Post-pandemic portfolio planning

Rebalancing for recovery

The March market meltdown, bond market gyrations, repricing of assets, and the flight to safety over the past couple of months has thrown many portfolios into disarray, particularly those of the do-it-yourself variety. The turmoil is likely to be reflected in increased values for fixed-income and cash holdings in your portfolio. Likewise, your equity values will have declined significantly.


No, investing is not “free”

The real cost of investing in mutual funds and ETFs

The way the marketing hype has it these days, you’d think investment costs have dropped to zero. What with all the do-it-yourself platforms out there hawking their black boxes and promising, at least implicitly, huge savings on costs, novice investors can be forgiven for thinking that buying mutual funds or setting up an ETF portfolio is somehow cost-free. Just open an online account, press the “trade” button, and it’s done. Unfortunately, it’s not quite that simple. Any economist will tell you that there are costs associated with every good or service. Investments are no exception. Here’s a summary of the costs that you’ll still pay for when buying that mutual fund or ETF. READ MORE

How busy Millennials can become investment couch potatoes

Active versus passive investment styles

The “couch potato” portfolio is so named because it takes a “passive” approach to investing. It is predicated on the theory that markets are efficient, or smarter, than any single person. Studies have shown that the passive, or couch potato, investment strategy on average beats about 80% of professional money managers over time. For time-squeezed Millennials who would rather do almost anything else than manage money, this strategy can make a lot of sense. READ MORE

Are segregated funds worth the cost?

More popular with older, risk-averse investors

Many investors, especially those facing retirement, are often offered so-called “segregated” funds by their financial advisors as a way to participate in the stock market while guaranteeing their principal. Although a segregated fund might hold a portfolio identical to its non-segregated counterpart, its fees are typically much higher, while returns tend to be lower. Does it make sense to invest in seg funds? READ MORE

The cost of investing in funds


Why it pays to pay attention to MERs

As new fee transparency rules for advisors and money managers start to kick in, more investors have been asking me about difference between the costs of various mutual funds and exchange-traded funds. It’s a valid question, and looking at the management expense ratios (MER) of various funds, you can see the significant difference it can make to your investment returns. READ MORE

Coping with market volatility

How to avoid money-losing moves in gyrating markets

During periods when sentiment sours and markets sell off suddenly and steeply, as has happened recently, financial advisors’ phones never stop ringing, with clients asking whether they should sell their funds or switch into something “safe.” Indeed, markets do seem to be signaling a period of weakness, but no one really knows for how long the bearish sentiment will last. READ MORE

Options, futures, and swaps, oh my!

Is your mutual fund safe?

You may have been surprised to see some mutual funds and exchange-traded funds disclose that they use “derivatives” in their portfolio management. It may have come as a surprise, because most investors acknowledge that derivatives can be highly risky. Would the use of derivatives pose a major risk to mutual funds in your portfolio? READ MORE

How to find your way through the maze of mutual fund fees

Sorting out MERs, TERs, and loads

If you’re a novice investor, and you’ve been looking at the costs of mutual funds, you’re probably finding it more than just a bit confusing. For example, you might have seen a number of different costs and expenses listed for mutual funds, including front-end load, management expense ratio, and trading expense ratio. Here’s a look at what these are and what the difference is. READ MORE

Baffled by the alphabet soup of fund fees and series?

Choosing the wrong letter can cost you plenty!

The choice of mutual fund investments can be complex and completely overwhelming. There are very nearly 36,000 investment fund products (including clones) on the market. These include not only money market funds, equity mutual funds, and fixed-income funds, but also a host of exchange-traded funds (ETFs). There are income funds, balanced funds, international funds, high-risk, and low-risk funds. And most come in an alphabet soup of series, classes, and fee structures. Choose the wrong series or class, and you’ll pay through the nose. Here’s how to sort it all out. READ MORE

Yes, you can find tax happiness with mutual funds

But the search for tax efficiency can get complicated

High net worth investors are keen on tax efficiency in their investments. Understandably so, since taxes have a huge impact on investment returns. Mutual funds are sometimes seen as least tax efficient, because of their distributions to unitholders, which can be taxed as income, dividends, or capital gains – sometimes all three. However, some funds use what’s called the Capital Gain Refund Mechanism to reduce or eliminate the tax hit on unitholders. How does this work, and are there any other tax-efficient strategies available? READ MORE