to receive e-mails from readers who feel their advisors led them in the wrong direction and are now seeking other solutions.
Like other professionals, financial advisors are not perfect. They can make errors in judgment too. But you can minimize the chances of that happening by playing an active role in the investment process. Don't assume that because your advisor recommends a particular mutual fund that it is the perfect choice for your portfolio. Here are some of the questions to ask before giving your approval.
Tell me how this particular fund meets my investment criteria.
The answer to this question will be an immediate tip-off as to how much homework the advisor has done before the meeting.
If he fumbles around or gives some vague, general response, you should immediately be on your guard.
What should happen is that the advisor will explain exactly where the recommended fund fits into the portfolio, how it will enhance performance in relation to your overall goals, and what, if anything, it will replace and why.
How does this fund differ from the others I now own?
You'd be surprised at how many investors end up with three or four funds that are managed in basically the same way. For example, there is no reason why your portfolio should contain more than one of CI Canadian Investment Fund, Harbour Fund, or Mackenzie Ivy Canadian Fund. The managers are different but the style is much the same in each case. So have your advisor explain how the fund now being recommended differs from everything else you own. Or, if he is suggesting a replacement for a similar type of fund, ask why this one is better.
How has it performed relative to its peer group and its benchmark index?
Sometimes a fund can have what appear to be terrific numbers and still be an underperformer. For example, look at the AGF Canadian Small Cap Fund. It gained almost 42 per cent in the year to March 31. Impressive, right? No! The average fund of its type advanced 51 per cent in the same period. The benchmark BMO Nesbitt Burns Canadian Small Cap Index gained 65 per cent. In fact, this fund has underperformed over all time periods and has a poor risk rating. Yet people have invested $345 million in it. Somebody has been giving some bad advice!
What is the risk rating of this fund compared to others in the same category?
Ever since the bear market of 2000-2002 brutally reminded us that stocks can go down as well as up, people have been more conscious of risk. Remember, every investment decision involves a risk/return trade-off. But you need to know exactly how much risk you are assuming before making a commitment.
All the fund rating companies have risk measures that compare funds to others of the same type. Find out where the one that is being recommended stands in the risk pecking order. And don't just rely on numbers.
Ask if the fund has any special risk characteristics that you should be aware of. For example, if it is an income fund find out what percentage of the portfolio is in income trusts (higher risk) and what percentage is in cash and short-term bonds (lower risk).
When you visit your family doctor, does she always immediately remember all the facts about your medical history? Probably not. More likely, she has a file folder of information on the desk in from of her which she hasn't had time to even glance at because she's so busy. After all, she sees scores of patients every week. You can't expect her to keep them all straight in her mind, competent though she may be.
So you will probably find yourself reminding her of some things during the consultation. She'll then check back in the files, find the relevant note or prescription, and move forward from there.
Financial advisors are no different. They too have scores of clients, perhaps hundreds. In some cases, they may review the file thoroughly before a meeting. But you shouldn't take that for granted.
Every advisor is required to have you fill out a "know your client" form when you open an account. But that's no guarantee that the form will be frequently reviewed or updated.
Financial advisors, like other professionals, have heavy workloads and can't stay on top of every detail. So, as with your doctor, it's up to you to show some initiative and make sure the advice you are receiving is actually appropriate for your needs and priorities.
That means asking probing questions before finalizing any investment decision. Always remember: it's your money.
This may seem like very basic advice. But we continue to receive e-mails from readers who feel their advisors led them in the wrong direction and are now seeking other solutions.
Like other professionals, financial advisors are not perfect. They can make errors in judgment too. But you can minimize the chances of that happening by playing an active role in the investment process. Don't assume that because your advisor recommends a particular mutual fund that it is the perfect choice for your portfolio. Here are some of the questions to ask before giving your approval.
Tell me how this particular fund meets my investment criteria.
The answer to this question will be an immediate tip-off as to how much homework the advisor has done before the meeting.
