ING Direct Streetwise Funds Vs. TD Index e-Series Funds

ING Direct keeps sending me marketing material detailing their new “Streetwise Funds.” I wrote about these new funds earlier this month (ING Index Funds? Huh?) and argued that I preferred the TD e-Series Funds (index funds) based on lower fees (MERs). What I failed to realize at the time was the ING Streetwise Funds are not competing directly with TD e-Series Funds, but rather with a similar “packaged portfolio of funds” called the TD Managed Index Portfolios e-Series. The TD e-Series Funds are not a managed packaged product. They are individual index funds tracking either a stock or bond index. (Disclosure: I own TD e-Series Funds)

What is a packaged portfolio of funds?

A packaged portfolio of funds is a number of stocks and bonds diversified in a managed portfolio. Basically, you pay for someone to put together an asset allocation of stocks and bonds for you. Sounds good, right? Well, not really. For a single fee you pay for money managers, brokerage commissions, and advisory fees. A packaged managed fund costs more, period.

Comparing Packaged Portfolios with TD e-Series Funds

When comparing the ING Streetwise Funds with the TD Managed Index Portfolios e-Series, there is no competition. The ING Streetwise Funds cost far less and are seemingly the better option. However, when you compare the ING Streetwise Funds to the cost of building a similar asset allocation yourself using TD e-Series Funds, it is very clear the TD e-Series funds are far less expensive.

Since I would like to save you some big bucks, I’ve put together a group of tables showing three different asset allocations. Each table compares both the ING and TD packaged portfolio option. I’ve also shown you how to build a less expensive version of that asset allocation using the TD e-Series Funds. The tables range in asset allocation from the least risk to the greatest risk.


Canadian Fixed Income Balanced

Fund Package Allocation Package MER Total MER
ING Streetwise
Balanced Income Class
Cdn. Bonds: 70%
Cdn. Equities: 10%
U.S. Equities: 10%
Intl. Equities: 10%
1.0% 1.0%
TD Managed Index
Income – e
Cdn. Bonds: 70%
Cdn. Equities: 12%
U.S. Equities: 11%
Intl. Equities: 7%
1.19% 1.19%
TD e-Series Funds Allocation Fund MER Total MER
TD Canadian Bond Index
TD Canadian Index
TD U.S. Index
TD International Equity
Cdn. Bonds: 70%
Cdn. Equities: 10%
U.S. Equities: 10%
Intl. Equities: 10%
0.48%
0.31%
0.33%
0.48%
0.448%

Actual Portfolio Costs on a $25,000 Investment

Portfolio Total MER Amount Invested Annual Fees
ING Streetwise Balanced Income 1.0% $25,000 $250.00
TD Managed Index Income – e 1.19% $25,000 $297.50
TD e-Series Portfolio 0.448% $25,000 $112.00

Results: The Canadian Fixed Income Balanced category shows the TD e-Series Funds cost $138 less per year than the ING Streetwise Fund on a $25,000 investment. The TD e-Series Funds cost $185.5 less per year than the TD Managed Index fund on a $25,000 investment.


Global Neutral Balanced

Fund Package Allocation Package MER Total MER
ING Streetwise
Balanced Class
Cdn. Bonds: 40%
Cdn. Equities: 20%
U.S. Equities: 20%
Intl. Equities: 20%
1.0% 1.0%
TD Managed Index
Balanced Growth – e
Cdn. Bonds: 40%
Cdn. Equities: 15%
U.S. Equities: 23%
Intl. Equities: 22%
1.28% 1.28%
TD e-Series Funds Allocation Fund MER Total MER
TD Canadian Bond Index
TD Canadian Index
TD U.S. Index
TD International Equity
Cdn. Bonds: 40%
Cdn. Equities: 20%
U.S. Equities: 20%
Intl. Equities: 20%
0.48%
0.31%
0.33%
0.48%
0.416%

Actual Portfolio Costs on a $25,000 Investment

Portfolio Total MER Amount Invested Annual Fees
ING Streetwise Balanced Class 1.0% $25,000 $250.00
TD Managed Index Balanced Growth – e 1.28% $25,000 $320.00
TD e-Series Portfolio 0.416% $25,000 $104.00

Results: The Global Neutral Balanced category shows the TD e-Series Funds cost $146 less per year than the ING Streetwise Fund on a $25,000 investment. The TD e-Series Funds cost $216 less per year than the TD Managed Index fund on a $25,000 investment.


Global Equity Balanced

Fund Package Allocation Package MER Total MER
ING Streetwise
Global Equity Balanced Class
Cdn. Bonds: 25%
Cdn. Equities: 25%
U.S. Equities: 25%
Intl. Equities: 25%
1.0% 1.0%
TD Managed Index
Aggressive Growth – e
Cdn. Bonds: 20%
Cdn. Equities: 20%
U.S. Equities: 30%
Intl. Equities: 30%
1.33% 1.28%
TD e-Series Funds Allocation Fund MER Total MER
TD Canadian Bond Index
TD Canadian Index
TD U.S. Index
TD International Equity
Cdn. Bonds: 25%
Cdn. Equities: 25%
U.S. Equities: 25%
Intl. Equities: 25%
0.48%
0.31%
0.33%
0.48%
0.4%

Actual Portfolio Costs on a $25,000 Investment

Portfolio Total MER Amount Invested Annual Fees
ING Streetwise Global Equity Balanced Class 1.0% $25,000 $250.00
TD Managed Index Aggressive Growth – e 1.33% $25,000 $332.50
TD e-Series Portfolio 0.40% $25,000 $100.00

Results: The Global Equity Balanced category shows the TD e-Series Funds cost $150 less per year than the ING Streetwise Fund on a $25,000 investment. The TD e-Series Funds cost $232.50 less per year than the TD Managed Index fund on a $25,000 investment.


In conclusion, I am beyond thrilled with ING Direct entering the index fund space with their Streetwise Funds. I am also very excited that ING is bringing lots of publicity to the importance of low costs and indexing. I do however believe the average RRSP or non-registered investor could do a lot better than ING’s Streetwise Funds by simply constructing their own portfolio using TD e-Series Funds. After all, investing in index funds is all about keeping costs low and “saving your money.”

Your two cents:

  1. Kordula Spaude February 22nd, 2008

    Thank you for the information. It will help me to decide if I should invest in one of the ING Streetwise Funds. Sounds like they are brand new funds and have no record yet how they are doing?

  2. fox February 22nd, 2008

    Hi Kordula: Yes, the ING Streetwise Funds are a new product. Since they track the index, they should do neither better nor worse than the index they are invested in. Keep in mind the MER fee on an index fund will make it trail the index results. I have an article which discusses Index Funds in more depth. Hopefully this helps!

  3. Greg March 10th, 2008

    Have you looked at ETFs? Don’t they have even lower MERs? I guess that you would also have to factor in the buy and sell fees, but they should be pretty low through a discount broker.

  4. fox March 10th, 2008

    Greg: I have indeed looked at exchange traded funds (ETFs). I haven’t gone into depth as of yet by comparing their fees with index funds. Indeed, ETFs have lower MERs. I own some iShares.

  5. Greg March 10th, 2008

    Hmm, I just had a quick look and iShares S&P/TSX 60 E.T.F. (XIU-T) has a MER of 0.17 and iShares Cdn Univrs Bond E.T.F. (XBB-T) has a MER of 0.3. Both of these are lower than the ING or TD offerings.
    Do you have a favourite site that you use to investigate all this stuff?

  6. Peter May 23rd, 2008

    I could not find the TD US index fund. Was it renamed? What can I substitute with?

  7. Kerry May 23rd, 2008
  8. Peter May 23rd, 2008

    Thanks for the help. I was attempting to create a portfolio on morningstar and the TD US Index fund doesn’t appear in their database.

  9. Peter May 29th, 2008

    Is there a particular time of year that is advantageous tax wise to initiate an ETF portfolio? Does it make a difference if I open one next week or say in October or in April? I plan to add to and balance my portfolio once a year only.
    Do you (can you) recommend one discount brokerage over another?

  10. Kerry May 31st, 2008

    @Peter Wow. So many good questions. For tax considerations, everyone’s tax considerations are different…so perhaps consult an accountant to discuss this issue. I think the advantages and disadvantages really depend on your financial situation and I am certain the money spent on professional CA advice is well worth it!

    I tend to buy my ETFs the first week in July. I don’t even attempt to time the market, cause it’s impossible. July 6th is my rebalanced date and I stick to it consistently. I’d say just pick a date and be consistent.

    The question of which Discount Brokerage is also tough. This largely depends on what features you want and need (drips, wash trades etc.), how much you have to invest, what you want to invest in, and how sensitive you are to fees (larger portfolios usually get you lower buy fees).

    I use TD Waterhouse and only have experience with this firm. Other bloggers are more experienced in the differences between brokerages so I shall defer to them. I am assuming you are Canadian…

    Another excellent source for investing information is the Financial Webring Forum. I’ve spent hours in here. Try reading: Need a good Discount Brokerage.

    Let me know if this helps. :)

  11. Peter September 24th, 2008

    This comparision does not take into account the cost of portfolio rebalancing. This would add more than $40 per time to the cost (assuming $10 per trade which I am too poor to pay). I believe ING and the TD-MAPs rebalance twice a year. With e-series funds you would have to pay! (and remember to do it!). Bottomline is that Streetwise has more couch for the couch-potato.

  12. Kerry September 24th, 2008

    If you hold your eFunds in a TD eFunds account there is no fee for buying, selling, or rebalancing. You are still FAR ahead with eFunds.

  13. Siva March 28th, 2009

    Fox,

    Thanks a lot for this posting and related ones on index funds. I’m a rookie so this really helps me get started.

    Just so I’m clear…in your tables above the packaged portfolios and e-series portfolios would yield the exact same returns? In other words, an ING Streetwise
    Balanced Income Class, TD Managed Index
    Income – e, and the corresponding self-built e-series asset allocation would all yield the same return (not consider the MER of course).

    Is my questions clear?

  14. ResponsetoSiva November 20th, 2009

    Typically an index fund tracks an index. If both index funds track the same index, their yields should be similar. (They will probably never be identical because of minor differences in the way the funds rebalance, and handle cash, etc.)

    I’m not sure what indices the underlying funds of an ING Streetwise fund track. However you can get this information from the fund portfolios. If they track the same indices as the TD e-series funds, you can be relatively sure their yields will be very similar.

    If not, they will still probably be somewhat similar because they will likely track the same “segment” or “sector” of the global market, even though they don’t track the same index and therefore may not hold the same stocks in the same weightings.

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