# Bit of an investing dilemma...



## Dmoney (Apr 28, 2011)

I'm looking to get the gf into investing, but have run into a bit of a roadblock.

Due to my work in the investment industry, her investment account has to be with my employer (regulatory requirement)
Due to her job, she can own only open-ended mutual funds (no ETFs, stocks, bonds, options, futures, etc.)

Obviously, this severely limits her investment options. 

I was hoping to set up a low-maintenance "couch potato" style portfolio, but she does not have access to ETFs or most low-cost index funds (TD e-series/Tangerine)

What low-fee/low-maintenance options are out there in the mutual fund universe?
It looks like she can buy the TD Canadian equity e-series fund, which is a low-cost (33bps MER) TSX-index fund, but not the other three (US equity, fixed income, international equity)
Are there other cheap alternatives out there?


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## mordko (Jan 23, 2016)

She could consider leaving you.


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## Dmoney (Apr 28, 2011)

I'll run that by her... I'm kind of awesome though


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## mordko (Jan 23, 2016)

Plan b - one of you could change a job
Plan c - invest in a mutual fund with your company


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## scorpion_ca (Nov 3, 2014)

How about Mawer Balanced Fund 104?


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## Dmoney (Apr 28, 2011)

mordko said:


> Plan b - one of you could change a job
> Plan c - invest in a mutual fund with your company


Eventually one or both of us will change jobs, but no sense delaying investing until then
Don't love the mutual fund offerings from my firm (MERs are over 2% more or less across the board)
Other mutual funds are available, but I'm looking for something low-cost


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## Market Lost (Jul 27, 2016)

I'm not sure what you mean by her job is requiring her to invest in MFs. I know a lot of people that are forced to go to RY for their investing, and they think they can only buy mutual funds, but when you pry a bit, you find that they can do whatever they want. Is this maybe her situation?


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## james4beach (Nov 15, 2012)

scorpion_ca said:


> How about Mawer Balanced Fund 104?


Yes, there are some good mutual funds out there and if mutual funds are the only thing available, you can still do well:

Mawer Balanced Fund
RBC Monthly Income
TD Monthly Income
Beutel Goodman Small Cap

Any of these would be good investments. It's not all about MER. These have consistently shown outperformance despite higher-than-ETF fees.


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## MrMatt (Dec 21, 2011)

I'd get advise from the HR department or her coworkers on how to save for retirement.
It actually seems bizarre that you'd be able to buy a Canadian stock index fund, but not the US or global equivalents.

I think something is being confused here.
I'd definately lean E-Series


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## Dmoney (Apr 28, 2011)

Market Lost said:


> I'm not sure what you mean by her job is requiring her to invest in MFs. I know a lot of people that are forced to go to RY for their investing, and they think they can only buy mutual funds, but when you pry a bit, you find that they can do whatever they want. Is this maybe her situation?


Very strict guidelines, she's in the political world. I thought the same, I was particularly surprised that ETFs are offside.


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## Dmoney (Apr 28, 2011)

james4beach said:


> Yes, there are some good mutual funds out there and if mutual funds are the only thing available, you can still do well:
> 
> Mawer Balanced Fund
> RBC Monthly Income
> ...


I will obviously have to take a closer look at mutual funds.
Hard to look past the MERs, but Mawer actually looks relatively cheap vs peers (~1% vs most in the 2%+ range)


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## Dmoney (Apr 28, 2011)

MrMatt said:


> I'd get advise from the HR department or her coworkers on how to save for retirement.
> It actually seems bizarre that you'd be able to buy a Canadian stock index fund, but not the US or global equivalents.
> 
> I think something is being confused here.
> I'd definately lean E-Series


She's allowed to buy any mutual fund, the problem is that out of the four TD e-series funds, only the Canadian index is available through my company's online brokerage.
I actually thought TD e-series were only available through TD online brokerage, so I was somewhat pleasantly surprised by that.
But still would need a solution for US/International equity, and any fixed income


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## Beaver101 (Nov 14, 2011)

Dmoney said:


> *I'm looking to get the gf into investing*, but have run into a bit of a roadblock.
> 
> *Due to my work in the investment industry, her investment account has to be with my employer (regulatory requirement)*
> Due to her job, she can own only open-ended mutual funds (no ETFs, stocks, bonds, options, futures, etc.) ...


 ... what a weird dilemma here. 

Are you sure your gf needs to "invest" at all? Or have to "invest"- "her" - "money"? Never mind with you or not.


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## pwm (Jan 19, 2012)

Mutual Funds are rightly criticized for their high MERs and trailer fees, but there are still many good ones out there. I think you should be able to achieve your investment strategy by using them.


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## Xoron (Jun 22, 2010)

Does one or both of you work for an IIROC regulated entity? If so, you should be ok with opening a BANK LEVEL investment account with TD to invest in e-series funds.