If he fumbles around or gives some vague, general response, you should immediately be on your guard.
What should happen is that the advisor will explain exactly where the recommended fund fits into the portfolio, how it will enhance performance in relation to your overall goals, and what, if anything, it will replace and why.
How does this fund differ from the others I now own?
You'd be surprised at how many investors end up with three or four funds that are managed in basically the same way. For example, there is no reason why your portfolio should contain more than one of CI Canadian Investment Fund, Harbour Fund, or Mackenzie Ivy Canadian Fund. The managers are different but the style is much the same in each case. So have your advisor explain how the fund now being recommended differs from everything else you own. Or, if he is suggesting a replacement for a similar type of fund, ask why this one is better.
How has it performed relative to its peer group and its benchmark index?
Sometimes a fund can have what appear to be terrific numbers and still be an underperformer. For example, look at the AGF Canadian Small Cap Fund. It gained almost 42 per cent in the year to March 31. Impressive, right? No! The average fund of its type advanced 51 per cent in the same period. The benchmark BMO Nesbitt Burns Canadian Small Cap Index gained 65 per cent. In fact, this fund has underperformed over all time periods and has a poor risk rating. Yet people have invested $345 million in it. Somebody has been giving some bad advice!
What is the risk rating of this fund compared to others in the same category?
Ever since the bear market of 2000-2002 brutally reminded us that stocks can go down as well as up, people have been more conscious of risk. Remember, every investment decision involves a risk/return trade-off. But you need to know exactly how much risk you are assuming before making a commitment.
All the fund rating companies have risk measures that compare funds to others of the same type. Find out where the one that is being recommended stands in the risk pecking order. And don't just rely on numbers.
Ask if the fund has any special risk characteristics that you should be aware of. For example, if it is an income fund find out what percentage of the portfolio is in income trusts (higher risk) and what percentage is in cash and short-term bonds (lower risk).
Saturday, March 19, 2005
check out this report by Gordon Pape
Best bets from TD Gordon Pape
TD Asset Management offers a wide range of mutual funds, some of which are well worth a close look.
I have just completed a complete review of the family and here are four of my top choices.
TD Canadian Bond Fund. This is a very impressive bond fund. Since 1994 it has beaten both the average of its peer group and the Scotia Capital Markets Universe Bond Index the majority of the time. To achieve this result, the fund manager has overweighed the portfolio toward high-quality corporate bonds (about two-thirds of the assets), with the remainder in various government bonds. The fund is conservatively managed as far as interest-rate risk goes. Gain for the year to January 31 was 6.8 per cent, which was nicely above the 5.2 per cent average for the Canadian Bond category. Longer term results are equally impressive. This fund is a solid performer. Put it in your RRSP. Rating: $$$$ (out of four).
TD Short Term Bond Fund. This fund will fit very nicely in your RRSP and should provide a better return than you’d get from a money market fund or a GIC. The fund invests in short- to medium-term (up to three years) high-quality securities. About 40 per cent of the portfolio is in government issues with the rest in good-quality corporate bonds such as CIBC, Bank of Nova Scotia, and Wells Fargo Financial. The performance record is above average for the Short-Term Bond category, with a one-year gain of just over 4 per cent in 2004 and an average annual return of 5 per cent over the past three years (to January 31).
The fund makes monthly distributions which vary in amount. Over the past year, the total payout was about 36c per unit. This makes the fund a good choice for RRIF investors as well. The minimum initial investment is $1,000 for non-registered accounts but only $100 for an RRSP. Risk is about average for a fund of this type but very low compared to bond funds generally. The fund has not had a losing year since at least 1998. Rating: $$$$.
