Tag Archives: indexing

TSX celebrates 25th anniversary of the birth of ETFs

Posted By Jonathan Chevreau | March 9, 2015

By Jonathan Chevreau

Canada is home to the first ever ETF and today (Monday, March 9th) Exchange Traded Funds celebrated their 25th anniversary at their birthplace — in Toronto, Canada.

TIPs — Toronto 35 Index Participation Units — were the first ETFs in the world and were launched in 1990 by the Toronto Stock Exchange.

To celebrate the occasion, members of the Canadian ETF Association (CETFA) and some media and analysts (including myself) were on hand this morning to ring the bell to open the TSX. Other events are planned in 2015 to further celebrate this 25th anniversary of the ETF.

The ETF industry continues to grow in Canada and reached an all-time high of $86.1 billion in assets at the end of February, with inflows of approximately $2 billion in the first two months of 2015, according to CETFA. It says investors and advisors have embraced ETFs and their benefits, which include low cost and a range of investment options.

Nine providers offer 425 ETFs in domestic market

Nine providers in Canada currently offer almost 425 ETFs. “It’s been incredibly exciting to see the trajectory of ETFs, and their continued adoption in Canada, and globally,” said Atul Tiwari, managing director of Vanguard Investments Canada Inc. in a release.

He is also the incoming Chair of the CETFA (pictured on the far left of above photo.) “ETFs are a powerful tool that give investors low-cost, transparent access to markets with precision, the ETF is arguably the most disruptive innovation the fund industry has seen in decades. Whether its investors, advisors or large institutions, ETFs have really put everyone on the same playing field. ETFs have empowered us all to build portfolios that can truly reflect the unique goals and objectives of each investor.” Continue Reading…

How to overweight your portfolio for an oil comeback (and avoid Gambler’s Ruin)

Posted By Jonathan Chevreau | March 5, 2015

By Jonathan Chevreau

Here’s my latest Motley Fool blog, entitled (nicely by them, I thought!) How to overweight your portfolio for an oil comeback — and avoid Gambler’s Ruin.

Gambler’s ruin is a phrase popularized by Rotman Business School finance professor Dr. Eric Kirzner and refers to having a good idea about a sector (example energy) but choosing the wrong individual stock to capitalize on it (example Enron back in the day or in the telecommunications sphere a stock like Nortel Networks). The risk reduction via diversification is the strength of specialized ETFs focused on particular sectors.

The piece explores the idea of whether Canadian investors already have sufficient exposure to oil and gas via ETFs or index mutual funds based on the broad indices.

Because the Motley Fool requires full disclosure of the individual holdings of the writer, those curious can see my personal holdings in the energy sector in the disclaimer at the end of the piece. As per the full article, there will of course be more exposure to the energy sector via the broad ETFs.

The trouble with core-and-explore

Posted By Jonathan Chevreau | February 19, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

We all know how the story goes: You get a hot stock tip from your uncle who works in the oil & gas industry, or from your brother-in-law who works in the tech space, or from your mortgage broker (who’s an idiot).

I’m sorry, but just stop right there. No, Tiger Mike’s Drilling Co. is NOT going to be the next Suncor, and Flappy Bird (or whatever the kids are playing these days) is definitely not going to be the next Facebook or Instagram. And your mortgage broker is still an idiot, no matter what his day-trading recommendation was this time. So why are you listening to him?

Many investors obsess over fees, trying to shave tenths or even hundredths of a percentage from their mutual fund or ETF expenses. But some investors are willing to throw away those benefits by trying (and failing) to hit a home run picking junior mining stocks on the Venture Exchange.

“Play money” doesn’t belong in your retirement plan

The problem with a core-and-explore approach is when investors view “explore” as play money to gamble on risky penny stocks or the next up-and-coming trend. Was it play money when you first decided to save instead of spend your hard-earned dollars? Why is it different now that the money is in your brokerage account?

Why take that kind of risk with your investments? If you feel like gambling, go to a casino. “Play money” does not belong in your retirement plan.

I get it – it can be fun to try and find the next Microsoft or Google from a list of up-and-comers. But the odds of that happening are overwhelmingly not in your favour.

There’s a reason why most “hot stock tip” stories end up as cautionary tales for investors. So why do we keep doing it?

Remember, you don’t need to swing for the fences when a base hit will do just fine.

In addition to running the Boomer & Echo website, Robb Engen is a fee-only financial planner. This article originally ran on his site [note the comments that follow it] and is republished here with his permission.

Robb Engen, you’re no longer alone in being a 100% “pure” indexer

Posted By Jonathan Chevreau | January 28, 2015

By Jonathan Chevreau

Here’s my latest MoneySense blog, which is a followup to Robb Engen’s article here at the Hub about his conversion from stock-picking to 100% “pure” indexing.

After Robb revealed his “conversion” and I appealed for other readers with similar stories, readers started to come out of the woodwork. In one of the cases, the “confession” appeared first at MoneySense and now The Hub.

In addition to the two readers profiled in the MoneySense blog, I’ve already started to receive more emails from other “pure” readers. Please let me know by emailing me at jonathan@findependence.com. Hopefully, we’ll discover that there are a lot more than the half dozen I’m so far aware of.

I’ve republished the original version of the blog below and included photographs of the two readers that were not included in the MoneySense version:

Pure indexers step forward

Early in January, popular blogger and fee-only financial planner Robb Engen announced on Twitter and his Boomer & Echo site that he had finally bitten the bullet – he’d liquidated his portfolio of individual dividend-paying stocks in order to become a 100% “pure” indexer. Continue Reading…

Why Boomer & Echo’s Robb Engen dumped stocks to be 100% an indexer

Posted By Jonathan Chevreau | January 15, 2015

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

For a while now I’ve dithered over when to sell my portfolio of dividend stocks and implement my two-fund ETF solution. The tanking stock market didn’t help – particularly with oil and gas stocks plummeting and a few of my holdings underwater. Behaviourally, I badly wanted to wait until oil prices recovered so I didn’t have to sell those stocks at a loss.

But last Thursday I finally took the plunge and sold 24 dividend stocks, worth roughly $100,000, and immediately replaced them with two ETFs from Vanguard. I’m not going to lie; it was hard to sell my babies: