ING Direct keeps sending me marketing material detailing their new “Streetwise Funds.” I wrote about these new funds earlier this month 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.”