Canadian ETFs and their Management Fees: A Comparison Chart

As far as I know, there are no restrictions on Canadians buying US ETFs (just watch out for those currency exchanges, and differences in tax-treatment). And the US has been exploding in ETF Offerings, with over 100 launched just this year. Heck, you can even buy “Russian Ruble ETFs”.

ETFs are a decent option for a TFSA, but since you can only invest $5000 this year, you will want to only do so if you qualify for deeply discounted commissions for having enough assets with the brokerage (like the $9.99 trades one gets if their household has over $100 000 with TD Waterhouse). Take a look at my TFSA and Canadian Stock Brokers/Brokerages article for further details. If you must, I'd recommend getting just 1 ETF, 2 at the max, to avoid having commissions eat up all of your TFSA tax savings.

Although the MERs for Toronto Stock Exchange (TSX/TMX) listed ETFs look low at 0.40ish%, one of the US ones is just 0.07%/year.

Don't forget to take a look at my ETF cons article, going over some of the things you need to watch out for with ETFs and why I don't include the Horizon ETFs. Sorry, I haven't written the cons article yet, I'll have it up shortly.

There are just 3 issuers of ETFs on the Toronto Stock Exchange, but I've covered just two here, see the ETF cons article for further information about why the Horizons should be avoided. Be sure to also research the TD E-Series Line of Mutual Funds for those that won't invest enough in an ETF to account for the commission expense. 

The iShares are more popular in Canada, and are therefore more liquid and you stand to lose less upon buying/selling than the Claymores, especially if you don't plan on holding them for very long.

Claymore Divident Re-Investment and Preauthorized Purchases

Claymore, in an attempt to become more competitive, is starting to offer a DRiP-like system. A DRiP is a dividend re-investment plan, wher the dividends that are paid out are used to purchase new shares without additional commissions. It doesn't look like many brokers support this yet, and speculation suggests that it might be because the brokers don't want it because they lose commission fees. We'll see what eventually happens, it's all supposed to be launched at the end of February '09 for some funds, and end of March '09 for the rest. You may even need to opt-out of this if you don't want it, we'll see. 

Claymore is also trying to start a program where if you already own their ETFs, you can purchase, without extra commissions, more units on a monthly, quarterly or annual basis. Yes, they claim without any commissions. This would be huge if it does get implemented. 

Canadian Exchange Traded Fund Management Fees Comparison

Generally, the Claymore and iShares units don't overlap too much in terms of coverage. All numbers posted here are unofficial.

DJ = Dow Jones
# Capped means that there's a limit to how much any particular stock can be weighted in the portfolio.
* Fund of Funds ETFs are basically a basket of their own ETFs, I'm not sure if the MER figures include the MERs of the included funds or not.