TD Dividend Income Fund. This fund is geared for investors seeking preferential after-tax monthly income and the opportunity for moderate capital gains. Since inception, the fund has generally been an above-average performer compared with its peer group, although the 12-month gain of 9.9 per cent to Jan. 31 was below the category average. Three, five, and ten year results all surpass those of the peer group, however. The portfolio mix shows 55 per cent of the assets in common stocks in dividend-paying sectors like financial services, utilities, and pipelines. Another 15 per cent is in trust units, 10 per cent in preferred shares, and 16 per cent in bonds.
This gives the fund good tax-advantaged income, but also makes it more sensitive to rising interest rates. The bond side consists of government and corporate bonds and is of generally high credit quality. The safety rating is much better than average for a fund of this type. The overall defensiveness of the fund makes it a good vehicle for long-term conservative investors and the monthly distributions provide steady cash flow. It’s worth considering for a RRIF, although any tax advantages will be lost inside a registered plan. Rating: $$$$.
TD Dividend Growth Fund. The goal here is to provide investors with superior after-tax income and steady growth. It invests primarily in large-cap, high-yielding common stocks and, to a lesser degree, in trust units (about 19 per cent of assets at the start of '05). The portfolio holds a small core group of around 35 to 40 stocks, mainly in the traditional dividend-paying sectors of financial services, utilities, and pipelines. As for risk, this fund is a tad more aggressive than the average Canadian dividend fund because of its significant bias toward common stocks. That makes it more risky than the companion TD Dividend Income Fund.
However, compared to a benchmark index like the S&P/TSX 60, the risk is still relatively low. In the 12 months to Jan. 31 the fund gained 12.1 per cent. That was about average for its peer group but longer-term numbers are well above the average over three, five, and 10 years. Overall, this is an above-average fund for capital appreciation, but tax-advantaged cash flow is not its strong suit (distributions are only paid quarterly and are quite small). The fund is therefore not recommended for those who need regular income. It is better suited for investors looking for a conservatively managed blue chip stock fund. Rating: $$$$.
Check with a financial advisor to see if the funds are suitable for your needs before investing.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
TD Asset Management offers a wide range of mutual funds, some of which are well worth a close look.
I have just completed a complete review of the family and here are four of my top choices.
TD Canadian Bond Fund. This is a very impressive bond fund. Since 1994 it has beaten both the average of its peer group and the Scotia Capital Markets Universe Bond Index the majority of the time. To achieve this result, the fund manager has overweighed the portfolio toward high-quality corporate bonds (about two-thirds of the assets), with the remainder in various government bonds. The fund is conservatively managed as far as interest-rate risk goes. Gain for the year to January 31 was 6.8 per cent, which was nicely above the 5.2 per cent average for the Canadian Bond category. Longer term results are equally impressive. This fund is a solid performer. Put it in your RRSP. Rating: $$$$ (out of four).
TD Short Term Bond Fund. This fund will fit very nicely in your RRSP and should provide a better return than you’d get from a money market fund or a GIC. The fund invests in short- to medium-term (up to three years) high-quality securities. About 40 per cent of the portfolio is in government issues with the rest in good-quality corporate bonds such as CIBC, Bank of Nova Scotia, and Wells Fargo Financial. The performance record is above average for the Short-Term Bond category, with a one-year gain of just over 4 per cent in 2004 and an average annual return of 5 per cent over the past three years (to January 31).
The fund makes monthly distributions which vary in amount. Over the past year, the total payout was about 36c per unit. This makes the fund a good choice for RRIF investors as well. The minimum initial investment is $1,000 for non-registered accounts but only $100 for an RRSP. Risk is about average for a fund of this type but very low compared to bond funds generally. The fund has not had a losing year since at least 1998. Rating: $$$$.
TD Dividend Income Fund. This fund is geared for investors seeking preferential after-tax monthly income and the opportunity for moderate capital gains. Since inception, the fund has generally been an above-average performer compared with its peer group, although the 12-month gain of 9.9 per cent to Jan. 31 was below the category average. Three, five, and ten year results all surpass those of the peer group, however. The portfolio mix shows 55 per cent of the assets in common stocks in dividend-paying sectors like financial services, utilities, and pipelines. Another 15 per cent is in trust units, 10 per cent in preferred shares, and 16 per cent in bonds.
