Acquiring TD e-Series Mutual Funds
Probably one of the better index fund deals in Canada is the TD eSeries Mutual Fund. The MER of %0.31 for their Canadian Index Fund, along with no minimum investment requirements makes this an ultimate winner for web-savvy newcomers with little to no money to push around. However, the entry barriers to actually purchasing eSeries funds makes it almost an intolerable hassle.
Let’s hop in the Delorean and set the clock to Sept. 8 2007.
I walk into my local TD Branch thinking that it will in a few short hours I will be heading home to put in my buy order for some handsomely low fee index funds. Unfortunately, not only can you not open an eSeries Account in a Branch, there was only one TD worker who even knew that this type of account existed. Which makes it extremely frustrating when trying to explain why you want to open an account (I opened a TD account which my eSeries account piggy-backs on). After getting a Basic Savings account I was sent home to print & fill out forms.
Now this is ridiculous, you think if you already had online banking set up it should be a 3/4 click process to open another online exclusive account, a lá PC Interest Plus Account, but nope, you have to fill out a PDF and then… print it out… and mail it in… lame.
Well a couple weeks pass (TD says it would take 1-2 business days after receiving the form) and sadly no new accounts ever appear in my Online Account Summary. So I call TD Investment Services several times, never getting a reason why it has not been processed except they’re “backed up”. Then I get a letter saying I need to fill out a “Wealth Allocation Model” form , basically just a investment worksheet for dummies. So reluctantly I fill out the form and send it in.
Approximately a week later (~Oct. 10) miraculously a new Investment Account appears in my Online Summary! WOOT! Excellent, I would now be able to invest this money that had been wallowing in my TD trivial savings account. I click on the account and get a….. java.lang.NullPointerExcepetion?! WHAT?! Did I code this thing??? Okay well maybe something isn’t set up yet, I let it sit for a few hours, and low and behold I get an e-Mail congratulating me on Opening an Investment Account. MY BAD! Shoulda had some patience. But to my dismay when I logged in again I still received the dreaded CompSci 111 error of doom. I call TD, as usual they are helpful as junk. They say they WILL FOR SURE CALL ME once it is fixed. Neva Happened.
Anyways 2 days later I checked again and the phantom Pointer had found it’s wayfaring object. And I was finally able to place that order 32 days late, but better than never. Awesome.
The next day I get an e-Mail informing me that my order did no go through because “it may not be suited to your
current investor profile”. Golly, good thing TD is holding my hand, like a baby, without a brain. I couldn’t believe this was serious, so I call up TD get a service agent on the phone and ask him what’s the dilly-o. Turns out because of the points I tallied up on my investments for dummies sheet my purchase was, and would continue to be, rejected. I ask him how this gets resolved, and he immediately plunges into the same questions from the dummy sheet. After asking 2 or 3, I stop the insanity and say, I’ve already filled that out, all I want to do is buy the Index Funds. Turns out to do this I need to answer all the questions like a Vegas Gambler on his Last Chip:
Q: What Level of Risk do you Feel Comfortable with?
A: I would bet the Devil my soul for nickle on a Snake Eyes dice roll.
Q:In ten years what is the worst possible case you would feel comfortable with your capital investment?
A: Pissed away and you also now own my house, my car, my first born, and the nickle I won off the Devil.
Q: When do you plan to start withdrawing money from the investment?
A: 10 minutes ago, to hedge against my VLT term deposits.
What a joke. So I went through the whole form again answering the questions like an irresponsible degenerate. Afterwards the Service agent says “That should do it sir, want me to place that order again for you?” To which I naturally replied “Double me down on Black!” And sure enough the order went through.
Over a month later, with about 4-5 hours invested in phone & form time, plus postage (I still can’t believe they don’t have online form submission) I am the melancholy owner of TD eSeries Funds. I guess it makes sense that TD does NOT want you to purchase their eSeries funds, as it makes their other class of index funds look like straight robbery, so the hoops are the tax. Good Luck & God Speed.
March 11th, 2008 at 9:29 am
Has anyone realized that the TD e-Series funds are a complete non-sense? You pay a slightly lower MER and buy the exact same fund but at a much higher price. Here’s the calculation (to keep things simple, I have decided to deduct the MER upfront):
CANADIAN INDEX e-Series FUND
Amount invested = $10000.00 @ Yesterday’s price (03/10/2008) = (10000 - .31%) = $9969/21.07 = 473.13716 units.
CANADIAN INDEX I-Series FUND (NON - e):
Amount invested = $10000.00 @ Yesterday’s price (03/10/2008) = (10000 - .85%) = $9915/20.24 = 489.87154 units.
Both the funds are identical twins so far as the underlying stocks are concerned but what meets the eye (low MER’s for the e-series funds) is in actuality a complete non-sense. You can do the same above calculation for ALL the e-series funds and compare them to their twin I-series funds and you will be shocked to see the results. So in a nutshell, given that TD e-series facilitates the transfers via internet, there’s no hard-copies of the prospectuses (environmentally friendly) and they charge you a “whopping” 0.5% less MER than the regular I-series funds - they will make you fill out tedious application forms and send them via snail mail and you will sleep blissfully thinking you just got the best deal in saving the MER’s.
March 19th, 2008 at 12:22 pm
Thanks for commenting!
What your not accounting for is how those high MER’s factor in to compounding interest.
Say we take our 10000 investment and it gives us 5% return year after year, after 10 years:
e-Series @ 4.69% (5%-.31%): $15,814.37
I-Series @ 4.15% (5%-.85%): 15,017.33
Sure you can buy more shares of the I-Series, thats because they are simply not as valuable, and over time I imagine the gap in price between the e and I series will only widen, due to erosion of returns from MERs.