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"When a new building block is discovered, the result is usually a range of innovations."~John Henry Holland (1995) Hidden order: how adaptation builds complexity.
Bricks, wood, glass, concrete, plastic and metal – all materials that are essential to build a typical house. If some of these items are missing, it doesn’t necessarily mean you can't build a house, but the quality, durability and longevity of the finished product may come into question. The finished product is only as good as the quality and suitability of the materials that went into building it.
The same can be said for an investment portfolio. Unfortunately, many investors' portfolios are built with significant design flaws or lack the proper components or "building materials" needed to succeed. The difference between well and poorly constructed portfolios can be drastic.
How the right building blocks can avoid fatal design flaws in your portfolio
At TDAM, we are committed to providing one of the broadest offerings of investment solutions in Canada and the essential building blocks needed to help you construct a well-thought-out portfolio to help you reach your investment goals. That's why we've added ten new ETFs to our ever-expanding solution suite.
Launching a mix of fixed income and equity ETFs, the funds are designed to help meet the evolving needs of investors and include features that we believe are truly distinctive in the marketplace. Here is a sampling of what you can expect from our new TD ETFs:
- TD Income Builder ETF (TPAY)
A convenient, one-stop ETF solution providing access to the fixed income expertise of TDAM through exposure to a broad spectrum of fixed income TD ETFs.
- TD Active Global Real Estate Equity ETF (TGRE)
An actively managed, globally diversified, real estate fund focused on income and growth, with low volatility, that leverages the extensive investment expertise at TDAM in the real estate sector.
- TD Q Global Multifactor ETF (TQGM)
A core global equity solution offering access to a quantitative strategy that optimally diversifies exposures to multiple factors such as Value, Momentum, Yield and Low Risk.
Leveraging the experience and expertise of the investment management and research teams at TDAM in fixed income, asset allocation, real estate and quantitative investing, the new TD ETFs can deliver great value with competitive pricing.
A closer look at fixed income ETFs
The TD Income Builder ETF (TPAY) is a prime example of a solution designed for today's investors' ever-increasing demand for an all-in-one fixed income ETF. As ETF assets have grown exponentially over the past decade, fixed income ETFs have increased in lockstep.
What is driving more investors to use ETFs for fixed income exposure?
- Lower costs - Fixed income ETFs generally have a lower median expense ratio versus mutual funds. And while many ETFs are index-based, this lower cost profile carries over to actively managed ETFs that also have a lower median expense versus actively managed bond mutual funds.
- Improved liquidity - Due to the hearty secondary market for ETFs (i.e. S&P/TSX Composite Index), investors can reallocate portfolios quickly across asset classes by tapping into market liquidity more easily than with single-issue bond holdings.
- Increased transparency - ETFs report holdings daily, increasing transparency for investors.
- Target duration - ETFs cover the entire spectrum along the yield curve. With that investors can manage a portfolio’s interest rate risk (duration) to match their market views. For example, the new TD Canadian Long-Term Federal Bond ETF (TCLB) and TD U.S. Long Term Treasury Bond ETF (TULB) have an overall duration target to keep their respective funds focused, while giving Portfolio Managers the flexibility to invest in bonds with variable terms and liquidity.
- Managing credit risk - Fixed income ETFs can cover a wide range of credit profiles, from investment grade credit to high yield. This allows investors to manage the amount of credit risk in a portfolio with relative ease.
Our new solutions recognize the important role that ETFs can play — from offering exposure to different asset classes, industry sectors and geographic regions to low cost diversification. Whether you're looking for a one-stop income solution, global exposure, or a core equity ETF, our offering provides greater choice and opportunity for investors in the fast-growing Canadian ETF market.
For more information on the launch of the 10 new TD ETFs please visit our ETF Resource Centre. Also, remember to follow us on Twitter for more timely updates and resources.