Reduce Your Investment Fees with TD e-Series Funds

One of the ways that you are likely to lose out in terms of real returns is through fees. When you pay high fees, you end up seeing lower returns. These lower returns are then compounded by the fact that the money you pay in fees not only directly reduces what you receive, but over time that money that could have been invested instead isn’t earning compound interest.

While you can’t completely eliminate fees, it is possible for you to reduce what you pay. One way to do this is through funds that come with low expense ratios. You can also look for brokers with lower fees, and that offer commission-free options. One such broker is TD Canada Trust.

Using TD e-Series Funds to Invest

TD e-Series Funds may be the simplest way for someone to invest in a diversified portfolio with low Management Expense Ratios (MERs). Not only that, but these funds come with no additional setup fees, or even with commissions. You can reduce what you are paying in fees, and see a better real return over time.

Reduce Your Investment Fees with TD e-Series Funds
Using funds is also a great way to gain instant diversity in your portfolio. Worrying about whether or not you are picking the right stock can be stressful, and market volatility can make it even more stressful over time. Funds, especially those tied to an index, can help you have peace of mind knowing that you are linked to the overall performance of that index. Over time, you are likely to build wealth. You don’t have to worry as much about day to day market volatility.

If you are looking to build a diverse portfolio that will build wealth for the future, you can do it entirely with TD e-Series funds. Below are the four funds that you can use to build a rather complete portfolio and would work well for regular contributions into an RRSP, RESP or TFSA.

TD Canadian Bond Index tracks the performance of the DEX Universe Bond Index. The Universe Index is comprised of Canadian investment-grade bonds which mature in more than one year. It has a MER of 0.51%.

TD Canadian Index tracks the performance of the S&P/TSX Composite Total Return Index. The S&P/TSX Composite Index is comprised of Canadian issuers traded on the Toronto Stock Exchange. It has a MER of 0.33%.

TD U.S. Index tracks the performance of The Standard & Poor’s 500 Total Return Index. The S&P 500 Index is comprised of 500 widely-held U.S. issuers. It has a MER of 0.35%.

TD International Index tracks the Morgan Stanley Capital International Europe, Australasia and Far East Index. The MSCI EAFE Index is a broadly diversified index consisting of equity securities of companies domiciled in developed markets outside the U.S. and Canada. It has a MER of 0.51%.

As you can see, you get wide diversity with this portfolio setup, including exposure to international markets, as well as the safety of bonds.

Not only do these four funds invest you in the entire index, their MERs are about 2% lower than the average mutual fund. This 2% advantage can go along way when investing over a long term, especially when you consider the compounding savings as well as the direct savings.

Another article I wrote details some of the advantages that the TD e-Series Funds have over other mutual funds and shows you how to open a TD e-Series account.

Written by Tom Drake

Tom Drake is the owner and head writer of Canadian Finance Blog. While you’re here, consider signing up for the RSS feed or email subscription. Both deliver the latest articles directly to you! You can also follow me on Twitter for all the latest posts or to send me any comments or questions!

5 Responses to Reduce Your Investment Fees with TD e-Series Funds

  1. Is it just me or is the TD e-series that tracks the U.S S&P 500 woefully inept? If you look at the vanguard VFINX which supposedly tracks the index in a similar fashion, the e-series seriously underperformed. Am I missing something?

    • I would really like an answer to his question. I’m about to open a TD brokerage discount account so I can invest some of my savings into TD e-series funds. However, this is the first time I hear something negative about these funds that I want to know more.

      • If you are comparing the TD US index in $CAD to the vanguard ETF in $US, then u get all the currency fluctuations tossed in. The TD US index-e currency neutral does a very good job of following the S&P500.

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