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Saving account ETF
August 18, 2019
12:32 pm
Jon
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I found this on the internet.

Here comes a great alternative to mutual fund style saving account that people hold in their security account as it offer higher yield (2.15% at the moment). Looks to me a great alternative for people with a company that need saving large amount of money. Not sure about the legal, or tax implication through.

August 18, 2019
3:57 pm
AltaRed
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That has been talked about in a number of places. Yield of 2.15% is misleading as a single data point and irrelevant as a performance measure. Look at calendar year performance, or 3 and 5 year performance.

Its best calendar year RETURN performance is 1.67% in 2018 and its 3 and 5 year performances are less than 1.5%.

August 18, 2019
5:45 pm
Jon
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You are right, this is very misleading.....
To make it worst, its rate of return is actually unpredictable, unlike saving account mutual fund.

August 18, 2019
7:32 pm
Norman1
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The return of the Purpose High Interest Savings ETF (symbol PSA) depends on its "rate chasing" between the chartered banks and credit unions.

As of the end of 2018, the funds were deposited as follows:

Financial institution Amount % of Total
Manulife Bank of Canada $138,282,542 9.7% 87.6%
National Bank of Canada $604,468,905 42.6%
Scotiabank $500,402,511 35.3%
Coast Capital Savings $59,481,381 4.2% 12.5%
First Calgary Financial $32,000,000 2.3%
G&F Financial Group $10,063,575 0.7%
Prospera Credit Union $49,662,682 3.5%
Westminster Savings $25,119,404 1.8%
Total $1,419,481,000

Rather hard to outperform with 88% of the funds deposited with Manulife Bank, National Bank, and Scotiabank.

August 19, 2019
6:34 am
Bud
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Like to stay as far away from structured products as possible that means if i have a choice i'd do the extra work to go direct..

GIC King

August 20, 2019
7:48 pm
FMC
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Been using this one and the PSU ETF shortly after each was introduced. I use them in my registered stock brokerage accounts. Perfect for my needs, though return could always be better. sf-wink

August 22, 2019
10:16 am
Selkirk
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Sounds like ETFs like PSA & PSU would be good places to temporarily 'park' cash in a Stock Investment Account. It's got to be better than just leaving it sit as cash in the account, where you earn almost no interest at all (~ 0.05% or less).

No?

August 22, 2019
12:04 pm
Londonguy
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Dean said
Sounds like ETFs like PSA & PSU would be good places to temporarily 'park' cash in a Stock Investment Account. It's got to be better than just leaving it sit as cash in the account, where you earn almost no interest at all (~ 0.05% or less).

No?  

All the big bank no-fee ISAs that do-it-yourselfers can access are still paying 1.60%. Cash is the absolute worst vehicle to hold

August 22, 2019
9:44 pm
Loonie
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I agree with Londonguy.

August 23, 2019
7:43 am
Jon
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Londonguy said

All the big bank no-fee ISAs that do-it-yourselfers can access are still paying 1.60%. Cash is the absolute worst vehicle to hold  

Not to mention there is probably no insurance protection using this ETF, the price my fluctuate, and its value may reduce if any institution in the list defaulted. (Remember money market fund in US during 2008?)

Really not to great when you look into it.

August 23, 2019
1:16 pm
Selkirk
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Londonguy said

All the big bank no-fee ISAs that do-it-yourselfers can access are still paying 1.60%. Cash is the absolute worst vehicle to hold  

I agree that; "Cash is the absolute worst vehicle ...", but I'm at a loss about the rest ^ of what you said .

My self directed investment accounts (stocks, ETFs, etc.) are with TD WebBroker. As far as I know, there is no Investment Savings Account (ISA) available there ... or am i missing something???

August 23, 2019
4:58 pm
Norman1
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Dean said

My self directed investment accounts (stocks, ETFs, etc.) are with TD WebBroker. As far as I know, there is no Investment Savings Account (ISA) available there ... or am i missing something???

How about TDB8151 (TD Investment Savings Account - F Series) that Bill mentioned some time ago? Current rate is 1.85%.

If TDB8151 doesn't work, see if TDB8150, TDB8155, TDB8157, or TDB8159 for 1.60% TD Investment Savings Account issued by TD Bank, TD Mortgage Corporation, TD Pacific Mortgage Corporation, or The Canada Trust Company.

Full details under "TD Investment Savings Account" at TD Asset Management: Additional Solutions.

August 23, 2019
8:28 pm
Joe
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Dean said

I agree that; "Cash is the absolute worst vehicle ...", but I'm at a loss about the rest ^ of what you said .