This gives the fund good tax-advantaged income, but also makes it more sensitive to rising interest rates. The bond side consists of government and corporate bonds and is of generally high credit quality. The safety rating is much better than average for a fund of this type. The overall defensiveness of the fund makes it a good vehicle for long-term conservative investors and the monthly distributions provide steady cash flow. It’s worth considering for a RRIF, although any tax advantages will be lost inside a registered plan. Rating: $$$$.
TD Dividend Growth Fund. The goal here is to provide investors with superior after-tax income and steady growth. It invests primarily in large-cap, high-yielding common stocks and, to a lesser degree, in trust units (about 19 per cent of assets at the start of '05). The portfolio holds a small core group of around 35 to 40 stocks, mainly in the traditional dividend-paying sectors of financial services, utilities, and pipelines. As for risk, this fund is a tad more aggressive than the average Canadian dividend fund because of its significant bias toward common stocks. That makes it more risky than the companion TD Dividend Income Fund.
However, compared to a benchmark index like the S&P/TSX 60, the risk is still relatively low. In the 12 months to Jan. 31 the fund gained 12.1 per cent. That was about average for its peer group but longer-term numbers are well above the average over three, five, and 10 years. Overall, this is an above-average fund for capital appreciation, but tax-advantaged cash flow is not its strong suit (distributions are only paid quarterly and are quite small). The fund is therefore not recommended for those who need regular income. It is better suited for investors looking for a conservatively managed blue chip stock fund. Rating: $$$$.
Check with a financial advisor to see if the funds are suitable for your needs before investing.
Gordon Pape, Contributing Editor of 50Plus.com, is one of Canada's best known and most respected financial authors and commentators. He is Publisher and Editor of the popular Mutual Funds Update and Internet Wealth Builder newsletters.
Thursday, March 17, 2005
holiday planing
There are all kinds of places to go to for information on trips to anywhere.
There is likely a travel agency close by to help you with your planning.
If you are planning a big long trip you can do all of it online, looking around and planning, is the most fun.
There is likely a travel agency close by to help you with your planning.
If you are planning a big long trip you can do all of it online, looking around and planning, is the most fun.
Wednesday, March 16, 2005
Looking for your past?
Re
searching for your Ancestors
Want to trace your roots over in Europe, Ireland, England, or even in the U.S or Canada and don't know where to start looking.
Check out this site, http://beginner-genealogy.blogspot.com/ it will give you a number of hints on how to start your search, and other information.
Want to trace your roots over in Europe, Ireland, England, or even in the U.S or Canada and don't know where to start looking.
Check out this site, http://beginner-genealogy.blogspot.com/ it will give you a number of hints on how to start your search, and other information.
Tuesday, March 15, 2005
retirement travel
One of the most people talk about when they are coming up to retirement, is to do some traveling.
This is when everyone has time to do all the traveling they want. Visiting family and friends is high on the travel list for most.
For others it is a trip somewhere they have not seen before, or maybe a life long dream to see different parts of the world.
red sunset red maple
 | Red Sunset Red Maple - $ 40.95 The Red Sunset® Red Maple tree, Acer Rubrum Red Sunset, is considered one of the best trees for early fall color! This is a large deciduous tree that has pyramidal form when young becoming rounded with age. Species name of rubrum (meaning red) is everywhere in evidence: red flowers in dense clusters in late March to early April (before the leaves appear), red fruit (reddish two-winged samara), reddish stems and twigs. The Red Sunset® is one of the best red maple cultivars available in commerce, with outstanding orange to red fall color. |
Saturday, March 12, 2005
Retirement options
If you are contemplating moving from your present home, to a community which is designed to accomidate retirees, there are many things you will have to think about before you make the move to a retirement Community.
