TD Bank is a Canadian financial conglomerate offering a wide variety of financial products, including mutual funds. TD Asset Management Inc administers TD Mutual funds, and these funds have specific features that distinguish one from the other.
However, a common trait of TD Mutual Funds is their low risk and potential to diversify your portfolio. Read on to find out all you need to know about TD Mutual funds and whether these funds are worth your investment.
What is a mutual fund, and how does it work?
Mutual funds are a pool of investments that include bonds, stocks, and other securities owned by a group of investors and managed by a professional fund manager. Canadians who buy mutual funds invest their money alongside other investors.
TD mutual funds are some of the best mutual funds in Canada. These funds are traded on the stock exchange, with the value fluctuating depending on the market. TD uses investors’ money to create a portfolio by purchasing investable assets such as bonds, stocks, GICs, and other securities. TD Mutual funds are built focusing on investment objectives, including capital gains, dividends, and interests.
Mutual funds vary in that some are made up of derivatives, hedge funds, and futures, while others may track a stock market index. That’s why it is necessary to go through the prospectus and fund facts before putting your money in a mutual fund.
TD Mutual funds may be actively managed, which means that the mutual fund manager purchases and sells the pool of bonds, stocks, and other investment securities to meet the funds’ objectives. TD mutual funds may also be passively managed in that the fund manager tracks an index to get similar returns. Passive funds commonly have the tag “index” attached to them.
The significant difference between the active and passively managed funds rests with the fund manager’s approach. However, both investment philosophies still have commissions, charges, and fees attached to the mutual funds, which invariably reduce your investment returns (ROI). TD provides both passive and active mutual funds, some of which will be seen later in the article.
Popular TD Mutual Funds
All mutual funds across the globe, including the mutual funds provided by Toronto-Dominion, fall under a few classifications such as the money market, equity, bond/income, global, and others that are sector-specific as well as emerging markets. These mutual funds all have a varying degree of risk and charges attached to them.
In sum, the more risk attached to the mutual funds, the higher the returns on investment. It is necessary to seek investment advice before selecting a portfolio that suits your needs. TD has over sixty mutual funds, including balanced, bond, money market, global, and equity funds. Some of the most popular funds are described in detail below:
TD Canadian Money Market Fund
The TD Canadian Money Market Fund focuses on investments in Canadian oriented money market securities. These securities provide investors with a high ROI while retaining liquidity and conserving capital. Amongst other mutual funds, the TD Canadian Money Market Fund is considered low risk. The minimum buy-in is C$100 and is eligible for RRSP. Benchmarks:
- 50% FTSE Canada 30 Day T-Bill Index
- 50% FTSE Canada 60 Day T-Bill Index
- AUM: C$1.7bn
- MER: .66%
- 3year return: 1%
- 5 Year return: .7%
TD Balanced Index Fund
The TD Balanced Index is a cocktail of income instruments and equities to conserve capital while meeting long-term financial objectives. It usually consists of a mix of short-term securities, bonds, equities, and sometimes the US and global instruments. The TD Balanced Index tracks the performance of the FTSE Canada Universe Bond Index. It also has a minimum buy-in of C$100 and is eligible for RRSP.
- AUM: C$77.9 million
- MER: .89%
- 3yr return: 3.44%
- 5yr return: 3.64%
TD Canadian Bond Fund
The TD Canadian Bond Fund was designed to earn investors a high ROI through investments in high-quality debentures and bonds issued mainly to Canadian borrowers in Canadian currency. These securities collect debt obligations backed by Canadian federal, provincial, and municipal governments, including Canadian trust companies, chartered banks, and other Canadian corporations. The minimum buy-in of this mutual fund is C$100, and it is also eligible for RRSP.
- AUM: C$11.5 billion
- MER: .88%
- 3yr return: 3.55%
- 5yr return: not available
TD Global Entertainment and Communications Fund
This mutual fund is not only a global fund, it is also a sector-specific fund. According to Morningstar, the TD Global Entertainment and Communications Fund was declared one of the top three mutual funds of the past decade. It focuses primarily on US media and telecom stocks, FAANG stocks (Facebook, Apple, Amazon, Netflix and Google), and top performers like PayPal and T-Mobil. The minimum initial investment is C$100, and the fund is also RRSP eligible.
