Years ago, the late Paul Newman, he of the stunning blue eyes and insouciant stare, was asked if he’d ever been tempted to stray from his wife, actress Joanne Woodward. Newman simply smiled and said, “Why would I go out for hamburger when I have steak at home?” With apologies to Newman, I’m borrowing his comment and applying it to the investment universe: If you can have investment steak at home, why would you bother going out for ground beef?
Exchange traded funds (ETFs) are prime meat for your portfolio, while actively managed mutual funds are, for the most part, ground beef. ETFs give you a lot less fat for the money. Not only are they cheaper – the management fees (MERs) start as low as 0.07 per cent and most are under 0.5 per cent compared to the MERs of Canadian mutual funds which average 2.5 per cent annually – but they also produce a better result. Read more