Canadian Index ETF Reveiw

In a recent post The Accountant said “I know that we usually recommend investing in low cost index funds” – well ACTUALLY, we have never recommended that in a post – it is just what we talk about amongst ourselves.  But right now in this post I am going to recommend it:

I recommend that you invest in low cost index funds (the content of this post is my personal opinion and you should not take it as investment advice tailored to your specific circumstance).  

Everytime I read a book about value investing or stock picking I come away with the same conclusion – I do not have enough time to commit to researching all the available investment opportunities to successfully pick my own stocks and even if I did, that likely would not be enough to beat the market. I’d also need insight that all the others researching these opportunities don’t have – a tall ask.

“BUT WAIT – YOU’RE AN ECONOMIST YOU MUST HAVE THAT INSIGHT”

No – here is a little secret: economists can not actually forecast the economy, we just take our best guess – it’s probably slightly more educated than a layperson’s best guess, but none of us are betting heavy on our guesses in Vegas.

So, what do you do if you realize that you can’t beat the market? Invest alongside the market in ETFs that charge a low fee and provide returns that are consistent with the market.  I started my index investing journey with a Canadian All Cap index ETF, TTP (TD Bank) which has a 0.08% MER fee.  But, as we learned from Larry Bates in ‘Beat the Bank’, we want the lowest fees possible, so I switched to VCN, a similar ETF with an MER of only 0.06%.

Here are some other ETFs that I am considering:

Fund CodeNameMER
VCE Vanguard Canada Large Cap index0.06%
XIU ishares S&P/TSX 60 index0.18%
HXT Horizons S&P/TSX 60 index 0.03%
XIC ishares TSX Capped Composite index0.06%
ZCNBMO TSX Capped Composite index0.06%

You might say Hey – XIU and HXT track the same index but XIU’s fee is much higher, why are you even considering it? Well HXT is a different type of instrument that guarantees the return of the S&P/TSX60 before fees of 0.03 (to at least September 30, 2019) but does not actually invest the fund in the stock market, instead entering into loan arrangements with payments tied to the index.  I’m not sure if I understand this fund enough to invest in it but I am doing my research because of that low, low fee. Look out for an upcoming post that digs deeper into these Horizon ETFs.

The other funds listed in the table are the Canadian index ETFs with the lowest fees that I could find – but I’m not making any guarentees!

Disclosure, I already own a position in these ETFs and the content of this post is my personal opinion.

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