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Mutual Funds vs ETFs

NucksPatsFan

By NucksPatsFan
in Off-Topic General

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NucksPatsFan Canucks Star

NucksPatsFan

Posted
Posted

What are your opinions on whether going with a mutual funds investment or an ETF investment? 

 

Is an ETF long term going to pay out better than mutual funds given the same on take of risk? Is investing in a system that is mimicking, let's say, the S&P 500 [SPDR funds] a wiser choice than mutual funds being invested in my your bank's professionals? Is the ease of having professional's handle your money and trading a better choice than monitoring an electronic system and making changes based on the market?

 

I'm not for one and against the other, just want to get some opinions [maybe experiences?] out there.

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Rick Blight Canucks Third-Line

Rick Blight

Posted
Posted
9 minutes ago, NucksPatsFan said:

What are your opinions on whether going with a mutual funds investment or an ETF investment? 

 

Is an ETF long term going to pay out better than mutual funds given the same on take of risk? Is investing in a system that is mimicking, let's say, the S&P 500 [SPDR funds] a wiser choice than mutual funds being invested in my your bank's professionals? Is the ease of having professional's handle your money and trading a better choice than monitoring an electronic system and making changes based on the market?

 

I'm not for one and against the other, just want to get some opinions [maybe experiences?] out there.

I own a lot of ETF's and no Mutual Funds. My primary reason for taking this approach is because of the fees associated with the two. ETF's typically will have a MER (management expense ratio) of anywhere between 0.3% and 0.7% whereas Mutual Fund trailing fees can be anywhere between 1% and 2.5%. Over a period of time these fees make a significant difference in the performance of your portfolio. For example, you could hold an ETF that holds all of the Canadian Banks or a Mutual Fund that holds all of the Canadian Banks and typically you will make more money with the ETF because of the fees.

The make up of an ETF and a Mutual Fund are virtually the same and your professional financial advisor can use either of these investment vehicles. If you are managing your own investments you can also invest in either at your discretion.

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Crabcakes Canucks Franchise Player

Crabcakes

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It depends on your knowledge and/or how much work you're willing to put in.

 

I like ETF's that track the Dow or TSE for a couple of reasons.

  1. Lower fees 
  2. An exchange is how mutual funds are measured.  If you buy a mutual fund that consistently beats the exchange, you have a winner.  The thing is, mutual funds typically do well during certain parts of the business cycle and not so good during other parts.  

So for buy and hold, long term investing, ETF's are great.  Of course, everybody talks about diversification being safer, so ETF's that track an exchange are by definition diverse.  Some exchanges are more diverse than others.  The Dow or S & P are more diverse than the resource heavy TSX for example.

 

If you think that you can time the market, buying some of these mutual funds can be advantageous despite high fees.  It's the net return you should be watching.  There are plenty of good segment focused funds out there that can do fabulously well for a year or 2 but timing the market is difficult even for professionals.

 

Get some advice from a pro.   

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nuckin_futz Canucks Franchise Player

nuckin_futz

Posted
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12 minutes ago, NucksPatsFan said:

What are your opinions on whether going with a mutual funds investment or an ETF investment? 

 

Is an ETF long term going to pay out better than mutual funds given the same on take of risk? Is investing in a system that is mimicking, let's say, the S&P 500 [SPDR funds] a wiser choice than mutual funds being invested in my your bank's professionals? Is the ease of having professional's handle your money and trading a better choice than monitoring an electronic system and making changes based on the market?

 

I'm not for one and against the other, just want to get some opinions [maybe experiences?] out there.

An ETF will pay out better because you will encounter no loads and no management fees. You'll just pay a dinky commission to buy and sell.

 

With your S&P example, the ETF is (SPY). If you want to maximize your gains you'll have to manually re-invest your dividends. Where a mutual fund would take care of that for you.

 

There's ETF's for just about everything. The main ones are fine (SPY, QQQ, DIA, GLD, XLF etc). Avoid ones with horrible liquidity.

 

Avoid double and triple ETF's like the plaugue. They're not what they appear to be.

