At the end of October 2019 Canadian ETF assets stood at $192 billion. With the recent and very robust markets it might be safe to say that assets have ‘crashed through’ that $200,000,000,000 mark. Yes, I like to write that number including all of the zeroes. That’s a lot of zeroes. That equals a lot of Canadian investors investing in a lower fee manner. Here’s the Canadian ETF update.
Of course ETF assets are still dwarfed by mutual funds assets. But ETF sales are now outpacing mutual funds sales. More Canadian investors are doing it right. So, we’re winning, kind of. Here’s the latest report for October.
And here was the net new creations story. That is, new sales above any redemption amounts.
October was was a robust month for creations at $4 billion. With markets roaring it’s a good guess that November will see some very generous numbers to the upside. And with the TSX and the S&P 500 up by some 4% or more in November it’s possible that we’ve already topped that $200 billion.
We’ve got a long way to go.
Here’s the mutual fund asset picture. Mutual funds assets sit near $1.6 trillion.
And mutual funds are experiencing some net new sales figures.
And let’s hope more of those sale are going into some of the ‘better stuff’. Not all mutual funds are evil of course. And advice-only planners have the ability to place their clients in lower fee F-series funds. It is because of the F series funds that the fee average in Canada is creeping down.
Larry Bates, the author of Beat The Bank reminds us that high fees are wealth destroyers. You want to stick to more of the wealth building side of the ledger.
$3.6 billion in annual savings?
With $200 billion in ‘the right place’ with fee savings (over typical mutual funds) in the range of 1.8% that might amount to about $3.6 billion in annual savings for Canadian ETF investors. If I’ve misplaced a decimal or something, please let me know. These are really big numbers to play around with. 🙂
To put that into perspective, that’s more than Canadians spend every year at Tim Hortons.
Will there be a tipping point?
Nope. I’ve become a realist. I’ve been very hopeful at times. And I really like this article based on my interview with Randy Cass of Nest Wealth. There will be a tipping point Randy had suggested. I now think that we will continue to experience the gradual shift away from higher fee mutual funds to lower fee ETFs and lower fee mutual funds. That trend is likely to accelerate as well.
The investment industry is driven by the distribution channels, the advisor sales channels. Nothing big happens until they say so. And the Canadian Robo Advisors that I’ve been chatting with recently report that the area of meaningful growth is from advisor referrals. That’s good news. And mutual fund giants such as CI Financial know where the puck is going. There are many positive trends.
Stay tuned for future Canadian ETF updates.
This ain’t your Daddy’s mutual fund.
Death will be a big driver of the death of the traditional mutual fund industry. We are about to experience the greatest transfer of wealth in history. Hey boomer. Your monies (upon your passing) will land in the hands of investors who are already embracing lower fee investing. The first thing they are going to do after the estate settles is go online and begin that digital transfer of assets.
As our friends at Questrade remind us “times have changed”.
The retirements of the traditional advisor will play in as well. More ‘younger’ advisors appear to not want to rip people off for a living. That’s a good trend. They are moving to that advice-only model where they can deliver conflict-free advice.
Queue the Weekend Reads and podcasts.
Here’s a great podcast from ETF.com. It features David Nadig and the main topic of conversation is the surrender of TD Ameritrade to Charles Schwab. It was a cunning and brilliant and ruthless strategy. Introduce free trades to hurt your competitor, drive down their stock price and swoop in. All legal. Very uh, opportunistic. Fine by me. I am about to become a part owner of the greater Schwab. If you own TD or a Canadian ETF or mutual fund you’re in the same boat. Welcome.
In the National Post Larry Sarbit suggests that we all need to feel that market pain. Otherwise, you don’t really know your risk tolerance level. You need to have your heart broken to know what it feels like. The markets have only been offering love over the last decade. Note to millennials, before you invest Mom and Dad’s mutual funds, please know your risk tolerance level. Err on the side of caution. And Larry suggests your parents might not have been that great at this investing thing either.
Otherwise, you will live the horror of what Galbraith reportedly said many years ago — the old generation has to die off so a new set of idiots can make the same mistakes all over again.
There was so much great stuff on Findependencehub this week. You might start with this post from Penelope Graham of Zoocasa. Are high rent costs a hurdle to condo ownership?
Here’s an interesting post and great headline, How to trick your lizard brain into saving more money. Thanks Robb Engen, it’s true we are simply not wired to be great savers and investors. It takes some rewiring. But I think Lady Lizards are better at it?
More on that 4% rule.
And on my ownadvisor Mark Seed asks Steve Bridge of Money Coaches Canada if the 4% rule makes any sense? Nope.
I’ll be honest, I’ve been preparing retirement plans for people for almost five years and I have never used the 4% rule or even mentioned it to any of my clients.Steve Bridge
Rob Carrick offers 6 things you didn’t know about the Canadian robo advisors. It’s nice to see that post as I do think that these modern wealth managers are the solution for so many Canadians. Modern wealth managers. hmm. Maybe that’s the branding ticket?
And in the Rational Reminder podcast Ben Felix is playing with FIRE and suggesting we ditch our Canadian bank stocks. I’d offer two words ‘perpetual discount’. Ha.
Ben Carlson reminds us that All-Time Highs are Both Scary and Normal.
Thanks for stopping by. Have a great weekend. Please offer your thoughts in the comment section. And please let me know what you’d like covered by Cut The Crap Investing.