Category Archives: Investments

Odette Morin

Fee Disclosure & The Value Of Advice

by Odette & Terry

 The other day, we opened our investment statement and it showed us how much of an investment fee we paid.   Though we know that we always paid for investment management and advice, it was still a change to see the dollar figure versus the previously reported percentage of assets.  It’s the same fee that had always applied to our accounts in the past, but now we see it as a dollar figure rather than a percentage that was simply deducted.

This full disclosure of the actual fees is part of the evolution of the mutual fund industry. Whether a fee is imbedded in a percentage or outlined in a separate dollar figure, the key question is, am I getting value for my money.  A lower fee does not necessarily mean a bigger return and a higher fee does not necessarily mean a lower return.

A recent research study shows that households with financial advisors have more than 4 times the assets of households without a financial advisor and as well, households with advisors save at twice the rate of non-advised households (source: “New Evidence On The Value of Financial Advice 2012” by Dr. John Cockerline, PH.D., Investment Funds Institute of Canada and former Director of Research at the Toronto Stock Exchange).

A few months ago, we wrote a detailed Infokit on the subject of fees.  In a nut shell, there are two sets of fees that Canadian Investors pay in investment funds; the management fee paid to the investment company which is typically 0.80% to 1.5%, and the advisory fee you pay to us and FundEX for advice and service.  This fee ranges from 0.50% to 1%.  The more money invested you have, the lesser the fee. Read the two information bulletin here.

FundEX bulletin “Understanding Mutual Fund Fees” and

Our detailed infokit About Investment Fees & Disclosure 

So, what do you get for these two fees?

The investment company fee is used to pay the investment managers, analysts, traders, statements, tax slips and client services.  The advisory fee is used to pay for investment mix selection, asset allocation, investment trades, financial planning which includes tax, retirement and estate planning.

Please remember that we are very sensitive to MERs. Frank and Anthony are very much on the look out to find ways to reduces fees. We are paid on your account value. So the less management fees you pay, the better it is for us as well.

We welcome the new fee transparency because it puts pressure on investment companies to reduce their MERs. You can expect to see a downward trend going forward. The infokit also shows that at You First/FundEX, we tend to charge less and do a lot more with regards to planning and advice.

We feel that our job is to make sure that your retirement cash flow analysis is on target. We want to make sure that your money will last until age 90. We try to get the highest possible rate of return of course and lower fees but want to make sure that your retirement assets are safe and you can enjoy a stress-free retirement.

Please contact us if you have any questions or concerns about this subject or any other aspect of your plan.

(i) Ontario Securities Commission Investor Advisory Panel 2013

(ii) Canadian Investors Perception of Mutual funds and the Mutual Fund Industry, Pollara, 2014.

Odette Morin
Odette Morin
Terry Broaders

Weekly Update February 3 2017

“In Three Words I Can Sum Up Everything I’ve Learned About Life: It Goes On” -Robert Frost

Financials Sector Boosts North American Markets

North American stock markets finished Friday on a positive note, led by financial companies as U.S. President Donald Trump prepared to scale back regulations affecting the sector. Toronto’s S&P/TSX composite index climbed 77.28 points at 15,476.39, with the financials sector up 0.8%. South of the border, the Dow Jones industrial average added 186.55 points at 20,071.46 and the S&P 500 climbed 16.57 points at 2,297.42. The Nasdaq composite gained 30.57 points at 5,666.77, a new all-time high. Michael Currie, a vice-president and investment adviser at TD Wealth, says the financials sector benefited from Trump’s first steps aimed at loosening regulations affecting the industry. Trump signed an executive order directing the Treasury Secretary to explore potential changes to the Dodd-Frank law, which was implemented after the global financial crisis of 2008-09. “The most regulated sector of the market is financials, so every time we hear about regulations being cut it tends to favour them the most,” Currie said.

U.S. stocks also got a boost from a better-than-expected jobs report. The U.S. Labor Department reported that employers added 227,000 jobs last month — more than last year’s average monthly gain of 187,000.
The Canadian dollar was at US76.76¢, down 0.04 of a U.S. cent from Thursday’s close. “It’s been trading in the 70s for a while,” Currie said. “As we get closer to 80, Canada starts to get a little bit more worried. It makes us a little less competitive when we’re up close to the 80-cent mark.”


