In another thread I outline how tricky it is to follow the course steps as a Canadian, as we don’t have TDIFs, index mutual funds are limited, and available brokerages aren’t as optimally functional for investing as Vanguard/Fidelity/Schwab. Therefore our first target date ETF is a welcome addition for a product that automatically rebalances and reallocates its assets over time.
Following the lessons from the course though, is this not the greatest deal after all? The management fee is 0.35%, and plus underlying ETF fees they project total costs to be 0.45% or potentially even greater. Approaching 0.5% is already high as we’ve learned, and for that cost you can consider robo-advisors which mirror what TDIFs would do anyways (Questrade’s robo-advisor charges 0.2%, WealthSimple 0.5%, + the underlying ETF fee is additional to both).
As this was launched in only February 2022, the assets under management are currently just $20 million. Although the holdings seem as diversified as any TDIF would be, should we be wary of putting 100% of our investment portfolio in a new company nobody’s ever heard of, with no track record or demonstrated fund performance? It seems like quite the contrast to long standing American brokerages with billions under management in TDIFs. In all fairness though even the all-in-one asset allocation ETFs offered by Vanguard, Blackrock etc. have only been around in Canada in their current form since 2018… In other words we are late to the party in everything.
Are we better of going with all-in-one asset allocation ETFs for some time (the next 5-10 years), and hope that over the years more TDIFs/ETFs pop up, and that greater competition may bring lower fees and more of these kind of products into the country, at which point we could make the switch?