Index funds are mutual funds or exchange-traded funds (ETFs) that invest to equal the performance of a market index, such as the S&P/TSX 60.). Index funds do show better long-term performance than about two-thirds of actively-managed mutual funds with long-term track records.
That’s partly because index fund fees run as low as 0.12% of assets per year. In our view, the big advantage of Canadian index funds is that they can help you avoid the risk of choosing a fund with a management style that virtually guarantees below-average long-term performance.
In that category we’d place mutual funds that pursue a market timing or sector-rotation approach to investing. Managers of these funds try to out-perform the market by betting on relatively short-term trends, rather than putting their investors in a position to profit from long-term growth in the economy. In any one year, the top fund is often run by a market timer who is having his or her proverbial ‘day in the sun’. However, in any one decade, the top funds are run by conservative managers who focus on long-term growth in the economy.
We still feel that most investors will profit the most by holding a well-balanced portfolio of high-quality stocks that follow our three-part Successful Investor strategy. However, if you don’t want to build a portfolio, then index fund mutual funds or ETFs can provide a good alternative. Here is our three-part strategy:
Discover which stocks to buy and hold forever in your portfolio in this FREE special report, 10 Stocks to Buy and Hold Forever.
Pennsylvania-based Vanguard Group is one of the world’s largest investment-management companies. It manages over $1 trillion U.S. in 150 mutual funds.
Vanguard, which went into business in 1975, offers low-fee index mutual funds. Generally speaking, Canadians can’t buy units of mutual funds that are registered in… Read More
We still think now is a good time to add some U.S. stocks to your portfolio. And we continue to feel that a well-diversified portfolio of high-quality stocks (like those we recommend as buys in our Wall Street Stock Forecaster newsletter) will outperform index funds… Read More
TFSAs let you earn investment income — including interest, dividends and capital gains — tax free.
You could only invest $5,000 this year to start your TFSA. However, you gain an additional $5,000 of contribution room (indexed to inflation and rounded to the nearest $500 on… Read More
An investor recently asked us a question that touches on several stock market investing concepts that we cover in our Canadian Wealth Advisor newsletter.
He said, “Due to a corporate reorganization, I now have the option of cashing in $279,000 from insurance-company mutual funds, then… Read More
TFSAs can generally hold the same investments as RRSPs. These include cash, mutual funds, publicly traded stocks, GICs and bonds.
However, you are best to hold lower-risk investments in your TFSA. That’s because you don’t want to suffer big losses in your TFSA. If you do,… Read More
Exchange Traded Funds, or ETFs, don’t load you up with heavy management fees, nor do they tie you down with heavy redemption charges if you decide to get out before six years have passed. Instead, they give you a lower-cost and more flexible and convenient… Read More
Ottawa’s new Tax-Free Savings Accounts (or TFSAs) let you earn investment income — including interest, dividends and capital gains — tax free.
A tax-free savings account can generally hold the same investments as an RRSP. This includes cash, mutual funds, publicly traded stocks, GICs and bonds.
However,… Read More
We still think high-quality mutual funds with a long-term focus will beat stock-market indexes over time. If funds invest as we advise — sticking with well-established companies and spreading their assets across the five main economic sectors — they will likely lose a lot less… Read More
ISHARES CDN LARGECAP 60 INDEX FUND $15.54 (Toronto symbol XIU; buy or sell through a broker) (units split 4-for-1 in August 2008) is a good, low-fee way to buy the top stocks on the TSX. The units are made up of stocks that represent the… Read More
At times like this, when deciding what to do with your portfolio, you should resist the urge to dump high-quality investments just because you think they may get dragged down by a further decline in the market.
After all, when things look bleakest (as they do… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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The information we receive from customers helps us personalize and continually improve your online experience at TSI Network. TSI Network may collect personal information online for all legal purposes, which include, but are not limited to:
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Does TSI Network Use the Information It Receives?
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Changes to this Policy
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Legal Notices and Disclaimers
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