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RBC Dominion Securities suggesting me RBC Parameters

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  • May 3rd, 2012 5:07 pm
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[OP]
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Dec 17, 2004
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Toronto

RBC Dominion Securities suggesting me RBC Parameters

Hi,

Any body has any experience with them?

I want managed asset program since I do not have time to actively trade.

Any other suggestions?

Thanks
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Jun 19, 2006
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RBC DI pitched the same thing to my grandma. Basically, its pretty much the TSX60 index, which you can buy for 0.17% annual fees, through the XIU ETF. Whereas, RBC charges at least 1%, if not more.

I'd suggest that if you want something simple, just build an equity portfolio of XIU, VPL, VGK, VTI, and VWO, and rebalance periodically (like every year). Or if you are contributing -- just make a purchase, every couple months, of the most out-of-balance component in your portfolio.
"I worked with several H1B employees that were/are borderline ********. One of them wanted to spray an electrical patch panel with solvent to see if it would make the “network go faster”". <--- lol (source)
[OP]
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pitz wrote:
Sep 15th, 2009 5:53 pm
RBC DI pitched the same thing to my grandma. Basically, its pretty much the same thing as the TSX60 index, which you can buy for 0.17% annual fees, through the XIU ETF. Whereas, RBC charges at least 1%, if not more.

I'd suggest that if you want something simple, just build an equity portfolio of XIU, VPL, VGK, VTI, and VWO, and rebalance periodically (like every year). Or if you are contributing -- just make a purchase, every couple months, of the most out-of-balance component in your portfolio.
Thanks for the reply.

From what I am being told, it is not a mutual fund. In this, one holds the stocks directly & get dividends as well. You can also write off the fees for the taxes which you cannot for mutual funds.

The fees is 2.1%

http://www.rbcds.com/RBC:SqHUI6wWAA8ANB ... olios.html
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Feb 9, 2005
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Lalchi wrote:
Sep 15th, 2009 6:05 pm
Thanks for the reply.

From what I am being told, it is not a mutual fund. In this, one holds the stocks directly & get dividends as well. You can also write off the fees for the taxes which you cannot for mutual funds.

The fees is 2.1%

http://www.rbcds.com/RBC:SqHUI6wWAA8ANB ... olios.html
You can do as pitz says and buy many stocks in a single transaction (one comission) buy using an ETF which holds the underlying stocks and will pay you the dividends from the underlying stocks (you just might need to wait a short time since the ETF will not pass on the dividends quite as frequently as owning the individual stocks.) They will charge you 0.17% to do this.

or

RBC can buy the individual stocks for you (charing you comission on each stock purchase I bet) and also charge you 2.1% fee.

Really, you get pretty much the same thing, you just need to decide if you want to pay a single comission and a 0.17% fee, or multiple comissions and 2.1% fee.
[OP]
Member
Dec 17, 2004
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AllWheelDrift wrote:
Sep 15th, 2009 6:14 pm
You can do as pitz says and buy many stocks in a single transaction (one comission) buy using an ETF which holds the underlying stocks and will pay you the dividends from the underlying stocks (you just might need to wait a short time since the ETF will not pass on the dividends quite as frequently as owning the individual stocks.) They will charge you 0.17% to do this.

or

RBC can buy the individual stocks for you (charing you comission on each stock purchase I bet) and also charge you 2.1% fee.

Really, you get pretty much the same thing, you just need to decide if you want to pay a single comission and a 0.17% fee, or multiple comissions and 2.1% fee.
There is no per transaction fees for sure.
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Lalchi wrote:
Sep 15th, 2009 6:17 pm
There is no per transaction fees for sure.
Ok, well at the $100k minimum, 2.1% will be $2100/year, while the ETF would be $170/year on the same $100k. $100k qualifies you for $10 trades with RBC DI so the $1930 savings means you would come out ahead as long as you do less than 193 ETF purchases per year (and I think before you reached 193 purchases, you would get active trader status and qualify you for $7 comissions so you could even go beyond, though I have no idea why because given that it's ETFs, there should be no need to trade so frequently.)

In any case, it would seem prudent to increase my holdings of RBC if people are interested in services like this one. :lol:
[OP]
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AllWheelDrift wrote:
Sep 15th, 2009 6:37 pm
Ok, well at the $100k minimum, 2.1% will be $2100/year, while the ETF would be $170/year on the same $100k. $100k qualifies you for $10 trades with RBC DI so the $1930 savings means you would come out ahead as long as you do less than 193 ETF purchases per year (and I think before you reached 193 purchases, you would get active trader status and qualify you for $7 comissions so you could even go beyond, though I have no idea why because given that it's ETFs, there should be no need to trade so frequently.)

In any case, it would seem prudent to increase my holdings of RBC if people are interested in services like this one. :lol:
So if ETF have lower fees, why do people go to Mutual Funds? I like the ETF idea now.

Are there any risks in ETF?
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Jul 29, 2009
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Lalchi wrote:
Sep 16th, 2009 9:59 am
So if ETF have lower fees, why do people go to Mutual Funds? I like the ETF idea now.

Are there any risks in ETF?
ETFs have lower expense ratios, but you have to pay commissions to buy them. For people who don't have a lot of money to invest, a no-commission mutual fund can be less expensive than a low-MER ETF.

