Personal Finance

TD e-series rebalancing

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  • Apr 3rd, 2010 9:24 pm
Jr. Member
Aug 27, 2007
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Canada

TD e-series rebalancing

I recently opened a TFSA account with TD e-series but not yet invested in money into it. I am about to set up a PPP (pre-authorized purchase plan) and realized that I have a question. I plan to invest $160 every second week in a 25/25/25/25 mix of Canadian Bond Index, Canadian Index, US Index and International Index. My question is about rebalancing (which I plan to do once a year as that is what is recommended with a couch potato portfolio). I am wondering if it is best to rebalance by allocating new money to the proper allocation to make it
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Apr 11, 2008
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Rroo wrote:
Mar 12th, 2009 3:13 pm
I recently opened a TFSA account with TD e-series but not yet invested in money into it. I am about to set up a PPP (pre-authorized purchase plan) and realized that I have a question. I plan to invest $160 every second week in a 25/25/25/25 mix of Canadian Bond Index, Canadian Index, US Index and International Index. My question is about rebalancing (which I plan to do once a year as that is what is recommended with a couch potato portfolio). I am wondering if it is best to rebalance by allocating new money to the proper allocation to make it
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Archanfel wrote:
Mar 12th, 2009 3:25 pm
You can not sell within 90 days of any purchase (which means the date reset every two weeks for you), so you will have to adjust your purchases.
As long as you don't liquidate your entire holdings it may be OK. I don't know for sure with TD eFunds but in most cases including the regular TD funds, as long as you don't sell more than you've bought prior to the last 30 days (it would be 90 for eFunds) you don't get hit with the short term trading fees.
Having said that, the best way to do it is probably sell everything and buy ETFs once per year and rebalance in the process. I am still thinking about how to do this though since I am not sure whether the CRA will consider the e-funds and the ETF as the same investment. I might need to buy a managed fund with a similar mix for 30 days before buying the ETF.
From what I've read, the CRA will not consider the e-funds and the ETF the same investment. I believe they are a bit more lax than the IRS in the US in this respect.
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AllWheelDrift wrote:
Mar 12th, 2009 3:35 pm
As long as you don't liquidate your entire holdings it may be OK. I don't know for sure with TD eFunds but in most cases including the regular TD funds, as long as you don't sell more than you've bought prior to the last 30 days (it would be 90 for eFunds) you don't get hit with the short term trading fees.
I asked them. They said it's last in first out, which means whatever you bought in the last 90 days will be charged an early redemption fee.
From what I've read, the CRA will not consider the e-funds and the ETF the same investment. I believe they are a bit more lax than the IRS in the US in this respect.
I hope so, but the CRA doesn't seem to want to give me a straight answer. Some people was saying that even if I sell one bank and buy another, it would be considered a superficial loss. :(
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Archanfel wrote:
Mar 12th, 2009 4:58 pm
I hope so, but the CRA doesn't seem to want to give me a straight answer. Some people was saying that even if I sell one bank and buy another, it would be considered a superficial loss. :(
I've read that as long as there was some difference as to why you'd prefer one over another (e.g. even just lower MER) it was OK for CRA.
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Jul 15, 2003
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Archanfel wrote:
Mar 12th, 2009 4:58 pm
I asked them. They said it's last in first out, which means whatever you bought in the last 90 days will be charged an early redemption fee.

Well, that's not been my experience. I've managed to buy and sell the same asset well within the 90 day period. I think their system is set up to be first in, first out.

I've even sold all my holdings of an e-Series fund within the 90 day period (77 days since last purchase) and wasn't charged the 2% fee on any part of my sale.
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Sep 25, 2007
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Archanfel wrote:
Mar 12th, 2009 3:25 pm
Having said that, the best way to do it is probably sell everything and buy ETFs once per year and rebalance in the process. I am still thinking about how to do this though since I am not sure whether the CRA will consider the e-funds and the ETF as the same investment. I might need to buy a managed fund with a similar mix for 30 days before buying the ETF.
I was thinking of this too...

Buying e-series funds and then selling off to buy EFTs and rebalance yearly. I suppose if this is the case I should probably just open up a Waterhouse account and buy the funds through there?? Or even some other discount brokerage accout - Would the funds be available via Questrade and such??

If you buy the funds under the TFSA umbrella and sell them to buy the EFTs, are the EFTs still eligible to be bought under the TFSA umbrella?
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YUP5588 wrote:
Mar 12th, 2009 6:00 pm
I was thinking of this too...

Buying e-series funds and then selling off to buy EFTs and rebalance yearly. I suppose if this is the case I should probably just open up a Waterhouse account and buy the funds through there?? Or even some other discount brokerage accout - Would the funds be available via Questrade and such??

If you buy the funds under the TFSA umbrella and sell them to buy the EFTs, are the EFTs still eligible to be bought under the TFSA umbrella?
You can't get the e-series funds in an account other than a TDW account or TD e-Series Mutual Fund account.

If you stick with TDW it's probably going to take a lot more than a year before it's worthwhile switching to ETFs because of the high comissions.

On the other hand, the ETFs can be bought at any brokerage and you could get different index funds with fairly low MERs (but not as low as the e-series) at those brokerages. Of course, there are a lot of people that aren't very satisfied with Questrade.

Both the funds and the ETFs are fine under the TFSA umbrella and you're allowed to buy and sell as you please.
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May 31, 2007
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YUP5588 wrote:
Mar 12th, 2009 6:00 pm
I was thinking of this too...

Buying e-series funds and then selling off to buy EFTs and rebalance yearly. I suppose if this is the case I should probably just open up a Waterhouse account and buy the funds through there?? Or even some other discount brokerage accout - Would the funds be available via Questrade and such??

If you buy the funds under the TFSA umbrella and sell them to buy the EFTs, are the EFTs still eligible to be bought under the TFSA umbrella?

Don't sell a Eseries fund within 90 of purchase and there are no commission fees. ETF=brokerage commission fees to buy and sell.
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Sep 25, 2007
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If the portfolio as a whole is down at the end of a year what do you suggest for a rebalancing strategy? Sell or hold?
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YUP5588 wrote:
Mar 13th, 2009 12:07 pm
If the portfolio as a whole is down at the end of a year what do you suggest for a rebalancing strategy? Sell or hold?
Do you know what rebalancing is?

If your target is 80% stock and 20% fixed income, if your stock goes down by 50% you end up at 66% stock and 33% fixed income, so if you're rebalancing you sell some fixed income and buy some stock to get back to 80/20.

Holding would be avoiding/delaying rebalancing, and selling (assuming you mean moving towards cash/fixed income) would be abandoning your asset allocation entirely, possibly because you're trying to time the market, or possibly because you've discovered your risk tollerance isn't what you thought it was.
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if i were you i'd buy etf instead, in $2000-$5000 per batch
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Jul 27, 2006
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You need to buy enough ETFs so the transaction costs=MER paid on the e-funds.
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Sep 25, 2007
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ccyk wrote:
Mar 15th, 2009 12:42 am
if i were you i'd buy etf instead, in $2000-$5000 per batch
Why do you recommend that? What EFTs should be focused on, equity and bond stocks?
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