My self directed investment accounts (stocks, ETFs, etc.) are with TD WebBroker. As far as I know, there is no Investment Savings Account (ISA) available there ... or am i missing something???  

In your CAD (margin,rrsp, tfsa) accounts you can buy TDB8150 (HISA) at no charge in or out....at present it pays 1.6%
In your USD (margin,rrsp) accounts you can buy TDB8152 (HISA) at no charge in or out...at present it pays 1.45% or buy TDB166 no charge in or out (USD MoneyMarket fund) at present it pays 1.98%
These are all bought under the mutual fund tab and take 1 day to complete when you buy or sell.

August 23, 2019
10:35 pm
Doug
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Norman1 said

Dean said

My self directed investment accounts (stocks, ETFs, etc.) are with TD WebBroker. As far as I know, there is no Investment Savings Account (ISA) available there ... or am i missing something???

How about TDB8151 (TD Investment Savings Account - F Series) that Bill mentioned some time ago? Current rate is 1.85%.

If TDB8151 doesn't work, see if TDB8150, TDB8155, TDB8157, or TDB8159 for 1.60% TD Investment Savings Account issued by TD Bank, TD Mortgage Corporation, TD Pacific Mortgage Corporation, or The Canada Trust Company.

Full details under "TD Investment Savings Account" at TD Asset Management: Additional Solutions.  

The discount brokerages don't let you access the Series F funds, though, Norman. (A bone of contention of mine and many others, considering they provide no advice for which the trailer fees were intended. 😉 )

Dean, I wouldn't rule out these HISA ETFs. They offer intraday liquidity in that you can sell them and use the proceeds immediately to buy whatever it is you wished to buy. With the ISA funds, they "trade" at the end of the day and don't settle until the end of the day following the trade date.

Also, as mentioned by AltaRed and others above, I tend to ignore the stated MER of these funds because the NAV and market returns are net of fees. And, since the market makers do a good job of maintaining a constant $10 or $50 per unit NAV, within a few pennies or so, the annualized distribution yield is generally what you will receive.

CI First Asset just launched 'CSAV' as an alternative to Purpose's PSA, though AltaRed reports that TDDI doesn't let customers purchase PSA because they want to steer people to their own funds (which is not cool). For that and other reasons, TDDI is a 'strong avoid' for me as a discount brokerage. My top picks would be Scotia iTRADE, Questrade, National Bank Direct Brokerage, or HSBC InvestDirect.

If you do decide to purchase an ISA, generally speaking, the ISAs that are available (unless it's a non-bank-owned brokerage) are limited to those of the parent bank. That is to say, TDDI will offer TD ISAs, Scotia will offer Scotia ISAs, RBC will offer RBC ISAs, and CIBC will offer Renaissance ISAs (an investment management subsidiary of theirs).

For me, I park my cash in the BNS ISA and ADS Canadian Bank ISA at Scotia iTRADE, which pay about 1.65% net of trailer fees.

Hope that helps,
Doug

August 23, 2019
11:11 pm
Norman1
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Doug said

The discount brokerages don't let you access the Series F funds, though, Norman. (A bone of contention of mine and many others, considering they provide no advice for which the trailer fees were intended. 😉 )

Didn't someone report that the Series F TDB8151 was available from TD Direct Investing if one phoned in and was willing to accept the $65 telephone order charge?

Dean, I wouldn't rule out these HISA ETFs. They offer intraday liquidity in that you can sell them and use the proceeds immediately to buy whatever it is you wished to buy. With the ISA funds, they "trade" at the end of the day and don't settle until the end of the day following the trade date.

Scotia iTRADE allows same-day use of the proceeds from selling one of their Scotia ISA funds. I've done it many times. It is not immediate as with a filled sale of a stock. It takes about an hour after the ISA sell order is placed for their system to add the future proceeds to the account's buying power.

August 24, 2019
12:14 pm
Norman1
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Doug said

The discount brokerages don't let you access the Series F funds, though, Norman. (A bone of contention of mine and many others, considering they provide no advice for which the trailer fees were intended. 😉 )

Norman1 said

Didn't someone report that the Series F TDB8151 was available from TD Direct Investing if one phoned in and was willing to accept the $65 telephone order charge?

That turned out not to be the case.

Found the original post about Series F TDB8151 being available:

Loonie said

This is not true from my friend's experience in 2017. He is with TDDI, and I believe he made the transaction by phone. He doesn't have an advisor. I have seen the statement, and this is definitely what he bought.

