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Canadian ETF and Mutual Fund Comparison: October 31, 2011

December 1, 2011 - 1 comment

With the ever-growing plethora of broad-based and dividend focussed Canadian ETFs entering the marketplace, I’ve decided to put together a report that illustrates some of the main differences in order to help investors navigate between these ETFs, mainly:

  • Management Expense Ratio (%):  Lower fees = more money in your pocket at the end of the day
  • Portfolio Turnover (%):  Less turnover = less trading costs and possibly less realized capital gains
  • Gross Dividend Yield (%):  For the income-starved investor
  • Number of Holdings:  More holdings = less single security risk
  • Equity Sector Allocation (%):  It’s difficult to diversify away from the energy, financials, and materials sectors in the Canadian equity markets (these three sectors currently make up approximately 78% of the S&P/TSX Capped Composite Index), but beware of any ETF that is overweight in any of these sectors relative to the market
  • Equity Size and Style Allocation (%):  “Small” companies have higher risk but higher expected returns than “large” companies, while “value” companies may have higher risk but have higher expected returns than “growth” companies

Some of the data is incomplete, but I will update it as it becomes available (note that I’ve also included Dimensional Fund Advisors/DFA mutual funds, as we use these low-cost securities with our PWL clients to gain exposure to the small and value premiums).

If any investors find this analysis useful, I will certainly consider regularly updating it, as well as comparing various U.S. and International ETFs in the future.

By: Justin Bender with 1 comments.
Filed under: Funds
Comments
  15/12/2011 1:21:21 PM
Sandyson
Very useful. Thanks
 



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