Investing with ETFs
Low Costs/No Commissions
The J.C. Hood Difference
How do ETFs perform relative to mutual funds? Interestingly, if you were to compare the largest ten to fifteen holdings of your 'large cap' Canadian mutual fund with the XIU, the similarity is quite astonishing. Index based ETFs, however, outperform nearly 80% of similar actively managed funds over the long term primarily because the fees are lower. We construct portfolios with ETFs because they provide better performance at lower cost.
Low Costs; No Commissions
Over 20 years ago, former OSC Commissioner Glorianne Stromberg challenged many of the sales practices of the mutual fund industry.She explained that over a 20 year time frame, high MERS of 2.5% could erode nearly 50% of an investor's retirement capital, which she described as; 'an egregious encroachment of capital'.
What differentiates J.C. Hood Investment Counsel from other Portfolio Managers?
The most important issues for our clients are personalized service and innovative investment strategies.
Personalized Service and Security
Our clients accounts are all managed individually and can be customized to your requirements. For your security, investments are held in your name at NBIN(National Bank Independent Network). You will be provided with a user id and password to monitor your account. All statements, performance are prepared by NBF (National Bank Financial). You will meet with and have direct access to the Portfolio Manager actually managing your capital. Many Investment Counsel firms are oriented toward pension funds, whereas our focus is on the mid to high net worth client. We deduct our fees outside of your RRSP to preserve your retirement capital.
Innovative Strategies for Enhanced Income: Covered Call Writing
The firm's reputation is built upon the integration of ETFs and dividend paying stocks with 'covered call writing'. This involves purchasing a dividend paying ETF or stock and simultaneously selling an option to a trader. Essentially, this means using an equity position to develop enhanced cash flow because the sale of the option combined with the dividends targets annual returns of 6-7% with all of the returns being either capital gains or dividend income. Depending on the client we opt to use covered call ETF's from the Bank of Montreal or other ETF providers. Using covered calls is not like a bond, there are no guaranteed returns because returns are based on the underlying equity, but it is nonetheless a very conservative strategy that we use extensively.
At J.C. Hood Investment Counsel, we are jointly registered as Portfolio Managers, as such we have a fiduciary responsibilty to our clients. As Portfolio Manager, we are fee-based advisors and entitled to charge a fee for our services based upon the amount of assets being managed; we are not allowed to collect any commissions for our services. Our fees grow only as your assets grow.
As Portfolio Managers our license is the same as that of pension fund or other fund managers; that is, we manage your money, not just sell you investments. After we clearly define your objectives and asset allocation, we will begin to manage your investments on your behalf. For accounts under $1 million, our fee for this service is 1% annually, plus transaction/ETF approximate costs of 0.2% for a total fee of 1.2% on accounts of $250,000-$1,000,000. For accounts over $1 million, fees are .8%. Unlike many other Portfolio Managers, we welcome family accounts with combined investment assets over $250,000.