Investing

how to purchase Vanguard mutual fund?

  • Last Updated:
  • Jul 12th, 2018 1:16 pm
Deal Addict
Aug 19, 2016
1888 posts
745 upvotes
Rhinox87 wrote:
Jul 9th, 2018 10:04 am
Could you please expand on this?
Questrade allows you to hold USD (pseudo USD for this case), so that they don't do forced conversion of USD to CAD when selling, and CAD to USD when buying US stocks.
Pseudo is basically a USD fund created by Questrade. This is the only method that I know of that allows RESP holders to own USD in these accounts without violating the rules for RESP (whatever that may be).

Q: Why stocks in the US? I just want to invest in Canada.
A: Well, Canada's economy is really small in comparison to the US. And most of the Canadian companies aren't that promising.

Q: What about the dividends paid by US companies?
A: They will become the pseudo USD, if I remember correctly.

Q: Are there any fees for having such feature?
A: Yes, the fee is $5 every day you trade a US stock. You don't get charge the fee if you don't trade any US stocks on a single day. However, you only pay $5 extra for that day, not per trade. That means you can trade US stocks 1000 times on Monday, and still get charged only $5 extra.

Q: What so bad about RESP at other brokers?
A: Since you can not have a USD balance in RESP accounts, they will automatically get converted to CAD. The ForEx spread is around 1.5% to 2.5% more than the market. You can call it the ForEx fee. Back 10 years ago, the ForEx was around 1.5%, I am sure that is not the case anymore. It is around 2.0% to 2.5%.
So every time you sell a US stock, you get dinged. And every time you buy a US stock, you get dinged. So a full round trade will cost you from 3.0% to 5.0%.
Newbie
Jun 23, 2012
59 posts
5 upvotes
Calgary
This is great. Thank you! Although I use Questrade as brokerage of choice for TFSA and RRSP accounts and hold mixed CAD and USD securities, I was unaware of pseudo USD feature for RESP. While US economy is large and more diversified, I'd use this feature more for expanded ETF selection. I'm a big fan of Alpha Architect and Meb Faber's products.
[OP]
Sr. Member
Feb 21, 2010
679 posts
151 upvotes
Scarborough
I am reading a lot on how passive investing is allowing sp500 and other popular index companies valuations go high. So I thought might as well have some exposure to Russell 1000 companies but if I can get active mgmt for 0.5% mer, I prefer that over the ETF route

Rhinox87 wrote:
Jul 9th, 2018 10:03 am
Any particular reason for VIC 300 and not other active offerings?
Deal Addict
Jan 20, 2016
1808 posts
757 upvotes
Houston, TX
romeocanada wrote:
Jul 10th, 2018 12:44 pm
I am reading a lot on how passive investing is allowing sp500 and other popular index companies valuations go high.
I'd advise to stop reading such bs. It do not has any ground.

It's NOT the index investing who pushed the valuation.
Make the Trudeau drama teacher again!
[OP]
Sr. Member
Feb 21, 2010
679 posts
151 upvotes
Scarborough
dont you feel there are index component companies who are blindly getting investor dollars popping their share prices because passive investors are too busy to even understand what the index contains? I feel there is alpha out there for active managers to beat passive guys for next few years.
Member
Jan 13, 2016
244 posts
62 upvotes
Vancouver, BC
I thought i read you could buy the funds at qtrade.
Deal Addict
Jan 20, 2016
1808 posts
757 upvotes
Houston, TX
romeocanada wrote:
Jul 11th, 2018 1:20 pm
dont you feel there are index component companies who are blindly getting investor dollars popping their share prices because passive investors are too busy to even understand what the index contains? I feel there is alpha out there for active managers to beat passive guys for next few years.
The myth about index investing is distorting the market been debunked many times. First of all because index fund buying/selling share of ALL companies within index according to MARKET weight (and you'll find the P/E of companies inside S&P500 is VERY different)
And because S&P is ~98% cap of whole US market, we could say there is no distortion as 98% of the market get "pooing their shares" NOT the some selected ones :)

Regarding ability of actively managed funds to beat the index - besides VERY few managed to this consistently, we all know the "winners" postfactum. The problem that 99% of them FAILED to beat the index on long run and NOBODY have the crystal ball to pick up 1% in ADVANCE, not in back testing :)

The Warren Buffet experiment showed it's quite clear - how hard to find the RIGHT active fund to beat the index. He had few very competent (and resource rich) opponents but they didn't managed
to beat passive guys
Make the Trudeau drama teacher again!

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