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Hello:

I have some questions for the forum, below. The context on these questions is:
-- For many years I have been buying TD e-Funds using dollar-cost averaging. But I am interested in getting some (low-cost preferably) emerging market exposure.

-- I can't find any emerging market index funds (or at least any that have a MER that is materially different than an actively managed MER!!).

-- I was considering one or two emerging market ETFs (Claymore or iShares) via Canadian Shareowner but just saw that Claymore is now offering a PACC and DRIP plans.

I just need to check that the PACC/DRIP (which is via brokers) is offering their common units, not the atrociusly more expensive advisor units....iShares says they are considering PACC/DRIP but do not offer now.

1. Are you aware of any true (ie MER below 1%) index funds in Canada that are emerging market, BRIC or China?

2. I've googled and morningstarred Claymore and iShares. If you hold either what are reasons why you chose one vs. the other? Any comments on relative tax efficiency and tracking error of the two companies?

3. Two of the Claymore emerging ETFs are $C hedged for some reason so I think I may pass on those..... I have 15 year+ horizon. I WANT foriegn curreny exposure, not hedge. Any holes in that rationale?

4. Claymore does not offer fractional units for either the PACC or DRIP, which I see as a disadvantage vs TD e-Funds. But this seems like a small weakness, relatively speaking?

5. For ETFs, is "management fee" the same meaning as "managment fee" for a mutual fund - i.e., it is *fee*, not MER (the latter being a ratio)?

Thanks for your input
 

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Would you consider a US traded ETF such as VWO? I hold VWO in a registered account and it is certainly cost efficient.

For mutual funds, the CIBC emerging market index fund has been a pretty good perfromer. It has a high"ish" MER for an index fund but all things considered it is not a bad fund (it has been a good performer for my wife). If you are a mutual fund only investor (and want to invest monthly), it is certainly better than the alternatives. CIBC index funds generally have a high MER unless you are able to hold over $150,000 in CIBC index funds (in which case the MER drops to e-series range).
 

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>>read your post too quickly. Seems you are looking for ETFs in Canada that are not currency hedged... :S well, maybe it's time to look outside Canada ;)

Fees for emerging market index funds are often the highest, but there are many ETF options with MERs below 1%, some as low as 0.27%.

I'm surprised you did not find any viable options, a quick glance at 3 popular ETF sources produces:

iShares: XCH, XEM, FXI, EEM, BKF,
Vanguard: VWO
Claymore: CBQ, CWO
 

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I'm in the same boat as jtmann. Looking for opinions on an emerging markets ETF. I'm leaning towards VWO due to a much lower MER than XEM for example. My main concern about buying US dollar denominated investments in general is the currency risk and currency conversion fees. I earn Cdn dollars and plan on always spending Cdn dollars. I imagine those who buy US ETFs figure that the lower MERs will more than make up for any minor currency losses and fees?
 

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i understand that currency hedge funds have a downside due to costs and that over time currency will even out

but i would make the argument that, if your "home" currency is the cad and if the economics fundamentals for canada vs the rest of the world continue to look as good as they do, it seems to me that the currency hedging might be a worthwhile cost

with the rise in emerging market currencies and the probable loss of value for the usd, i wonder if we need to write new rules ?
 

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I'm in the same boat as jtmann. Looking for opinions on an emerging markets ETF. I'm leaning towards VWO due to a much lower MER than XEM for example. My main concern about buying US dollar denominated investments in general is the currency risk and currency conversion fees. I earn Cdn dollars and plan on always spending Cdn dollars. I imagine those who buy US ETFs figure that the lower MERs will more than make up for any minor currency losses and fees?
Though VWO is denominated in US dollars, a Canadian investor is NOT exposed to fluctuations in the CAD-USD rate. The Canadian investor is exposed to the fluctuation in the CAD to a basket of emerging market currencies. Same argument applies to the Vanguard Europe Pacific ETF (VEA).

I wrote an explanation here on my blog:

http://www.canadiancapitalist.com/currency-effects-of-buying-foreign-stocks-or-etfs-on-us-exchanges/
 

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Though VWO is denominated in US dollars, a Canadian investor is NOT exposed to fluctuations in the CAD-USD rate. The Canadian investor is exposed to the fluctuation in the CAD to a basket of emerging market currencies. Same argument applies to the Vanguard Europe Pacific ETF (VEA).

I wrote an explanation here on my blog:

http://www.canadiancapitalist.com/cu...-us-exchanges/
is this still true in the "new normal" ? if the canadian dollar goes on a prolonged rise against usd and the japanese yen ? it can't be true if the usd gains against the yen and loses against the cad ?
 
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