Here’s a low-cost mutual fund that ranks among the best Canadian index funds and that’s easily within reach of the small investor. You need only a $100 commitment to get started.
The U.S. is the world’s largest, most diverse and open economy. It has industries that don’t exist in Canada, or that exist here only marginally. That means the U.S. stock market offers profit opportunities you can’t find among Canadian stocks. Canadians, then, can benefit by investing part of their stock portfolios in the U.S.
Among the U.S. equity funds we include on our Recommended List is an index fund. The big appeal of these funds is their low cost. And among the best Canadian index funds, TD’s e-Series stand out for their cost savings. With these funds, you manage your investments online. And because of the lower costs associated with this type of investing, you pay lower management expenses than you would if you invested in TD’s ordinary index funds.
TD U.S. Index Fund-e (Fund code: TDB902 (NL)) seeks to provide long-term growth of capital by primarily purchasing U.S. equities to track the performance of the S&P 500 Total Return Index. The Index is comprised of 500 widely-held U.S. issuers. Each security in the S&P 500 is held by the fund in close tolerance to its index weight so that the performance of the fund closely tracks the performance of the Index.
Index funds frequently outperform their managed competitors, and TD Index-e is no exception. Over the past 10 years, the fund’s compound annual growth rate is 7.2 per cent. That ranks the fund in the top quartile of the U.S. equity category. The fund has also performed in the top quartile of the category in each of the past one-, three- and five-year periods.
Year-by-year performance has been relatively strong on a consistent basis. In five of the past 10 years, the fund was a top-quartile performer in five years, a second-quartile performer in three years and a third-quartile performer in two years.
Superior results have been accompanied by relatively low volatility. Indeed, the fund’s volatility ranks in the bottom quartile of its category. To top if off, its management expense ratio is quite low at 0.35 per cent.
The fund’s top holdings break down as follows: Apple Inc., 3.9 per cent of the portfolio; Exxon Mobil, 2.1 per cent; Microsoft Inc., 1.9 per cent; Google Inc., 1.7 per cent; Johnson & Johnson, 1.6 per cent; Berkshire Hathaway, 1.5 per cent; Wells Fargo, 1.4 per cent; General Electric, 1.3 per cent; Procter & Gamble, 1.3 per cent; and JPMorgan Chase, 1.1 per cent.
TD U.S. Index Fund is a long-term buy if you want to track the returns of a major U.S. equity index and you can tolerate medium investment risk.
Money Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846