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Investing 101
It’s not unusual for investors to use standard deviation – a statistical measure of volatility – as a guide to assess the long-term performance of mutual funds. While there are some merits to using standard deviation, it is useful to note that it is not an indicator of future performance because it is calculated using the past performance of a mutual fund. Essentially, what standard…
The vast majority of Canadian investors are under the impression that emerging markets are inherently riskier than developed markets. The underlying truth is that all markets, developed as well as emerging markets present some level of risk. In the case of emerging markets, it is important to understand that this is not a homogeneous group of countries. Each market has its own unique growth drivers,…
As of July 15, 2016, the final implementation stages of Client Relationship Model – Phase II (or CRM2) are now in place. CRM2 is a collection of rules introduced by the Canadian Securities Administrators (CSA), requiring enhanced fee and annual performance disclosure to clients.Specifically, registered firms will now need to¹: Provide an annual report on charges and other compensation that shows, in dollars, what the…
Taxes are a certainty. However, depending on the way in which investors structure their portfolio, they can either defer or minimize their taxes altogether. Typically, investors do not pay taxes on returns in a registered account, but must pay taxes on income and gains made in a non-registered account. Registered Accounts When investing in a Registered Retirement Savings Plan (RRSP), the returns accumulate tax-free until…
A financial plan is essentially a roadmap that helps chart a course to a destination. This destination could be a singular objective or a series of goals that you want to achieve over your lifetime. These goals may include: saving to buy a home, getting married, having children, accumulating wealth for a comfortable retirement, saving for a child’s education, paying down debts, enjoying a specific…
As investors seek opportunities outside traditional markets such as the U.S. and Canada, an active management style can prove to be more beneficial. When investing in emerging markets, managers who are on-the-ground typically have greater insight and knowledge of the local investment landscape, especially when compared to managers who operate from a Canadian base. There are several reasons why on-the-ground managers have a competitive advantage…
All mutual funds charge fees, but the fees for some funds are higher than others largely due to the investment strategy of the fund. The fees an investor pays are referred to as the management expense ratio (MER) of the fund. A fund’s MER is comprised of two parts: the management fee; and the operating expenses of the fund. Management Fee The management fee includes…
Whether mutual fund investments are safe depends on the underlying securities a specific fund invests in. For instance, a fund that invests in risk-free Treasury bills such as those issued by the U.S. or Canadian government, is considered to be safe because both these governments guarantee such investments, and it is unlikely that either would default on their debt obligations. On the other hand, a…
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