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## Nerd Investor (Nov 3, 2015)

Xoron said:


> Does one or both of you work for an IIROC regulated entity? If so, you should be ok with opening a BANK LEVEL investment account with TD to invest in e-series funds.


I was wondering that myself. Although certain firms have their own regulations that are even more strict than those imposed by IIROC. 
One thing I've been looking into are BlackRock's strategic portfolios. It's basically a fund of ETFs, you choose between Conservative, Income, Growth, Defensive etc. If you have access to the D-series, the MER is lower than the regular A-series. Actually, D-series would be something to look for in general when you're scoping out funds.


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## gardner (Feb 13, 2014)

Dmoney said:


> Due to my work in the investment industry, her investment account has to be with my employer (regulatory requirement)


Surely this can only be the case if you are acting as her investment advisor. Why not find a fee-for-service advisor who will act for your girlfriend and handle things independently from your own obligations?


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## Xoron (Jun 22, 2010)

Actually, I should have been more concise. The account you would want to open is a Bank Level *Mutual fund* account at TD. After it's setup, you need to change it to an E-Series account, and then you can buy those funds. And because it isn't an IIROC account, they likely won't be offsides with your employer


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## CalgaryPotato (Mar 7, 2015)

Sorry, I'm a little confused, is this something where the company is matching her RRSP contribution or something? Otherwise I don't understand how her company can force her to invest in one thing over another.

If it is an RRSP match situation, just keep in mind that getting 100% gain right off the top, trumps having to pay the 2% mutual fund fee. And if most mutual funds are on the table, then you can still do index funds, which are about .7% typically. Higher than ETFs but still pretty small in the big scheme of things.


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## Xoron (Jun 22, 2010)

CalgaryPotato said:


> I don't understand how her company can force her to invest in one thing over another.


Some industries (investment banking for example) have to monitor their employees trades. Some just watch what is traded, others limit what can be invested in. People taking these jobs should be made aware of the requirements before they accept any job.


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## Market Lost (Jul 27, 2016)

Dmoney said:


> Very strict guidelines, she's in the political world. I thought the same, I was particularly surprised that ETFs are offside.


Ouch.  It makes sense that she would be restricted to passive income, but no ETFs is rather surprising.


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## Dmoney (Apr 28, 2011)

To be a little bit clearer:

My firm's policy is that all employees and household members must either (1) invest through a broker/investment advisor from our firm, or (2) invest through our firm's online discount brokerage.

The second restriction, which limits investment to only mutual funds, is due to the girlfriend's work in politics. Concern with individuals dictating policy that benefits themselves and their investments. I think it's silly that ETFs are off the table, but that's the rule. 

The issue is that only one of the four TD e-series index funds (the Canadian equity fund) is available through our online brokerage. 
Which leaves me trying to decide on the best mutual fund. I'm averse to paying too high an MER, but as a few of you have pointed out upthread, if the fund performs, the MER isn't the end of the world.

Am taking a harder look at Mawer, as the MERs don't seem to be too high, and performance looks to be there.


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## Eclectic12 (Oct 20, 2010)

Does your firm's online discount brokerage offer other bank index MFs?

Maybe there's a mix of bank index MFs offered that would give varying MERs but would cover off the range you are looking for.


Just a thought to check out.


Cheers


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## humble_pie (Jun 7, 2009)

as james4 has pointed out, there's nothing wrong with some mutual funds, if push has come to shove & there are no alternatives. After all, the present restrictions are temporary, in the sense that circumstances may change in a few years.

in addition to the Mawer fund family, there are also the Jarislowsky Fraser & the Steadyhand fund families.

of these 2, jarislowsky would have the lower MER, would be comparable to mawer at roughly 1% although lower for bond funds. It's my belief that steadyhand charges slightly more, although still less than the traditional mutual fund 2-3%.

(jarislowsky fraser manages the justin trudeau assets, or what's left of them) (since you mention your partner is active in politics, this might affect her view .each

in addition to the goodman small cap that james4 is proposing, i'd look also at the Pembroke funds. This boutique fund manager is an old firm, with 3 generations of loyal clients now in place. It's always focused on small cap investing. The flagship canadian growth fund was established in 1988, has returned close to 9% annualized since then.

however, pembroke fees are standard mutual fund fees, ie 2% & up.

dMoney a question: since you mention your friend is a beginner investor, why are you looking to put her into international securities?

it's my witness that beginner investors learn nothing from these. They don't understand the complexities involved including currency hedging, let alone the geopolitics. Perforce they quit trying to understand.

also our dollar is at crash low levels, is looking to recover. Is this the right time to exit the loonie? it does not seem right to me.

i'd suggest to a young beginner investor 50/25/25. 50% canadian equity, at least there's a good chance the party will know the names & get to learn something. I'd sub-divide this 50% between the large caps & the small/mid caps. Followed by 25% US equity plus 25% short-term GICs or HISA.

.


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## pwm (Jan 19, 2012)

You should also consider PH&N. They have now merged with RBC, but their funds still have lower MERs than most. I still hold two mutual funds, one of which is a PH&N fund.


