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Discussion Starter #1
Following is on the MAWER website FAQ
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We recommend that investors hold the Balanced Fund in tax sheltered accounts (RRSP, SPRRSP, TFSA, RRIF, LIF, etc), and hold the Tax Effective Balanced Fund in non-registered, fully taxable accounts.
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I do not understand why it suggests to put MAW104 in RRSP account. Withholding tax will be lost if put MAW104 in RRSP account, right? Why not put MAW 105 in RRSP account?
 

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MAW105 seeks to minimize annual distributions to minimize taxes on ongoing annual investment income. That is what is supposedly tax effective about it. Nothing to do with US withholding tax.

Mawer itself says that plan does not always work out, i.e. MAW105 distributions being less than those of MAW104, but that is the intent. I hold MAW104 in my TFSA.
 

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Thanks AltaRed for your quick response. I am looking at the withholding tax. Withholding tax is to be lost for TFSA acount anyway. So holding MAW104 or MAW 105 in TFSA has no impact on the tax. Lower distributions will lead to lower withholding tax. So my understanding is MAW105 is better for RRSP than MAW104 unless there are other parts I do not understand.
 

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Lower distributions will lead to lower withholding tax. So my understanding is MAW105 is better for RRSP than MAW104 unless there are other parts I do not understand.
You cannot assume that is the case. Mawer seeks to limit turnover and re-balancing in MAW105 to reduce, most likely, realized cap gains....and if so, cap gains on US assets have no US withholding tax in any event. Further the Mawer funds are balanced funds so there could be a lot of distributions on the Canadian components without affecting withholding tax at all. US withholding tax only applies to US domiciled dividend and bond interest income, NOT cap gains.

IF you really want to dig into this, you need to compare the type of distributions on each of MAW104 and MAW105 over several years to get a feel for US withholding taxes.
 

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Discussion Starter #5
Thanks AltaRed. Do you see any disadvantage holding MAW105 in RRSP account? Comparing it with MAW104.
 

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Thanks AltaRed. Do you see any disadvantage holding MAW105 in RRSP account? Comparing it with MAW104.
Have not done any analysis on it.

Added: But based on Morningstar comparisons, it seems MAW105 has marginally better multi-year performance. Not material enough for me to get excited one way or the other.
 

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Have not done any analysis on it.

Added: But based on Morningstar comparisons, it seems MAW105 has marginally better multi-year performance. Not material enough for me to get excited one way or the other.
I hold MAW104 in reg accounts and MAW105 in non-reg. Alta is right. no big difference in performance. 105 is a nice way to accumulate gains, then cash in once a year to balance other asset classes in a pf. that's about it.
 

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Discussion Starter #8
Thanks Alta and dubmac for your explanation. I have a few thousand cash left in my RRSP account. I am going to buy MAW104 today.
 

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Thanks. Yes, I had 8K and bought MAW104 already.
I have 90K GIC expiring next week and 50K GIC expiring middle of March. I do not have RRSP and TFSA room left. So I am thinking of putting 40k or 50k to my TD Waterhouse cash account and the rest for 6 month GIC. Currently I do not have investment on my cash account. I have not done well on my RESP, RRSP and TFSA account even though I have more than 85% on equity. I read a lot on CCP but just cannot resist buying some individual stocks and was deeply burned some times. Since I knew I could buy MAW104 from TD waterhouse, I bought around 45K of MAW104 in different accounts (mine and my wife's) since the January of this year. I am thinking of buying 40K or 50K of MAW105 next week on my cash account. Any advice? Should I move the rest of my cash to my TD Waterhouse account and buy XBB or leave it in short term GIC? Thanks in advance.
 

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Discussion Starter #12
Just realize MAW105 has slgithly lower MER than MAW104. Will that make it a better choice than MAW104?
 

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Just realize MAW105 has slgithly lower MER than MAW104. Will that make it a better choice than MAW104?
the composition of 104 and 105 are the same. The small difference, I think, is in how the managers deal with cap gains and losses in the fund when they buy or sell a position.
 
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