- AUM: C$882 million
- MER: 2.82%
- 3year return: 16.69%
- 5year return: 17.64%
TD Mutual Funds that pay Dividends
TD also provides mutual fund investors with dividend-paying funds that have a lower risk than the typical equity or global fund. These funds may also provide investors with more ROI than a bond or money market fund. Designated dividend-paying funds may also allow investors to reinvest their returns by purchasing additional units automatically. Some of these dividend-paying funds include:
TD North America Dividend Fund
The TD North American Dividend Fund, focuses on equities in the US by investing 69% in companies like Merck & Company, Cisco Systems, Boeing, Johnson & Johnson, and Coca-Cola. The minimum investment amount is C$100, while distributions are made quarterly.
- AUM: C$1.5billion
- MER: 2.22%
- 3 year return: 4.91%
- 5 year return: 6.94%
TD Monthly Income Fund
The TD Monthly Income Fund is another dividend-paying fund that invests in big banks like the Canada Big Five, government bonds, Brookfield Asset Management, CA Rail, Enrique, and other security instruments. The minimum buy-in is C$100.
- AUM: C$4.9 billion
- MER: %1.47%
- 3year return: 0.7%
- 5year return: 2.23%
TD Dividend Growth Fund
The TD Dividend Growth Fund combines the advantages of tax-preferred capital gains with income-producing gains alongside dividend-paying securities. The top investments include TV Energy Corp, Brookfield Investments, Canadian banks, and CP Rail. The minimum investment is C$100.
- AUM: C$616 million
- MER: 2.02%
- 3year return: -1.52%
- 5year return: 1.69%
How to Invest in TD Mutual Funds
The following is a detailed step-by-step guide to invest in TD Mutual funds:
1. Consult a Mutual Fund Advisor
It is mandatory to buy TD mutual funds using a licensed mutual fund professional. TD Mutual funds are traded through a mutual fund manager licensed to deal in mutual funds in the province where you reside. Not every bank employee has a license to sell in mutual funds. Licensed professionals working in financial institution like TD may only deal with TD’s mutual funds’ collection. To find out more information, consult the Canadian Securities Administrators to see if your fund advisor is licensed in Canada.
2. Map out your Investment Goals
The mutual funds investor will address your investment concerns, risk limit, and objectives before recommending a suite of investment funds that fit your goals. These funds may include individual securities or a collection of funds that has been tailored to meet specific investment parameters. Bear in mind that this is your money, and thus, you need to ask as many questions as you can to understand your investment’s mutual funds.
3. Invest your money
There are a few options when it comes to putting money into a mutual fund. You may decide to make a single large contribution or set up automatic monthly payments through your bank account to your investment account. Most funds have a minimum buy-in, which starts at C$100. Investors can track their mutual funds performance online while receiving financial statements yearly, bi-annually, or quarterly.
TD provides investors with the option of registering a self-directed investment account that enables them to select their investments. Investors trade mutual funds through TD Asset Management. Be mindful that active investments incur more MER compared to passive investments.
4. Stay Focused
Remember that mutual funds fluctuate in value depending on the movement of the stock market. There may be wide variations in the short-term, so it’s good advice to think in the long-term. If you are concerned about the state of your investments, consult your fund manager.
If you decide to opt-out of your fund or invest in another mutual fund, ask your fund manager. It is possible to withdraw your money from a mutual fund whenever you want, but processing time may take as long as 48-72 hours unless you own a money market fund that operates like a cash account.
Note of Caution
Unlike RRSPs, mutual funds do not enjoy the protection of the CDIC. Consequently, it is possible to lose a part of or all your investment in a worst-case scenario. Ensure you thoroughly understand the contents of the prospectus, the level of risk, and the fees involved before putting your money into a mutual fund.
Are Mutual Funds Worth it?
Mutual funds are worth it because they enable investors to grow wealth by holding a collection of investment securities. The risk is often lower than most other investment packages.
Can I lose my money in Mutual Funds?
Yes, you can. But you can also limit your risk by consulting a mutual fund professional before investing your money.
What is the distributor of TD Mutual Funds?
TTD Asset Management Inc distributes TD Mutual Funds
*The information provided in this article does not constitute financial advice, and past fund performance is not an indicator of present or future investment returns. The information on this page is subject to change, and it is in your best interest to check out the current TD fund pages for the latest information.