TD Gets Out of ETF Market

As reported by the Canadian Capitalist, TD ETFs are history. The TD announcement says that “the decision to terminate the Funds is based on a lack of investor interest in the Funds and low trading volumes since their creation.” The TD ETFs (TAG and TAV especially) offered some real choice for semi-passive index investors in Canada. TAV (TD Select Canadian Value Index Fund) tracked the Dow Jones Canada TopCap Value Index and TAG (TD Select Canadian Grows Index Fund) tracked the Dow Jones Canada TopCap Growth Index.

With no foreign limits in RRSPs anymore, it is easy for Canadians to get any US and international ETFs they like. Barclays iUnits, however, is the only provider of ETFs for the domestic market. The selection is mostly limited to the S&P TSX 60 Uncapped Index (XIU) and the S&P TSX Composite Capped Index (XIC), a Canadian Mid-cap Index (XMD), and now, a Canadian Dividend Index Fund (XDV). From this article in the National Post,

Advisors who specialize in creating ETF portfolios don’t view TD’s departure as a serious setback for investors. The TD ETFs “never took off and they never really put much marketing effort into it anyway,” says Fred Kirby, president of Armstrong, B.C.-based Dimensional Fund Advisors. In his permanent portfolios Kirby is substituting BGI’s new iUnits Dividend Index fund (XDV/TSX) for the TD Canadian Value ETF (TAV/TSX).

I was thinking about buying TAV myself, but may have to look at XDV a little more closely as well as a way to invest stocks with higher dividend-yields and slightly lower P/E ratios compared to XIC. I still wish there was more choice in the Canadian ETF and index market and if I had a bit more money I would forget ETFs altogether and just make my own index (0% MER), starting with equal amounts of the top 10 holdings of the large-cap Canadian indexes.

5 thoughts on “TD Gets Out of ETF Market”

  1. You mentioned only XIU, XIC, XMD and XDV for Canadian Market. How about XRE? Do you have any other particular suggestions for any REITS in a portfolio?

  2. Yeah, I only mentioned those because I was mainly thinking of broad large cap indexes. I don’t have enough money in my RRSP yet to start branching into the sector ETFs, while still keeping my costs/commissions low.

    I don’t know much about REITs, so getting an index is something I could see myself doing, unless my advisor had something else in mind then I would go with his suggestion.

  3. You say by establishing your own “index” of the top companies you have a mer of 0%.

    Unless you are buying huge amounts and planning on holding forever, you’ll end up spending more because you have to pay commision 10 times to buy and 10 times to sell. If you buy an index, only 1 commision to buy, 1 to sell.

    that could save you quite a bit of money in the long run.

    I think you’d be better off buying s&p index for now.

  4. You’re totally correct, it depends on a) how much money is involved and b) how long one plans on holding it for. It also depends on how many stocks one buys. It certain cases it does work out.

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