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## humble_pie (Jun 7, 2009)

^^

you're right! i'm glad you added, my omission was only because i'm not personally familiar with any aspect of PH&N.

a couple years ago there was a thread about Which are the traditionally managed mutual funds with good histories plus low MERs.

the same names surfaced then as surface today. Mawer, steadyhand, jarislowsky, PH&N.

.


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## Dmoney (Apr 28, 2011)

Eclectic12 said:


> Does your firm's online discount brokerage offer other bank index MFs?
> 
> Maybe there's a mix of bank index MFs offered that would give varying MERs but would cover off the range you are looking for.
> 
> ...


A few of the other banks' index MFs are available, but the MERs on TD's competitors appear significantly higher (1% or so for the exact same index fund as the TD e-series). Highway robbery for an index.
At least I can get the Canadian exposure through e-series, and will have to explore alternatives for remaining exposure.


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## Dmoney (Apr 28, 2011)

humble_pie said:


> as james4 has pointed out, there's nothing wrong with some mutual funds, if push has come to shove & there are no alternatives. After all, the present restrictions are temporary, in the sense that circumstances may change in a few years.


Agreed. Now it's a question of finding the right one.
The rest of your reply has given me a very good idea of where to start my search. Thanks for the pointers.
It's funny, a lot of the guys managing all the funds you and others have mentioned are clients, but I've never really looked into their product offerings!



humble_pie said:


> dMoney a question: since you mention your friend is a beginner investor, why are you looking to put her into international securities?
> 
> it's my witness that beginner investors learn nothing from these. They don't understand the complexities involved including currency hedging, let alone the geopolitics. Perforce they quit trying to understand.
> 
> ...


All very good points.
This is going to be her first foray into investments, so your advice is extremely relevant. 
She wants to give me the money and have me make all the decisions, but I really want her to get at a minimum a basic understanding of how it all works. 
To that end, it might be a better idea to focus on Canadian equities to start with, so the names are more tangible.

I was initially envisioning something along the lines of 30% Canadian equity/30% US equity/20% global equity/20% fixed income but may start off with something closer to your suggested 50/25/25 split. 

Appreciate the input - back to the drawing board!


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## Dmoney (Apr 28, 2011)

pwm said:


> You should also consider PH&N. They have now merged with RBC, but their funds still have lower MERs than most. I still hold two mutual funds, one of which is a PH&N fund.


Thanks for the input - will be adding PH&N to humble_pie's names upthread.
:encouragement:


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## humble_pie (Jun 7, 2009)

Dmoney said:


> This is going to be her first foray into investments ... She wants to give me the money and have me make all the decisions, but I really want her to get at a minimum a basic understanding of how it all works.




spoken like a truly modern male!

what's at stake is all of her future independence & basic security, all of her life.

she's a lucky young woman in so many ways. Just one of the ways is that she'll have a master teacher in finance.

.


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## Dmoney (Apr 28, 2011)

humble_pie said:


> she's a lucky young woman in so many ways. Just one of the ways is that she'll have a master teacher in finance.
> 
> .


Going to frame this and hang it up at home!
:highly_amused:


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## gardner (Feb 13, 2014)

Dmoney said:


> My firm's policy is that all employees and household members must either (1) invest through a broker/investment advisor from our firm, or (2) invest through our firm's online discount brokerage.


I am used to restrictions that prevent conflict of interest -- eg: household members must observe employees trading black-out period in employer's stock -- but this strikes me as unusually manipulative. Suppose you married someone who already had significant conflicting investment portfolio that your firm couldn't handle? What do they consider "investing" for the purposes of this rule? Do they want to manage your rental property or small business?


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## My Own Advisor (Sep 24, 2012)

Dmoney said:


> To be a little bit clearer:
> 
> My firm's policy is that all employees and household members must either (1) invest through a broker/investment advisor from our firm, or (2) invest through our firm's online discount brokerage.
> 
> ...


Consider PH&N as well.
https://www.phn.com/

https://www.phn.com/Default.aspx?tabid=89

You could put her money into a "lifetime" fund.


Other options:
http://www.myownadvisor.ca/simple-all-in-one-investing-solutions/


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## lonewolf :) (Sep 13, 2016)

What about going with a robo advisor


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## humble_pie (Jun 7, 2009)

lonewolf :) said:


> What about going with a robo advisor



wolf might you be forgetting that dMoney is one who could create & run a robo advisor .each:

.


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## Dmoney (Apr 28, 2011)

Thanks all for the advice.
Looks like of all the great suggestions above, Mawer is the only one available through my firm's online brokerage. 
They do seem to have a decent fund offering, and given that I have access to the TD e-series Canadian equities index fund (tsx composite index fund), I'm sure I can build something with those blocks. 
As I mentioned, these restrictions are only temporary; greener investment pastures beyond!
Cheers!


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