Presentation: ETFs and why costs matter

To make it easier for you to prepare materials for clients, we’ve developed this text for a slideshow on ETFs and how investment costs are structured. The slides are designed to help you educate investors and prospects. We know you’ll want to customize them and add elements specific to your client, so we’re providing a Word file to make that easier (there is no PowerPoint). All you need to do is fill in your own details and then move the slides into your favourite presentation software or app.

Enjoy, and we hope this offering helps enhance your client meetings.

SLIDE 1

What are ETFs?

SLIDE 2

ETFs track benchmark stock indexes such as the S&P/TSX 60.

SLIDE 3

The original idea behind ETFs was to provide low-cost exposure to recognized indexes.

SLIDE 4

ETFs can be an excellent way to get exposure to market segments and international markets.

SLIDE 5

Like all investments, ETFs require some understanding of the market.

SLIDE 6

Because passive ETFs don’t rely on a management team that actively picks stocks or tries to beat the market, the fees are generally lower than for mutual funds.

Administrative costs associated with running a mutual fund also aren’t in play with ETFs.

SLIDE 7

Low management fees translate into better overall returns, since those savings can be used to buy more fund units or otherwise be recouped by the investor.

SLIDE 8

The average industry management expense ratio for ETFs as of December 2012 (the latest industry data) was around 80 basis points, compared with around 2% for mutual funds.

SLIDE 9

Cost matters

SLIDE 10

The lower the fees, the more returns you keep.