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Canadian Investing / Canada - Microcaps


Subject:  Re: More CDN index funds Date:  7/17/2001  10:06 PM
Author:  larmstro Number:  1399 of 3296

Last week, my on-line brokerage (Schwab Canada) dropped their minimum commission from 
$33 to $25 (effective July 31).  So - that affects the computed mer taking into account
trading commissions.  So I've redone the numbers.

At current prices (XSP=$18CDA, IVV=$118U.S.), my commission is about $25/trade (was $35/
trade), representing a cost of 0.8-0.5%/trade.  (I tend to make one investment/contribution
a year, of about $3000-$5000 (Canadian).)  Over a ten-year period, ten trades X $25 = $250 
cost, spread out over an average portfolio of $20,000 (10X$4,000/2), amounts to a total cost 
of 1.25%, or .125%/year.  This .125% needs to be added to the mer, bumping the cost of XSP 
up to.425%, and the cost if IVV up to .215%.  [Is my arithmetic correct?] Even with these 
bumped-up costs, XSP and IVV are still the best choices available to me (see table following).  
And if the commissions go down, or I am able to purchase more than $4000/yr., this bumped-up 
cost gets smaller (in percentage terms).  And as my investment itself grows (excluding the 
annual contributions), this also contributes to the $25 annual trade-commission shrinking 
in percentage terms.

The following data summarize the choices of index funds/ETF's with a mer of .5%
or less, available to canucks.  They are grouped into Canadian-content and universal
funds/ETF's, sorted by mer's (lowest/best to highest), within each group.
S&P500 FUNDS/ETF's                      TYPE    MER     STARTED
Ranked (within group) by MER (lowest/best