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Ex-dividend date
November 16, 2020
2:22 pm
savemoresaveoften
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Interesting mutual fund dividend discussion.

Unless the total portfolio is small like $10k or less, mutual fund is just a bad investment for the following reason:

1) 90% of mutual fund return worse than broad market in the long run. Simple math when you just pay someone 1-3% every year on your principal. Mutual fund managers are just really not that good and certainly not investment genius. A very selected few hedge funds outperform broad market consistently, but they are not mutual funds.
2) For a small size portfolio (<$100k), just invest in ETFs like XIU, SPX, QQQ. Pay
10bps instead of 100-300bps away
3) If you must "pay" someone to manage the money for you, makes more sense to invest in something like Power Corp, Berkshire (Buffet's baby), Fairfax etc. At least those individuals have a good chunk of their net worth in there with you.
4) Check the holdings that your mutual funds hold, its not that hard to just buy the same stocks and save the fee each year.

Given I own a few FIs shares and they all make good money from their wealth management each year, I should not say the above. But every time I see some one talk about investment in mutual fund, I cant keep my mouth shut...

November 16, 2020
9:15 pm
AltaRed
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There are some actively managed mutual funds within certain families like Mawer, Leith Wheeler, Beutal Goodman and Steadyhand that can compete with passive index ETFs most of the time....and that is simply because they have low(ish) MERs in the 1% range and don't pay trailer fees (even if Class A and not just Class F). So...it depends.

It would be a rare mutual fund with MER 2+% that could be competitive and it can't be known in advance. Either way, I understand mutual fund AUM has stalled and may be in decline due to the growth of ETFs. A long ways to go though. I understand mutual fund AUM in 2019 was about $1.5 trillion vs $170 billion in ETFs. The mutual fund industry is far from dead.

November 17, 2020
12:25 pm
Bill
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I agree, ETFs are superior to mutuals for the vast majority of investors but there is an army of advisers/advisors establishing personal relationships with clients so mutuals are probably far from dead as many people like the personal connection with someone. Especially as we get older when every dollar doesn't matter as much plus the tolerance to spend our rapidly-diminishing above-ground time on DIY money management wanes (I now really treasure every minute hiking in the woods, etc, not so with time indoors sitting with a screen).

I don't know enough about how ETFs and mutuals work to know the difference, but I do tend to stay away from ETFs/mutuals that invest mainly in other ETFs or mutuals. I prefer the ones that invest directly in financial instruments. For example, aside from its tax effectiveness I prefer MAW105 to MAW104 for that reason - the latter basically holds just other Mawer funds. Maybe it's irrational but I just feel more confident in a fund/ETF that owns the actual financial instruments - if things hit the fan I wonder about what you're actually owning if you're in a fund-of-funds, etc structure.

November 17, 2020
6:30 pm
Loonie
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If it's personal contact you need, you'd be better off to call your local seniors service agency and see if they have what was known in pre-covid days as a "friendly visitor" service. They probably do it with phone calls now. These are often volunteers who like to be helpful in the community and they don't charge.

Many advisors/advisers will charge 1% of your assets each and every year, and the service is questionable. It is almost always "this is a buying opportunity" or "this is not the time to sell".
If I have money to throw around, I'd rather give it to the seniors agency.

November 17, 2020
7:09 pm
AltaRed
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Don't think a 'seniors services agency' does anything with respect to portfolio management or even budgeting and cash management, so as one ages and needs help, it will likely either be a family member or a POA or some 3rd party which will charge a fee.

It is too late for the 'before boomers' (those >75) to start to engage in DIY portfolio management but there are products and tools around to really simplify what does not have to be a complex process for current boomers and even Gen-Xers and younger.

New products are out there such as the Asset Allocation ETFs or even Vanguard's new Retirement Income Fund (VRIF) designed at a 50/50 allocation to provide a 4% payout are making investment management as easy as balancing a cheque book with virtually no attention what so ever. Put it on autopilot and look at it once a month or once a year. A single holding (or two). Seriously.....