Trudeau Rules Out Tax On Health Benefits

Prime Minister Justin Trudeau has ruled out a tax on health and dental benefits in the upcoming federal budget. Addressing interim Conservative Leader Rona Ambrose at Question Period on Wednesday, the prime minister refuted that such a levy would be introduced. “We are committed to protecting the middle class from increased taxes and that is why we will not be raising the taxes,” he said. In addition, and contrary to months of speculation regarding the proposed benefits tax, Trudeau stated this was never under consideration by his government. Responding to Conservative MP Denis Lebel, who asked would there be a “new tax on dental and health care?” the prime minister countered that: “It was never in our plan to increase taxes as suggested by the member.” The denial came just hours after Minister of Finance Bill Morneau had told reporters: “We are not going to talk about budget measures in advance of the upcoming budget.”

The prime minister’s comments will come as welcome news to Canada’s 13.5 million workers that have health or dental coverage, as well as the “Don’t Tax my Health Benefits!” campaign. Part of that group is the Canadian Life and Health Insurance Association (CLHIA), which responded to the government’s apparent volte-face. “We fully support the decision to maintain the current tax treatment of employer health benefits that over 22 million Canadians rely on for their healthcare needs,” said Stephen Frank, SVP, Policy, CLHIA.


North America
The TSX closed at 15476, down -100 points or -0.64% over the past week. YTD the TSX is up 1.30%.
The DOW closed at 20072, down -22 points or -0.11% over the past week.YTD the DOW is up 1.56%.
The S&P closed at 2297, up 2 points or 0.09% over the past week.YTD the S&P is up 2.59%.
The Nasdaq closed at 5667, up 6 points or 0.11% over the past week.YTD the Nasdaq is up 5.28%.
Gold closed at 1222, up -7.00 points or 2.35% over the past week.YTD gold is up 7.38%.
Oil closed at 53.85, up 0.65 points or 1.22% over the past week.YTD oil is up 3.12%.
The USD/CAD closed at 0.767, up 0.0064 points or 0.84% over the past week.YTD the USD/CAD is up 3.38%.

The MSCI closed at 1795, down -9 points or -0.50% over the past week. YTD the MSCI is up 2.40%.
The Euro Stoxx 50 closed at 3273, down -30 points or -0.91% over the past week.YTD the Euro Stoxx 50 is down -0.55%.
The FTSE closed at 7188, up 3 points or 0.04% over the past week.YTD the FTSE is up 0.63%.
The CAC closed at 4825, down -15 points or -0.31% over the past week.YTD the CAC is down -0.76%.
DAX closed at 11652, down -162.00 points or -1.37% over the past week.YTD DAX is up 1.49%.
Nikkei closed at 18918, down -549.00 points or -2.82% over the past week.YTD Nikkei is down -1.03%.
The Shanghai closed at 3140, down -19.0000 points or -0.60% over the past week.YTD the Shanghai is up 1.16%.


Sources: Bloomberg; Investment Executive;

Anthony Sabti

2016 Market Review & Key Themes for 2017

2016 was the year of surprises.  There were a number of unexpected political outcomes throughout the year, namely the “Brexit” vote, Donald Trump winning the U.S. presidential election and OPEC members reaching a deal to reduce oil production.

But perhaps the biggest surprise was stock markets themselves.  After the worst 10-day start in history and a January that saw 93% of investors lose money, both Canadian and U.S. markets finished the year with healthy double digit returns.  The Canadian index, represented by the TSX finished up 17.62%. The Dow Jones Industrial Index (DOW) in the U.S. set new highs and almost reached the 20,000 point mark.  It finished the year up 13.42%.  The Global Index, represented by the MSCI world, finished the year up 5.41%

What happened in 2016 serves as a reminder to investors to ignore the “noise”, take a long-term approach, and remember the importance of investing in a high quality and diversified portfolio.

Key Themes for 2017

We expect two key themes to emerge in 2017:  Improved U.S. Growth and Bond/Equity Divergence.

Economic indicators in the U.S. strengthened in the second half of 2016, confirmed by a Gross Domestic Product (GDP) number of 3.5% and a projected 2.0% pace in the 4th quarter, which comfortably exceeds the ceiling for U.S. economic growth.  The Republican administration’s planned policies are also expected to accelerate economic growth in the U.S.  Overall there is renewed faith in the longevity of the U.S. recovery.

The second key theme for 2017 is likely to be a continued divergence between equity and bond returns. For thirty years equity and bond returns have been positively correlated in that falling interest rates have benefitted equities and bonds. That has changed since the U.S. election on November 8th. Since the election, U.S. equities have rallied sharply in anticipation of stronger economic growth and its causal linkage to stronger corporate earnings while U.S. bond returns have been very soft. Bond returns have been weak because investors fear that fiscal stimulus will cause inflation to move upward.