There are some really good books available, on the pros and cons of such a move.
Some questions to think about.
Why and when should I think about moving to a retirement community?
When is the best time to move to a retirement community?
What do my children, other family members, and friends have to say to me regarding a move?
Are their comments substantive? Where do I want to live? Can I list six good reasons? What are five downsdes? If I move, what type accommodations would I like to have?
What are the six amenities and services I want in a retirement community and why?
Will my future healthcare needs be adequately met if I move?
What can I afford? What am I willing to pay?
If I decide to stay in my home, what are the pluses? What are the drawbacks?
And what are the possible costs I can expect for maintenance or retrofitting the house for a wheelchair, for instance?
Here is the question we all fear and will have a hard time finding the answer.
As a couple, when one of us dies, will the situation be what the surviving spouse would need or want?
Check the link below to visit a geart site, with a ton of information and a excellent forum.
http://www.50plus.com/home_family/adultlife.cfm
There are some really good books available, on the pros and cons of such a move.
Some questions to think about.
Why and when should I think about moving to a retirement community?
When is the best time to move to a retirement community?
What do my children, other family members, and friends have to say to me regarding a move?
Are their comments substantive? Where do I want to live? Can I list six good reasons? What are five downsdes? If I move, what type accommodations would I like to have?
What are the six amenities and services I want in a retirement community and why?
Will my future healthcare needs be adequately met if I move?
What can I afford? What am I willing to pay?
If I decide to stay in my home, what are the pluses? What are the drawbacks?
And what are the possible costs I can expect for maintenance or retrofitting the house for a wheelchair, for instance?
Here is the question we all fear and will have a hard time finding the answer.
As a couple, when one of us dies, will the situation be what the surviving spouse would need or want?
Check the link below to visit a geart site, with a ton of information and a excellent forum.
http://www.50plus.com/home_family/adultlife.cfm
Thursday, March 10, 2005
spring is on the way
According to the calender spring is only a few days away.
In the area where I live, there is no evidence that spring is just around the corner, unless the sound of crows is a hint that spring is near.
We were out snowshoeing this morning for our exersize, we try to get out walking or out on our snowshoes four times per week.
In our area the garden centres are starting to get ready for the arrival of all their spring and summer plants and shrubs.
I seems like we have been waiting for this time forever.
A bit south of us they are enjoying the first of the spring flowers in thier gardens
In the area where I live, there is no evidence that spring is just around the corner, unless the sound of crows is a hint that spring is near.
We were out snowshoeing this morning for our exersize, we try to get out walking or out on our snowshoes four times per week.
In our area the garden centres are starting to get ready for the arrival of all their spring and summer plants and shrubs.
I seems like we have been waiting for this time forever.
A bit south of us they are enjoying the first of the spring flowers in thier gardens
Tuesday, March 08, 2005
Plants for your retirement garden
For your gardening needs, type in the flower you want and check out the great veriety of plants, flowers and shrubs. free catalouge
Monday, March 07, 2005
tools for your hobbies
these are great storage space savers no need to search through drawers for your tools :-)
DeWALT 100-Piece Tradesman Set
Rapid load for quick and easy accessory changes
Magnetic drive guides to reduce stripping and wobbling
Black oxide drill bits with 135° Split Point - starts on contact
Most commonly used accessories such as screwdriver bits, nut drivers and sockets
Two bit boxes for additional storage
Heavy-duty kit box with metal latches
DeWALT 100-Piece Tradesman Set
Rapid load for quick and easy accessory changes
Magnetic drive guides to reduce stripping and wobbling
Black oxide drill bits with 135° Split Point - starts on contact
Most commonly used accessories such as screwdriver bits, nut drivers and sockets
Two bit boxes for additional storage
Heavy-duty kit box with metal latches
235-Piece Mastercraft Hobby Set
Assorted rotary tool accessories
Fits 1/8" shanks
Includes convenient carrying case
Saturday, March 05, 2005
tax deferral time is gone for 2004
With all the advertisement on tax deferral investments, from all the big financial institutions and countless smaller players, on the wane.