November 17, 2020
7:37 pm
Norman1
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Loonie said

Many advisors/advisers will charge 1% of your assets each and every year, and the service is questionable. It is almost always "this is a buying opportunity" or "this is not the time to sell".
If I have money to throw around, I'd rather give it to the seniors agency.

I wouldn't underestimate the value of the financial hand holding, especially for newbies.

A while back, one newbie panicked after the investments dropped ½% after one week!

Had the person been convinced to stay the course through the rest of 2016 until now, he or she would likely be around $50,000, less 1% to 2% per year, richer instead of crystallizing a $500 loss.

November 18, 2020
6:31 am
savemoresaveoften
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Norman1 said

Loonie said

Many advisors/advisers will charge 1% of your assets each and every year, and the service is questionable. It is almost always "this is a buying opportunity" or "this is not the time to sell".
If I have money to throw around, I'd rather give it to the seniors agency.

I wouldn't underestimate the value of the financial hand holding, especially for newbies.

A while back, one newbie panicked after the investments dropped ½% after one week!

Had the person been convinced to stay the course through the rest of 2016 until now, he or she would likely be around $50,000, less 1% to 2% per year, richer instead of crystallizing a $500 loss.  

Thats a story on the other side of the extreme in my mind. Why would one wants to pay someone 1% a year just to hold their hands to prevent something like that ? If anything most financial advisors do not spend much time monitoring each portfolio they manage on a regular basis. They may meet with you twice a year if u insist, otherwise once a year (and thats when they do the homework before the meeting.) How effective are they in "cutting the loss" on bad investments being made ? Missing a potential gain cuz you chicken out is much better than losing your principal on a trade that one hangs on for too long. My 2 cents for the newbies

November 18, 2020
6:53 am
Bill
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Most people don't want to spend hardly any of their life's time on money management (hard to believe for some folks here, I know), their eyes glaze over when it comes to extended money talk, they're too busy with life. So financial help is not just for newbies, most folks couldn't care less what an ETF, etc is, they'd rather bake cookies.

My parents had an Edward Jones guy, very nice man, who basically looked after their money, based on their guidelines, for decades. As they had zero inclination or interest in spending time on finances they likely would have just bought GICs otherwise, and the result would have been a much smaller portfolio. Their money delivered pretty steady, solid returns during the last decades of their lives, that was the objective and they couldn't have cared less that they could have made another few per cent if they did it themselves.

November 18, 2020
1:59 pm
picassocat
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My experience with mutual funds with an FI advisor: evaluate the clients risk level (a 10 questions questionnaire to determine low, medium or high-risk investments), and then you’re out the door. Eventually you receive an update if your fund is making money or not. What am I invested in, I don’t know. Of course, I didn’t receive a prospectus.

Mutual funds are complicated vehicles. One fund may have 10 series (same holdings, but different conditions): Deferred Sales Charge, Low Sales Charge, Front-end Charge, etc.

Some are income funds, but by default the distributions are reinvestment's (go figure). If you want cash, you need to ask your broker or fund manager.

Some have a minimum investment amount like 100,000$ (I’m not kidding), they have weird names like: BMO Monthly High Income II T8 or a code like MMF33647

Bottom line for me is total return and some are really performing, the likes of:
Dynamic Power American Growth Class Series F (DYN245)
Fidelity Global Innovators Class F (FID5982)

Presently my portfolio has about 30% of mutual funds and only 10% of ETFs, the rest being stocks. It’s a 100% distribution portfolio until such time we are fully out of this covid crisis. Better to be safer.

November 18, 2020
6:12 pm
topgun
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Mutual experience. In the 1980's I tried mutual funds after buying GIC's for a long time. I picked many funds from Royal Trust and TD bank. I made monthly deposits. After 5-7 years I determined that they were not doing very well. I cashed them. That was enough experience to avoid mutual funds. There is still a huge market for them. I am not one. If you make a mistake do not do it again. Move on. Have fun.

Have a Great Day

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