Sunday, January 31, 2016

Maybe I should not write off mutual funds

Years ago I moved out of mutual funds and into ETFs and stocks. I bought into the argument that the high MER charges put most mutual funds behind the eight ball when it came to competing against ETFs. Maybe I was wrong.

At the start of the year I created ten ghost portfolios using Portfolio Manager offered by TD Waterhouse. I'm not going to go into too much detail as it is only one month into 2016 and a lot can change over the course of a year.

That said, the portfolio that is easily leading the pack is one composed of just two mutual funds:

  • TDB3085 - TD Monthly Income fund D-series
  • TDB3086 - TD U.S. Monthly Income fund D-series

With just those two funds making up the entire portfolio, this portfolio is clearly ahead of the pack. At the moment it is even well ahead of the Couch Potato portfolio that I am tracking. I'm an assertive investor and so if I were following the Couch Potato advise I would have a Vanguard ETF Assertive Couch Potato portfolio or a TD e-series Assertive Couch Potato portfolio. My D-series mutual fund portfolio is easily worth a full two percent more than either of the Couch Potato offerings.

I'm surprised but this possibility wasn't totally unexpected. The TD Monthly Income D-series is nothing more than the TDMI that has been around for years with some of the fees cut back a little. I've always like the monthly income fund, I had a good chunk of my portfolio invested in it. When the D-series came on the scene I converted from the I-series to the D. It saves me a little money.

The fund tries to invest in solid dividend paying stocks, it has a balanced approach to portfolio creation and so holds all the expected bonds and it follows a portfolio allocation plan I can appreciate. Plus, the fund does not buy and sell to an undo extent. The last time I checked the portfolio turnover was less than 10 percent annually.

Come back in a month and I'll update you then.

And oh, were there any big surprises? Yes. My personal portfolio had done better than the Couch Potato entries at this point. I don't expect this to continue as the CP has a much better mix and I continue to believe diversity is king. Still, I'm doing nicely and my dividends are piling up as they should. All is right with my world despite the crashing market.

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