Recommended Index Funds

While ETFs get far more attention, index mutual funds are still an excellent choice for Couch Potato investors, especially those who want to keep things simple, those who contribute small amounts every month, and those with accounts less than $50,000.

Unfortunately, most index funds in Canada are far too expensive, and indexing does not work when the costs are too high. Below is list of the best products available, with a description of when they are most appropriate. To see how these fit into the larger picture, visit the Model Portfolios page.

Mutual funds that hedge their exposure to foreign currency are marked with an asterisk (*).

TD Mutual Funds

TD’s e-Series index funds are the best choice for most Couch Potato investors. However, they are only available to investors who open an online account with TD Canada Trust, or through a TD Direct Investing discount brokerage account. If you plan to invest with index mutual funds, this is definitely worth the effort.

Fund name
Fund ID MER Index tracked
TD Canadian Index – e TDB900 0.33 S&P/TSX Composite
TD US Index – e TDB902 0.35 S&P 500
TD US Index – e * TDB904 0.51 S&P 500
TD International Index – e TDB911 0.50 MSCI EAFE
TD International Index – e * TDB905 0.53 MSCI EAFE
TD Canadian Bond Index – e TDB909 0.50 DEX Universe Bond

The TD index funds are also available in a higher-fee “Investor Series,” which can be purchased through any discount brokerage. In most cases, the RBC and Altamira funds listed below are less expensive, but some may be useful.

Fund name Fund ID MER Index tracked
TD Canadian Index TDB216 0.88 S&P/TSX Composite
TD US Index TDB661 0.54 S&P 500
TD Canadian Bond Index TDB966 0.83 DEX Universe Bond
TD Balanced Index TDB965 0.89 [blended]

RBC Asset Management

For investors who do not have access to the TD e-Series funds, RBC’s family of funds is the next best bet. They are available through all discount brokerages. Note that RBC’s bond index fund includes government bonds only. For a more broadly diversified fund that includes corporate bonds as well, consider TDB966.

Fund name Fund ID MER Index tracked
RBC Canadian Index RBF556 0.72 S&P/TSX Composite
RBC US Index RBF557 0.72 S&P 500
RBC US Index * RBF558 0.72 S&P 500
RBC International Index * RBF559 0.70 MSCI EAFE
RBC Canadian Gov’t Bond Index RBF563 0.66 DEX Universe Federal Bond

Altamira (National Bank of Canada)

Altamira’s family of index funds is also a good choice for equities. They do not offer a bond fund, however: consider using TDB966.

Fund name Fund ID MER Index tracked
Altamira Canadian Index NBC814 0.66 S&P/TSX 60
Altamira US Index NBC846 0.63 Dow Jones Industrial Avg
Altamira US Index * NBC856 0.64 S&P 500
Altamira International Index NBC839 0.65 MSCI EAFE
Altamira International Index * NBC877 0.67 MSCI EAFE

Tangerine Investment Funds

The Tangerine Investment Funds (formerly the ING Direct Streetwise Portfolios) are only available directly from Tangerine. Although the fees are relatively high for index funds, there are no account minimums, and investors do not need to work with a discount brokerage, pay annual account fees, or rebalance their portfolios. That makes these funds an excellent choice for novice investors with small portfolios.

Fund name Fund ID MER
Tangerine Balanced Portfolio  INI220 1.07
Tangerine Balanced Income Portfolio  INI210 1.07
Tangerine Balanced Growth Portfolio  INI230 1.07
Tangerine Equity Growth Portfolio  INI240 1.07

Dimensional Fund Advisors

Strictly speaking, Dimensional funds are not “index funds,” as they do not track any index. They are more properly called “asset class funds,” as they’re designed to capture the returns of specific equity or fixed income markets by holding hundreds or thousands of securities. Built on the Fama-French Three Factor Model, the equity funds give additional weight to small-cap and value stocks.

The funds are not available to DIY investors: they can be accessed only through a select group of financial advisors. The Class F versions are listed below; the Class A funds have higher fees that also include the cost of advice.

Fund name Fund ID MER
DFA Canadian Core Equity DFA256 0.38
DFA Canadian Vector Equity DFA600 0.45
DFA US Core Equity DFA293 0.38
DFA US Vector Equity DFA223 0.44
DFA International Core Equity DFA295 0.58
DFA International Vector Equity DFA227 0.72
DFA Global Real Estate Securities DFA391 0.61
DFA 5-Year Global Fixed Income DFA231 0.38
DFA Investment Grade Fixed Income DFA449 0.40