The risks involved with an ETF would be comparable to the risks involved with a comparable MF. You do buy them on the open market, so there can be a difference between the market rate that you pay, and the NAV of the fund at the time.
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Lalchi wrote:
Sep 16th, 2009 9:59 am
So if ETF have lower fees, why do people go to Mutual Funds? I like the ETF idea now.
I buy mutual funds because I invest once a month into 3 index funds. If I did that with ETFs, it would cost me $10/month per fund, so $30/month or $360/year. Instead once a year when I rebalance I sell my 3 mutual funds (or as much as I can without being hit with a short term trading fee) and buy the corresponding ETFs.
Are there any risks in ETF?
The underlying risks are the same as holding the similar mutual fund.

Also, because they trade like stocks, there is a spread between the bid/ask price. Usually the spread is pretty low and ETFs trade close to NAV (Net Asset Value, i.e. how much the stocks it holds are worth), however if the ETF isn't very liquid (not many buyers and sellers) the spread can be a minor issue. (Recently there was a Canadian ETF that momentarily dropped 4% below NAV because there was a single transaction that was larger than the average of the sum of all the transactions in a day.) However, if there are large errors in pricing, they present opportunities for arbitragers. If the price gets too far above NAV, the ETF will create new shares (since they get more money for each share than it costs to buy the underlying companies.) On the other hand, if the price gets too far below NAV, large players can profit by buying ETF shares because they are able to exchange ETF shares for the underlying stocks.
[OP]
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Can ETF outperform the index?

Let us say if you had $250,000 would you like to risk it by doing trading yourself? Or would you go to a FA?
Member
Feb 19, 2008
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bc
Lalchi wrote:
Sep 15th, 2009 6:05 pm
Thanks for the reply.

From what I am being told, it is not a mutual fund. In this, one holds the stocks directly & get dividends as well. You can also write off the fees for the taxes which you cannot for mutual funds.

The fees is 2.1%

http://www.rbcds.com/RBC:SqHUI6wWAA8ANB ... olios.html
Not quite correct. A mutual fund will have fees which it deducts from gains through the year. As an investor, you pay taxes on the Net gain. With a managed account, you pay the fees directly and deduct them against the higher gains, as fees were not deducted. It comes out the exact same value at the end.

Your taxes are much more complicated with a managed account opposed to mutual funds. With MF you just input the T3 slip. With managed, you need to file Schedule 3, 5, and maintain files of ACB of all the stocks and bonds your managed account holds.

ETFs are a mix. You get one T3slip for each ETF, and you have to keep track of the ACB for each ETF you hold. You likely need fewer than 6 to track, though.
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Feb 19, 2008
415 posts
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bc
Lalchi wrote:
Sep 16th, 2009 1:39 pm
Can ETF outperform the index?

Let us say if you had $250,000 would you like to risk it by doing trading yourself? Or would you go to a FA?
ETF track the index so they should be pretty close.

Your decision is basically what % to allocate to each index (Use a free allocation profile on the web/ at your broker). Every year, you buy/sell to get back to your target allocation. There is sometime variation (tracking error) from the index due to fees and timing issues.

You get ahead because your fees would be $5000 at FA, and $500 with ETF.
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Feb 19, 2008
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bc
Lalchi wrote:
Sep 16th, 2009 1:39 pm
Or would you go to a FA?
The question is can an FA beat the index? From all the studies I have read, not likely. They have one arm tied behind their back as they must charge 2% which is 20% of expected returns.

Do your own investigation as any investment strategy needs confidence. If you are not sure of a certain approach, you are easily swayed from following it.

FAs are most useful for this. A GOOD FA can convince you to stay the course when stacks plummet, and dissuade you from chasing the flavour of the day. Unfortunately, it is easier for them to use the herd mentality to make you act in THEIR best interest (that is churn accounts).
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Lalchi wrote:
Sep 16th, 2009 1:39 pm
Can ETF outperform the index?

Let us say if you had $250,000 would you like to risk it by doing trading yourself? Or would you go to a FA?
Well, there are ETFs that use active management in an attempt to beat the index, but those will have higher fees and are just as likely to underperform the index as they are to outperform (before factoring in the higher fees.) The same is true about a FA. Think of the index as the average (before fees). While some will beat it, others will underperform. There's many highly paid skilled people running mutual funds and pension funds and what not, and they aren't consistently able to outperform the index, so why would you expect that your much lower paid FA would do any better. Maybe they will outperform, maybe they will underperform, but over the long term, they'll probably be about average (index) but take more in fees than a low cost index fund/ETF.

That is my argument against hiring a FA or investing in funds or ETFs that use active management. That leads to the conclusion that you should do your own investing using low cost index funds/ETFs. Note, I'm careful to avoid using the word trade, because you shouldn't be buying/selling frequently like the word trade implies. Instead, determine an asset allocation that's right for you (based on your goals and risk tolerance), and then rebalance once in a while to maintain that asset allocation. Also, your target asset allocation will probably change over time so you'll need to review it once in a while.

If you absolutely want or need help, get a "for fee" financial planner that will help you determine the asset allocation that's right for you, rather than a financial planner that represents a particular institution and has a vested interest in selling you particular products.
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Feb 19, 2008
415 posts
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bc
Lalchi wrote:
Sep 16th, 2009 9:59 am
So if ETF have lower fees, why do people go to Mutual Funds? I like the ETF idea now.

Are there any risks in ETF?
ETFs are not marketed well as no one really makes any money selling them. (and is why they are superior IMO).

In a buy and hold strategy, they will have the same risk profile as the underlying index. For example, a government bond ETF will behave like bonds, and similar for an emerging market/ commodity ETF.
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