The Portfolio Doctor
By
David Cruise and Alison Griffiths
--------------------------------------------------------------------------------------------------
Q: Are you aware of any site on the Internet that will give an investor the complete breakdown by class of investments for each mutual fund? As you say it is vitally important to know what really lies beneath the surface of mutual funds for several reasons. I personally want to know the content of income trusts the funds hold but have not been able to find a site that gives this particular information for income trusts. Bill K.
A: This is a heck of
a good question but one that has no simple answer. You can determine top ten
holdings easily at www.morningstar.ca (go to the Investment Style tab in the
Quicktakes report), or by viewing the documents filed with Sedar, www.sedar.com.
The latter gives you a more detailed look at a given investment fund through the annual report. However, that information is going to be months out of date as soon as you view it because the annual report is only available for some time after year end and funds are constantly trading.
Still, Sedar is a worthwhile day trip when digging in to a mutual fund. Look in the most recent annual report and scroll to the Statement of Investment Portfolio, usually at the end, which contains every holding in that fund at year end. You can also look at the quarterly Management Report of Fund Performance where the top 25 holdings are commonly listed or the Statement of Portfolio Transactions which details a fund's trading activity.
These reports won't give an up-to-date picture of holdings at any given point in time, only buy and sell activity. However, you do start to get a picture of what a fund is up to. And you'll be amazed at what busy beavers some fund managers are as the six-month trading reports often spill over into dozens of pages.
Some funds provide the percentage of income trust holdings as a separate asset class but this is by no means true across the board. Contact the fund directly and ask for this information. It is a legitimate question and one that should be readily available.
Q: I have inherited five different stocks from my great uncle. I don't see any of them listed on the Toronto exchange but two are (or were) definitely Ontario companies. Is there a clearing house where one can determine information about the value of old stocks? Cyril H.
A: For Ontario companies check with: Companies Branch, Ontario Ministry of Consumer and Corporate Relations, (416) 314-8880 or 1-800-361-3223 (Ontario only) or fax: (416) 314-0102. There is a $12 search fee.
You can also try Cyberbahn Inc., www.cyberbahn.ca or (416) 595-9522. The online search costs $32.08 and you will need either the Ontario corporation number or the name of the corporation that issued the shares. You can also search active Ontario companies through Oncorp Direct Inc. (416) 964-2677.
For companies no longer in business, go to the "FP Survey - Predecessor & Defunct" which lists Canadian companies going back to 1920. It is carried in most libraries. For federally incorporated companies contact Industry Canada Corporations Directorate at (613) 941-9042.
There are a number of private search services which charge anywhere from Cdn. $20 to U.S. $75 per certificate. For resource companies try Shirley Gilson "Shirlock" at editor@canadianminingnews.com or phone 705-679-5403. Her fee is $20 per search. For both Canadian and U.S. companies there is Utah-based America West Archives stock search service, www.OldStockResearch.com which charges U.S. $45 per search.
Q: I am 23 years old and just starting to contribute to an RRSP. I have $100 a month to invest and have chosen four exchange traded funds, one Canadian, one US and one global. Should I invest equal amounts in each one every month? Yolanda C.
A: Since you are paying a
trading fee for every transaction at your discount brokerage it makes no sense
to rack up costs. Stash your $100 in a high interest savings account and invest
a couple of times a year in each of your chosen investments. As the amount you
have available to invest increases the cost efficiency of this dollar cost
averaging will also increase.
You could also join the Canadian Shareowners Association and invest incrementally (monthly, bimonthly, quarterly, etc.) in your exchange traded funds (ETF). The trading fees for a co-op account are $9 for one to three stocks or ETFs and a flat $36 for four or more. Selling fees, if you sell according to the firm's pre-set schedule are $15 plus three cents a share. Go to www.investments.shareowner.com. The fee for opening an RRSP is $59.
Q: My husband and I, both 42, are in fairly good financial shape with RRSPs of about $130,000 each. But, because of the need to support a family member after a car accident we are not able to save as much as we would like over the next few years. We have three children, 10, 12 and nearly 16 and all will probably attend university. Do you think we should continue contributing to our RRSP or stop that for a few years and put the money in their RESPs? Mary and Farik W.
A: It is pretty tough to give a blanket answer without knowing your full financial picture. Three kids in university is an expensive proposition, even if all of them stay at home. Since you are both still young with 20 or more earning years ahead, you might want to deal with the schooling issue first, if only because the Canadian Educational Savings Grant (based on your income) of 20 per cent on up to $2,000 contributed per child is free and easy money. Both of which we like.
You only have a couple of years to contribute for the older one anyway, so the new plan could have you diverting those RESP contributions back to your RRSPs, once he is in university. This is only one option of several which could include reducing both RESP and RRSP contributions but continuing to make both, planning on a larger student loan for the older child or encouraging your children to save for their share of college expenses from part-time and summer employment.
If the family situation is long term a visit with a fee-based or fee-only financial planner would be very worthwhile to examine the financial implications of various scenarios.