Can you recommend some good mutual funds to invest in? I'm a moderate risk taker.

[BrokeBastard]

Just looking to invest in some funds that could earn anywhere from 6-9% a year. Although I have a financial advisor I like to hear anyone else's good expericences with funds. I know there's some very wealthy posters here because this is an expensive hobby so I thought there might be some savvy investors in the market.

 

[Daty Man]

first of all mutual funds will charge you mgmt fees, plus possibly trailer fees if you use a full service broker or financial adviser, best to set up a discount brokerage accnt and buy stocks in safe, secure type of securities, best to remember the higher the return the higher the risk, Interoil Pipelines and or Crescent Point Energy will give you a 6% yield but with most securities if interest rates rise the price of the securities will fall in order to maintain a 6% yield, unless their payout increases. Also take into account your age, risk tolerance, knowledge levell and time frame its extremely difficult to suggest securities.

 

[threepeat]

Just looking to invest in some funds that could earn anywhere from 6-9% a year. Although I have a financial advisor I like to hear anyone else's good expericences with funds. I know there's some very wealthy posters here because this is an expensive hobby so I thought there might be some savvy investors in the market.

My advice to a novice investor is always that you ultimately want to educate yourself and manage your own investments. Financial advisors have their place, but at the end of the day they are salesmen and you should not trust your advisor to manage your finances anymore than you should trust a car salesman to tell you what car to buy. For example, I am heavily invested in commodities. The mainstream considers commodities to be risky investments because of their volatility, and no financial advisor is going to recommend as heavy a weighting as I have because they don't want the backlash if their client loses say 20% in a year. That being said, I am willing to accept that risk, and my RRSP is up 67% this year and I am averaging a 15% return annually since I started tracking in 2003.

If you truly can't stand to do your own research and just want something to buy and forget, I'd say get a Canadian equities mutal fund or ETF and dollar cost average into it (ie., buy a fixed amount every paycheque).

I would not recommend mutual funds because of the relatively high fees as the other poster has said. Exchange Traded Funds are the ETFs of the new century -- they do everything mutual funds do, and they are cheaper and you can trade in and out of them more easily.

If you are willing to spend even a half hour or so every three months, a better solution would be to divide your portfolio into four equal quarters, each invested into a different sector. My own suggestion for you would be:
* 25% broad Canadian equities (eg., Claymore Investments Canadian Fundamental Index ETF - TSE:CRQ)
* 25% Canadian utilities (eg., BMO Equal Weight Utilities Index ETF - TSE:ZUT)
* 25% emerging markets (eg., Claymore BRIC ETF - TSE: CBQ)
* 25% commodities (eg., iShares S&P/TSX Capped Materials Index Fund - TSE: XMA)

Every three months, rebalance your portfolio so each sector is an equal 25% again. The idea is that over the course of the year your relative percentage invested in each sector will change as some funds go up and some go down. By rebalancing your portfolio on a regular basis you are buying low and selling high.

You might be content doing this strategy for the rest of your life, but I would suggest this is just a starting point. Again you want to educate yourself to the point where you can buy a basket of individual stocks, say about 10 to 15, and actually have an opinion on why you like this company or this fund.

I'm not picking on you, but just talking generally I'm always surprised that people spend so much time working on their careers and typically won't spend a few minutes a week working on their investments and managing the fruits of their hard work.

Anyway, I hope that gets you started and good luck with your investments. If you have any other questions, please feel free to post them or PM me

 

[FunSugarDaddy]

Unless you're willing to spend the time to monitor each investment, I'd personally stay away from picking individual stocks, and focus on exchange traded funds. For the TSX 60 the management fees are dirt cheap. For my money I'd probably get something along the lines of

30% in a corporate bond fund. (XCB)
20% in REIT's (which have done very well last year), and (XRE)
30% in the TSX60 which is essentially a combination of bank and resource stocks, and the other (XIU)
20% in emerging markets. (ie Brazil, China, India) or put another way, BRIC less Russia. (can't remember the stock ticker symbol)

That's a total of 4 investments and it provides a very nice diversified and cheap portfolio.

 

[cruiser]

first of all mutual funds will charge you mgmt fees, plus possibly trailer fees if you use a full service broker or financial adviser, best to set up a discount brokerage accnt and buy stocks in safe, secure type of securities, best to remember the higher the return the higher the risk, Interoil Pipelines and or Crescent Point Energy will give you a 6% yield but with most securities if interest rates rise the price of the securities will fall in order to maintain a 6% yield, unless their payout increases. Also take into account your age, risk tolerance, knowledge levell and time frame its extremely difficult to suggest securities.

You mention Crescent Point...Can you say if you are invested in Crescent Point and how it has done for you?

I've looked into that stock recently and have heard some analysts that it's at a high buy-in and to wait for it to drop before doing a purchase.

What has your experience been with it?

 

[EveAdams]

Some links that I have checked out in the past week ... these ETF's are so hot right now! lol

http://watch.bnn.ca/etf-update/etf-update-december-2010/#clip395312

http://etf.about.com/od/benefitsofetfs/tp/ETF_Mutual_Fund.htm

Just a trend in investing that I've noticed lately but I hope it helps

 

[Silver Surfer]

BrokeBastard, clear your PM box.

