A good asset allocation that responds to market conditions is the best way to protect your clients from wrenching volatility. ETFs give you precise control over asset allocation and allow you to keep that control unfettered by other considerations.

Using mutual funds to build a detailed asset allocation is a little like trying to make great wine from a mix of grape juices. You’ll get wine, alright, but chances are it won’t win any awards. A Canadian equity mutual fund can have as much as 30% in foreign stocks and an undetermined amount in cash at any time. Even bond funds can hold investments very unlike bonds, such as income trusts. ETFs, on the other hand, are virtually pure asset pools. They hold almost no cash nor do they mix asset classes.

Furthermore, ETFs do not complicate your allocation decisions with DSC schedules and fund switches. Rebalancing doesn’t trigger DSC fees and you can move in an out of ETFs as easily as a stock trade. This liberates your allocation to become as tactical as you wish, and with a huge and expanding selection of ETFs covering just about every imaginable asset class, ETFs give you plenty of choice.

You can hand your clients’ asset allocation over to mutual fund managers, or you can control it with surgical precision using ETFs. Who would you prefer to be in charge?


Sponsored by Barclays Global Investors Canada Limited
Contact Howard Atkinson at howard.atkinson@barclaysglobal.com

The rate of return is used to illustrate the effects of the compound growth rate and is not intended to reflect future values of the mutual fund or returns on investment on the mutual fund.