The battle continues. Are Canadians getting the message? There is no competition for the returns history of low cost ETFs vs Canadian mutual funds. As you know if you’ve ever come across this site, Canadians pay some of the investment highest fees in the world. Those fees are a wealth destroyer as Larry Bates points out in Beat The Bank. That is still a best-selling ‘blow the whistle on the Canadian mutual fund industry’ book. But moving the needle for Canadians is a gradual process. Canadians are creatures of habit. We’ll look at August 2o2o numbers in this Canadian ETF and Canadian Mutual fund update.
And congrats to Larry on the continued success of Beat The Bank. Two years after its release the book is still top of category in Canada.
For August, how are Canadians faring in the battle to Beat The Bank by investing in Exchange Traded Funds? The following charts and tables are courtesy of National Bank.
Canadians moved another $2.8 billion in August. That helped to set up an annual record for inflows (new net purchases).
Inflows into Canadian ETFs total $32 billion in 2020 year-to-date, a historic record in the making, and already surpassing the record annual inflow of $28 billion set in 2019. Equity ETF assets have swelled with creations during the market’s wild whipsaws this year, seeing inflows of $19 billion so far, almost twice the dollar figure of Fixed Income inflows.
New purchases were split somewhat evenly between equities and fixed income.
Here are the top inflow ETFs for August.
And a look at the current top ETF providers in Canada. Thanks to NEO Exchange for the pie chart.
What about those Canadian mutual fund flows?
It was another soft month for mutual fund sales.
Mutual fund sales are in line with monthly ETF sales. But that’s not ‘so good’ for the industry considering the massive size and scale of the mutual fund sales force. Think about all of the big banks and the sales force at Investors Group – sorry “IG”, Edward Jones, Primerica and more. Those advisors are fighting for scraps, and living off of their past mutual fund sales. Remember, they continue to get paid on an on-going basis, based on how much money you gave them in the past.
I just hope the majority of new mutual fund sales went to Mawer, Tangerine Investments, and a few of the other great options. Jonathan Chevreau reminded us in MoneySense that not all mutual funds are bad. Just most of them 🙂
Related post, my review of Tangerine Investments.
Get your money out of those high fee mutual funds.
There’s simply no reason to pay 2%-2.5% for investments and ‘advice’. Of course high fee Canadian mutual funds often come with no advice or poor advice as you are simply being sold a product. At the big banks, the mutual fund sales team is just doing what they are told. They are not allowed to offer you ‘the good stuff’. Often they are not licensed to offer you the superior lower fee ETF investments.
So, get the heck out of there!
You can access low-fee ETF portfolios and advice by way of the Canadian Robo Advisors.
You can continue the education process and learn to self direct. It’s not difficult to create your own ETF portfolio. Or you may choose to buy an all-in-one asset allocation ETF such as the one ticket options from iShares. Horizons, BMO, Vanguard and TD offer some one ticket options as well.
When you do need financial advice or planning you can go the route of an advice-only planner. You receive conflict-free advice and pay as you go. For example you can pay a one-time fee for a financial plan or retirement funding plan.
You may decide to build your own stock portfolio. On that front, check in with my pal Mike The Dividend Guy. Or follow Mark at My Own Advisor. Mark creates simple and effective stock and ETF portfolios and he’s well on his way to reaching his form of early financial freedom.
There are so many ways to leave those mutual funds behind.
Just do it!
Canada’s top-ranked discount brokerage.
Cut The Crap Investing readers can sign up with Questrade (Canada’s top-ranked discount brokerage) through this partnership link. You can buy ETFs for free, even the one ticket family.
And you might make your cash work a lot harder at EQ Bank.
While I do not accept monies for feature blogs please click here on the mission and ‘how I might get paid’ disclosures. Those affiliate partnerships help me pay the bills for this site.
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Thanks for reading the Canadian ETF and Canadian Mutual Fund update.