 

 

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Lancaster Canucks First-Line

Lancaster

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Not all mutual funds are created equally.  Some "less skilled" managers may just create a portfolio that matched the indexes, which makes it kinda pointless as the ETF has lower management rates. 

In theory, that higher rate is supposed to help with the manager and folks to create higher returns.  In actuality, I believe much managed funds are at par with indexes or even lower (plus higher MER).

 

IIRC, the average rate of return from indexes (extrapolated and researched) since the 1800's are about 8-11% after factoring all the booms and busts. 

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Vanisleryan Canucks Prospect

Vanisleryan

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11 hours ago, Bur14Kes17 said:

Aphria APH, Canopy Growth CGC, Aurora ACB. Easily all going to be another 200% return over the next year

EMH is going to go on a a run this week. But I agree Canopy and Aphria will be great long term and easily see huge returns this year. Once Legislation is announced things should really take off. Full legalization is probably still atleast a year if not more.

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Bur14Kes17 Abbotsford Star

Bur14Kes17

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2 hours ago, Vanisleryan said:

EMH is going to go on a a run this week. But I agree Canopy and Aphria will be great long term and easily see huge returns this year. Once Legislation is announced things should really take off. Full legalization is probably still atleast a year if not more.

What's the deal with EMH this week?

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Vanisleryan Canucks Prospect

Vanisleryan

Posted
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4 hours ago, Bur14Kes17 said:

What's the deal with EMH this week?

They were looking good a couple weeks ago at about 1.55ish when a bought deal got announced for 12M at 1.35 so the sp took a dive down to 1.25ish...reconsolidated for about 10 days. ...now its heading back up....Friday they finally broke resistance and I expect a gap up Tuesday morning. They previously months ago had a NR about a letter of intent to buy land in Vancouver for expansion.  I imagine the funds are for that and I expect that they will finalize the letter of intent and announce it soon. I bought a bunch on the dip as they are a solid company....small float and mostly insider owned.

 

Ive been finding I do pretty well finding the dips buying them and selling after they rise....let it reconsolidate while Im applying same tactic elsewhere.  I did the same with WEED a few weeks ago...bought in at 9.84 and sold at 13.07 not long after. Last week was APHs turn...unfortunately I did get too much from that since my WEED profits were moved into EMH.

 

Also keep an eye on SL. ..they are due very soon to receive there sales license from Health Canada. They are a b2b model and have product pretty much already all spoken for as soon as the license comes through.

 

CMED is also a good one to watch this week. Been consolodating for a while like a coiled spring. 

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Bur14Kes17 Abbotsford Star

Bur14Kes17

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1 hour ago, Vanisleryan said:

They were looking good a couple weeks ago at about 1.55ish when a bought deal got announced for 12M at 1.35 so the sp took a dive down to 1.25ish...reconsolidated for about 10 days. ...now its heading back up....Friday they finally broke resistance and I expect a gap up Tuesday morning. They previously months ago had a NR about a letter of intent to buy land in Vancouver for expansion.  I imagine the funds are for that and I expect that they will finalize the letter of intent and announce it soon. I bought a bunch on the dip as they are a solid company....small float and mostly insider owned.

 

Ive been finding I do pretty well finding the dips buying them and selling after they rise....let it reconsolidate while Im applying same tactic elsewhere.  I did the same with WEED a few weeks ago...bought in at 9.84 and sold at 13.07 not long after. Last week was APHs turn...unfortunately I did get too much from that since my WEED profits were moved into EMH.

 

Also keep an eye on SL. ..they are due very soon to receive there sales license from Health Canada. They are a b2b model and have product pretty much already all spoken for as soon as the license comes through.

 

CMED is also a good one to watch this week. Been consolodating for a while like a coiled spring. 

Ah ok. I saw EMH take that dip but was sure why. I rode them from .45 to 1.09 back in September haha. Maybe I'll see if I can't free something up for them on Monday. I do think this is going to be a very good week sector wide tho. Both ACB and APH have bought deals that are coming to a close and I do own SL right now. Check out Radient Technologies tho, RTI. They've been doing a 6 week trial with ACB who invested 3 million in them and the half way results looked really good and in another two weeks when it comes to a close, I expect it to be between 80-90 cents. I bought it last week on the dip to .62 

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