Equity Outlook

As mentioned above, the Republican administration’s planned fiscal stimulus is expected to accelerate economic growth in the U.S.  Stronger economic growth and higher inflation should be beneficial for revenue growth, and proposed corporate tax cuts would provide a meaningful boost to corporate earnings. Because of all these possible measures, we continue to be biased towards U.S. equities.

Several Canadian companies should benefit from the strengthening of the U.S. economy in 2017. However, with weak commodity prices and Canadian economic growth and inflation expected to remain modest, Canadian equities are likely to underperform their U.S. counterparts in 2017.

Equities in some European countries are attractively valued but because of persistently low growth, inflation, high unemployment, and growing uncertainty about the future of the euro, we recommend an underweight position in international and emerging market equities.

Fixed-Income Outlook

During the first part of 2016, bond prices increased due to weak economic growth and inflation. However, as central banks’ monetary policies appeared to have peaked and it seemed that governments would have to begin implementing their own fiscal stimulus, bond prices decreased in the second half of the year.

While domestic and global government bonds can offer stability and diversification benefits, overall returns are expected to be low. Thus, most bond managers are underweight government bonds.  They may simply decide to hold cash instead and maintain a neutral weighting in investment grade bonds based on the slightly higher yields they offer over governments.

The consensus is that the Bank of Canada will hold its key interest rate steady for some time to come and that the U.S. Federal Reserve Board will modestly increase the federal funds rate over 2017.  This will likely keep short-term rates low, but U.S. fiscal stimulus may push longer yields modestly higher.

This will help keep the Canadian dollar remain low for an extended period.  The U.S. dollar is expected to drive higher due to higher growth and inflation in the U.S.


Although 2016’s surprises created volatility and uncertainty in the capital markets, they also created opportunities for experienced investors, and will continue to do so in the coming year.

We continue to recommend a diversified portfolio that is tailored to your individual investment objectives to take advantage of opportunities as they arise, while protecting your investments from further volatility.

On behalf of the entire You First team, we would like to wish you and your family all the best for the year ahead, and to remind you that my team and I are just an e-mail or phone call away should you wish to discuss your investment portfolio in greater detail.


Frank Mueller

Understanding Your Account’s Performance

Price Per Unit, Net Invested, Book Value, Market Value, Net Asset Value, and Adjusted Cost Base are some of the terms you may come across on your statement. People commonly struggle at times to understand the different “values” that are listed on their portfolio statements. This terminology confusion makes it very difficult to look at your statement and determine how the portfolio is really doing.

Understanding how your portfolio, and the funds within the portfolio, is doing will allow you to make better investment decisions going forward. Let’s investigate this a bit further.


Price Per Unit, or Net Asset Value Per Unit (NAV): This will be listed for individual funds in your portfolio. The Price Per Unit refers to the dollar value of 1 individual unit of the fund in question.

Market Value: Market Value of a fund is simply its current value as of the statement date. If your statement was printed today with today’s date, it would reflect yesterday’s market close unit price. The market value of Jim’s fund of 1,000 units of Fund XYZ with a unit price today of $10.00 NAV = $10,000.

Net Invested: This figure will appear for each fund you hold and for each account. Net Invested is simply the initial investment, plus all contributions, minus all withdrawals. For example: Jim initially invested $10,000 in Fund XYZ, subsequently made $1,000 in contributions, and then withdrew $500. Jim’s Net Invested is therefore his Initial Investment ($10,000) + Subsequent Contribution ($1,000) – Withdrawals ($500) = Net Invested of $10,500.

Adjusted Cost Base (ACB) aka Book Value: Book Value (or ACB) is the initial investment, plus subsequent contributions, plus any reinvested distributions, minus any withdrawals. Using the above example, let’s say that Jim also received $100 in interests/dividends distributions, which he opted to reinvest into XYZ. This Book Value (ACB) is thus his Initial Investment ($10,000) + Subsequent Contribution ($1,000) + Reinvested Distribution ($100) – Withdrawal ($500) = Book Value of $10,600.  This is important for tax purposes in a non-registered account.  When you sell these units, you will pay tax on the Market value minus the Book value.


One common misconception when looking at a statement is to gauge performance by simply taking the Market Value and subtracting Book Value (ACB). This DOES NOT equal performance, and we know this because we’ve already demonstrated above how Book Value differs from Net Invested. How you opt to receive distributions affects your Market Value and Book Cost (or ACB).

As you can see, when calculating the performance on a mutual fund investment it’s important to consider your initial investment, as well as your subsequent contributions and withdrawals or what we call your Net Invested. Let us know if you have questions about your portfolio’s return, as we can explain how your investments are performing, and help you to make the right decisions going forward.