SS

 

[FunSugarDaddy]

The one thing most investors don't realize is that about 85% of the returns of a portfolio are based on your asset mix, as opposed to specific investments within the mix. Another thing most investors don't realize is that there really is very little empirical evidence that timing the market works with any great degree of accurancy except perhaps when the market is in an obvious bubble such as the dot.com days.

That said, there's also theories such as reversion to the mean, which basically state that over the long term the market's going to give you about a 6% growth plus 2% dividends or thereabouts, (ie 8%) and so if the market has for say several years been above these returns, there's more than a 50% chance that a correction of some kind is going to take place going forward.

Also one can also use the PE ratio as a gauge of sorts as well.

 

[bcneil]

Your looking for 6-9%.
I wouldn't go with mutual funds.
You can go with a simple etf like xiu and with dividends get 6-9% fairly easy long term.

ETFs are great, I don't use them as much, only some bonds funds right now. Simply because I prefer investing in companies themselves. Its like a hobby to follow my companies. But What I see happening with buddies that do use only ETFs, they buy way to many! One coworker of mine owns over 30 ETFs, and trades them daily, just like a stock trader.

We couldn't even figure out what he really owned till we took it all apart. He had so many redundant ETFs.
Like the tsx 60, tsx 300, tsx banks, tsx banks/insurance, tsx high div, tsx balanced income.
It was just mostly the same stocks over and over that made up these funds, mostly banks.
Some of these funds he had tiny amounts of, like $300 in an ETF specific to India.

So if you go the ETF route, 3-4 is all you need, perhaps a couple more if you are looking for more international.
Or want to get more weight in gold, or energy for instance. I might do something like this.

xiu-40%
xsp-20%
xeg-10%
xgd-10%
xin-20%

 

[FunSugarDaddy]

Your looking for 6-9%.
I wouldn't go with mutual funds.
You can go with a simple etf like xiu and with dividends get 6-9% fairly easy long term.

ETFs are great, I don't use them as much, only some bonds funds right now. Simply because I prefer investing in companies themselves. Its like a hobby to follow my companies. But What I see happening with buddies that do use only ETFs, they buy way to many! One coworker of mine owns over 30 ETFs, and trades them daily, just like a stock trader.

That's not really investing. That's gambling. The way I look at it, a portfolio is like a puzzle, and one should know why they own every piece, and for the most part, less is better. A well diversified portfolio doesn't try to get you home runs, rather it tries to get you lots of singles, which over time turn into home runs, or put another way, it's the systematic way of building wealth over time.

As for your etf investment choice, they seem okay to me, except personally I'm not much of a fan of the XIN, as the returns have been rather disappointing over the last few years, as such I prefer to focus more on emerging markets sans, Russia.

With respect to etf's in general, the most accepted approach is called core and explore whereby etf's are used for core investments and mutual funds, or stocks, are used for the periphery. (ie Mawer New Canada, for Canadian small cap)

 

[FloridaGuy]

How is an ETF a better investment than a index-linked mutual fund? Are there no/lower management fees with ETFs? I was about to drop my RRSP contribution into an index fund - would an ETF of the same index be cheaper? Thanks.

 

[storm rider]

How is an ETF a better investment than a index-linked mutual fund? Are there no/lower management fees with ETFs? I was about to drop my RRSP contribution into an index fund - would an ETF of the same index be cheaper? Thanks.

ETF's have no MER like mutual funds...also there are no front/backloaded fees for selling them...just the cost of the trade....trading fees can get expensive if you trade frequently...I pay $29.99 a trade with TD Waterhouse though it could cost me more with relation to the number and total value of the shares.

SR

 

[FunSugarDaddy]

I would beg to differ with some of these comments. ETF's do have MER's, they are simply lower than most mutual funds. But a low cost US index fund, such as Vanguard, may very well have MER's on par with ETF's and if fact lower than Canadian ETF's. And if one has a self directed account, they do can likely trade them for the same cost as an ETF. The big difference is that an index fund might need a few more days to settle than an etf.

ETF's have no MER like mutual funds...also there are no front/backloaded fees for selling them...just the cost of the trade....trading fees can get expensive if you trade frequently...I pay $29.99 a trade with TD Waterhouse though it could cost me more with relation to the number and total value of the shares.

SR

 

[FunSugarDaddy]

Less experienced investors have to be aware that not only of the comments you mentioned, but that these particular products may also be leveraged. These are very different products from your standard buy and hold etf's.

One thing to point out, particularly with the commodity ETF's, is that with some products the ETF is NOT the same as owning the underlying product. A great example is the Horizons Beta Natural Gas ETF. People lost their asses on that not understanding that they NEVER actaully owned any nat gas. They only owned the near commodity future and the ETF bears the cost of rolling over the position every month. When the market is in contango that can get tricky and expensive. A lot of Gold ETF's don't actually own 100% bullion either. They often will have metal certs in lieu of the physical.