It turned out to be TDB8150 and not TDB8151:

Loonie said

I just checked the previous thread, where Bill gave me the advice. Looks like it was 8150 and 8155 that my friend invested in at TDDI. Sorry for the confusion; my eyes aren't what they once were, and it looks like I mis-read a digit, but I was right about 8155.

August 25, 2019
11:11 am
Londonguy
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Dean said

I agree that; "Cash is the absolute worst vehicle ...", but I'm at a loss about the rest ^ of what you said .

My self directed investment accounts (stocks, ETFs, etc.) are with TD WebBroker. As far as I know, there is no Investment Savings Account (ISA) available there ... or am i missing something???  

In case it still isn't clear, each of the Big Banks offers their own ISA products to their do-it-yourself clients. In a TD Direct Investing account like yours, you would purchase TD's ISA by entering a mutual fund order to buy TDB8150. There's no trading commission and it settles the next business day. It's been paying 1.60% since November 2018 but can change at any time.

Technically I believe the fine print says they can ding you a commission if you sell it within 30 days, but I've never been charged and obviously never asked why not. I would nonetheless discourage you from doing it unless you're prepared to not be so lucky and have to eat the trading fee.

Here's the TD short-version blurb on their ISAs -- https://www.tdassetmanagement.com/document/PDF/TD%20ISA%20Product%20Features.pdf

For your purposes you can ignore the F Series products, because those are only accessible for trading by licensed financial advisors managing other people's money. If you try to enter those product codes in the WebBroker platform for a self-directed account, you'll find they don't work.

August 25, 2019
12:31 pm
Norman1
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Scotia iTRADE seems to no longer have an early redemption fee for mutual funds. The 1% fee, applicable before 90 days of holding, used to be in their commission schedule, with an exemption for their Scotia Money Market Funds, Dynamic Funds, and Scotia Mutual Funds.

Now, the footnote just says

3 Early redemption fees may be charged by some mutual fund companies. Please refer to the prospectus of each fund for details. … The minimum purchase amount for all money market funds is $5,000. All other funds are subject to minimum purchase and redemption amounts as outlined in the prospectus or $1,000, whichever is greater. Switch orders are only permitted within the same load type & family of funds. Add $65.00 for telephone representative – assisted trades. Add $65 per fund per quarter per account for mutual funds not distributed by Scotia iTRADE.

In TD Direct Investing Commission Schedule, there is an exemption for money market funds. Perhaps their system places the TD ISA's in the money market fund category:

Short-Term Redemption Fee Policy

This policy applies to all mutual funds offered through TD Direct Investing, except Money Market funds and those purchased on a Deferred Sales Charge (DSC) or rear load basis. Funds held for less than 30 days are subject to a short-term redemption fee of 1% of redemption value or $45 (whichever is greater) in addition to any fee(s) the mutual fund company itself may charge.

August 25, 2019
1:38 pm
Londonguy
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Norman1 said

In TD Direct Investing Commission Schedule, there is an exemption for money market funds. Perhaps their system places the TD ISA's in the money market fund category:

Short-Term Redemption Fee Policy

This policy applies to all mutual funds offered through TD Direct Investing, except Money Market funds and those purchased on a Deferred Sales Charge (DSC) or rear load basis. Funds held for less than 30 days are subject to a short-term redemption fee of 1% of redemption value or $45 (whichever is greater) in addition to any fee(s) the mutual fund company itself may charge.

  

They're very clear in pointing out that an ISA is a deposit and not a mutual fund (nothwithstanding that you have to use their mutual fund order entry module to buy or sell it) but for some reason I've never gotten jammed by them over the early redemption thing. I used to use their MMFs (TDB164 and TDB165) to temporarily hold cash but they were only paying 0.50-0.60% at best so I switched. Better in my pocket than theirs.

August 25, 2019
3:04 pm
Selkirk
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I just want to 'Thank' All here who brought me up to speed on TD Investment Savings Accounts (ISA) ... it is GREATLY APPRECIATED !!!

I'm a little embarrassed for not knowing about them, but I've learned something new (to me), and Very Valuable !

After reading through all your comments and suggestions, I went and found this information on the TD WebBroker site, to share with anyone who's interested ...

- TD ISA Brochure; https://www.tdassetmanagement.com/document/PDF/TD%20ISA%20Product%20Features.pdf

- TD ISA Rates & Codes; https://www.td.com/ca/en/asset-management/additional-solutions/

- TD ISA Terms & Conditions; https://www.tdassetmanagement.com/document/PDF/TD%20ISA%20Terms%20and%20Conditions%20E.pdf

THANKS Again, Folks ! sf-smile

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