We can start calculating our taxes, so we can make the next deadline of April 30th.
Deadlines are something every one of us have been exposed to all of our lifes.
As you have noticed, we still have deadlines, even if we are retired.
There is a difference though, we have the time to take each deadline and do it without a lot pressure, unless we leave things until the last moment.
If this is the case we may as well stayed working and had all of the pressure all of the time.
A lot of people who retire, suffer an emotional roller coaster ride, for some time, after they leave work.
As I look back now, I am one of many who had enough things to do, and some things I always wanted to do but never had the time.
I played a lot of golf, 9 holes just about every day. At the start it was quite hard as I had not walked much in the last 10 years, out of shape.
I also made a life style choice to not ride a golf car, but instead pulled my little cart.
I sure was tired after a few holes, I stuck with it and by the end of the season, could play 18 holes with a little energy left.
I had a big "honey dooo list", that came with retirement, so I had to get into better shape if I wanted to have the time to play golf.
I did check with my doctor before I started out on my retirement life style.
All of the advice we hear from our doctors, many times over, develop hobbies, stay active in the community, stay fit, (this is as hard as loosing weight) and quit smoking (harder than loosing weight).
If you start your day with a little walk, it does not have to be far, and as you do it every day you will soon feel the diference. Check with your doctor first.
If a jogger runs at the the speed of sound, can he still hear his walkman?
We can start calculating our taxes, so we can make the next deadline of April 30th.
Deadlines are something every one of us have been exposed to all of our lifes.
As you have noticed, we still have deadlines, even if we are retired.
There is a difference though, we have the time to take each deadline and do it without a lot pressure, unless we leave things until the last moment.
If this is the case we may as well stayed working and had all of the pressure all of the time.
A lot of people who retire, suffer an emotional roller coaster ride, for some time, after they leave work.
As I look back now, I am one of many who had enough things to do, and some things I always wanted to do but never had the time.
I played a lot of golf, 9 holes just about every day. At the start it was quite hard as I had not walked much in the last 10 years, out of shape.
I also made a life style choice to not ride a golf car, but instead pulled my little cart.
I sure was tired after a few holes, I stuck with it and by the end of the season, could play 18 holes with a little energy left.
I had a big "honey dooo list", that came with retirement, so I had to get into better shape if I wanted to have the time to play golf.
I did check with my doctor before I started out on my retirement life style.
All of the advice we hear from our doctors, many times over, develop hobbies, stay active in the community, stay fit, (this is as hard as loosing weight) and quit smoking (harder than loosing weight).
If you start your day with a little walk, it does not have to be far, and as you do it every day you will soon feel the diference. Check with your doctor first.
If a jogger runs at the the speed of sound, can he still hear his walkman?
Tuesday, March 01, 2005
last chance
This year we have until March 1. (today), to put money it a variety of tax defered investments.
If you left it this late, you will have to pick out the best of the investment medium that you are comfortable with. You can move this money around after.
If you have all of your tax slips you can quickly figure out how much to defer to lower your tax payable.
For most people who have used this tax deferal method before will have no trouble.
For those who are well on the way to retirement, should look at how they will be withdrawing their investments, since your are looking at your taxes.
This will also take a lot of planning.
There are many ways to do this but you will have to now pay the tax, at a lower rate hopefully.
If you left it this late, you will have to pick out the best of the investment medium that you are comfortable with. You can move this money around after.
If you have all of your tax slips you can quickly figure out how much to defer to lower your tax payable.
For most people who have used this tax deferal method before will have no trouble.
For those who are well on the way to retirement, should look at how they will be withdrawing their investments, since your are looking at your taxes.
This will also take a lot of planning.
There are many ways to do this but you will have to now pay the tax, at a lower rate hopefully.
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