ETF War Offers Opportunity For Canadians

andrew hallam

andrew hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (Wiley 2011) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I'm happy to comment on your questions. However, please read the Terms of Use.

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9 Responses

  1. I love seeing falling costs! It looks like Vanguard funds aren’t necessarily the best in Canada in all major categories yet, but hopefully they bring in some more investors and get there soon.

    Vanguard has a great history. It remains to be seen whether the other ETF providers will be able to support investors over several decades. BMO has a few good ETFs but that seems inconsistent with its position as a fee-pumping big bank. (I currently hold BMO and Vanguard ETFs and will be adding iShares soon)

    Another side of this is the price wars at brokerages. Two are now offering commission-free purchases for all ETFs and a few others offer it on a limited list. As we spread the word and get more people on board, the deals will just keep getting better.

  2. Brunnenburg says:

    Great article, Andrew, but I wonder if buying just one global ETF might be more efficient than spreading out among several ETFs. I hope Vanguard Canada eventually opens up a global ETF. For simplicity’s sake I’ve been using iShares MSCI World (XWD). Admittedly, the problem here is the relatively high MER (0.46%), but I find it much easier to rebalance my current TFSA portfolio thus:

    XWD: 40%
    CBO: 40% (eventually I’ll probably switch this to VSB)
    ZCN: 20%

    My overall MER for this is roughtly 0.33%. Not bad, but I once Vanguard is more established I’d jump over in a second. My US$ RRSPs are all with Vanguard (BND, VTI, VEA).

    • You’re right Brunnenburg, a total world index would be great. I think Vanguard’s ETF (VT) has an expense ratio of about 0.35%, but then again, it trades on the New York Exchange.

      As for one on the Toronto exchange, I hope it’s coming. Perhaps we could make noise about it on forums, websites, articles, etc. It’s an idea for a new article, I suppose: a Dear Vanguard piece.

      Hope all is well!


  3. Rahim says:

    Interesting article, Andrew! I’m a newbie indexer and my portfolio is quite small at the moment so I’m focused on index mutual funds, not ETFs. However, I’m curious to know your thoughts on whether this might have a ripple effect on index fund prices. For example, could I see my index fund portfolio with RBC go down to an average MER of 0.4-0.5% from my current average of 0.7%? (I know the ETF-types reading this must think 0.7% is insane!).

    Mind you, there’s no price war taking place at the current time on the index fund side, but I have the impression that investors are increasingly making the switch from actively managed mutual funds to passively managed index mutual funds. Taking this into consideration, I’m sure the banks that offer index mutual funds (RBC, TD, ING, etc.) will want to grab their fair share of clients through cheaper index fund offerings. (If this happens, hopefully they’ll also expand their index fund line-up too! I’m with RBC and they only offer the 4 main types – Canadian Gov’t Bonds, Canadian Equity, US Equity, and Int’l Equity).


    • Vladimir says:

      Hi Andrew, have read your blog. Really interesting and practical thing considering as i have been approached by Friends salesman recently.
      He still cant make any comments to me about articles re Friends Provident in your blog.
      Can you advise me if Russian residing now in Kuwait can benefit from any of investment approaches described by you for Americans, Canadians, Britons, etc? Thanks in advance Vladimir

    • Hi Rahim,

      That would certainly be nice if it happened. But I don’t think it would, unless Vanguard started offering indexed mutual funds in Canada. Now that would rock the boat!

      Have you considered switching to TD’s e-Series indexed mutual funds? They cost nearly half of what you are currently being charged, and you could open a TD Waterhouse account, sell your current funds at no cost (and no tax hit if they’re in a RRSP that you would be rolling over into a TD Waterhouse RRSP) and you would give yourself a boost of about 0.4% each year. It doesn’t sound like much, but it would add up to plenty over time.


  4. Keith says:

    Hi Andrew – I read Millionaire Teacher and am starting a portfolio based on the principals you outline in it. Congrats on the book – I thought it was excellent, very easy to read and informative. (I read a “Random Walk Down Wall Street” afterwards and it is a LOT harder to understand once you get deeper into it.) I am an Irish citizen living in Vancouver, Canada and plan to be here for another few years but not permanently.

    Are you familiar with the TD e-series mutual funds? I have recently (as in this month) started a portfolio with:
    33% TD CDN Index e** (Code: TDB900)………….MER: 0.33%
    33% TD European Index-e** (Code: TDB906)… .MER: 0.51%
    33% TD CDN Bond Index-e** (Code: TDB909)…MER: 0.50%

    Do you think I should add a US Index fund or emerging market fund to this?

    Are there cheaper alternatives to TD e-series? How do you rate the TD series in general?

    Thanks for any advice you can give!


    • Hi Keith,

      My book, Millionaire Teacher, lists a portfolio of e-Series funds that I recommend. If you don’t want to pay purchase commissions and you want your dividends reinvested, and if you have less than a $50,000 portfolio, I definitely recommend these funds. If you want to build a portfolio of low-cost ETFs, you could do so. They have slightly lower costs than the e-Series funds. But you would have to pay commissions to buy them and your dividends wouldn’t get reinvested automatically.

      I’m glad you liked the book.



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