MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

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Pitboard
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MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by Pitboard » 09 Jan 2017 12:08

I have this (MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE ) mutual fund and want to replace it with an ETF.
Any advice would be appreciated.

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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by AltaRed » 09 Jan 2017 12:57

Look up the list of ETFs from Blackrock iShares and BMO in particular. Each have something you want.
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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by Peculiar_Investor » 09 Jan 2017 14:08

Pitboard wrote:I have this (MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE ) mutual fund and want to replace it with an ETF.
Any advice would be appreciated.
I looked it up, Fund Portfolio – Mackenzie Ivy Foreign Equity Currency Neutral Class Series A | Mackenzie Investments and I don't see a CL FE, but I'm presume that's Series A, with a MER of 2.50%. Ouch!

But wait, if gets better, because for those high fees they'd be outperforming their benchmark right? Let's see: (click for big)
Sham on McKenzie Ivy fund.PNG
Ouch! Ouch! With numbers like that I'm left to wonder Where Are the Customers' Yachts? :lol:

I'm guessing the CL FE means it is the front-end load version so there is no deferred sales charge involved to rid yourself of this fund.

Two questions. What equity asset class are you using this fund to cover? MSCI World includes a token (about 4% of Canadian equity). Do you really want an ex-Canada holding? Do you really want a currency neutral (hedged) fund?

You could reduce your MER to 0.47% by switching to iShares MSCI World Index ETF | XWD. Looking under the covers of XWD shows it holds 3 other iShares ETFs.

If you don't need a Canadian equity allocation as part of the choice, then maybe consider VXC: Vanguard FTSE Global All Cap ex Can ETF ETF | Morningstar, MER of 0.27%.

If you use the search box for XWD and/or VXC you'll undoubtedly find views on these two ETFs and other alternatives.
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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by AltaRed » 09 Jan 2017 14:50

There is XAW (comparable to VXC) that doesn't include Canada like XWD does (at less cost too) but neither are currency hedged. The OP needs to do some sleuthing on his own to see if he truly wants currency hedged or not. It is not all that difficult to do...just down down the list of ETFs that each provider has.
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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by DanH » 09 Jan 2017 20:36

PI I know you grabbed that data in good faith and it's from the fund co's own website but we need to work with more complete data here. Not sure which index that is in terms of currency denominations. I have a time series for each of CAD, USD and local versions of MSCI world and none match what's on that Mackenzie site. Though there are other versions (e.g., gross vs. net) so I'll use another site and data set.

First, using the original A series units you have a fund that has slightly outpaced the benchmark on a full cycle (i.e. since before the Financial Crisis) - see this Globeinvestor profile - and that's net of its 2.5% MER. That's the case over meaningful time periods. And it has done so with lower volatility and lower downside risk (see this for example). If you go for longer periods you'll find the same. It's a fund I was never overly enthused about. But it's a fund that commission-based advisors have long supported - going back at least 15 years.

You could support an argument that says the odds are stacked against it going forward for 10, 15 + years for outperformance when such cheap index funds exist today (and cheaper active funds). But to say that it didn't add value in the past is wrong. And that it did so after its fairly high MER over such a long period can't be so easily dismissed. It's impressive. I knew about the fund but largely missed it. Score one for commission advisors.

As for whether an investor should hold a currency neutral version or not it seems to me that too many investors post-2002 sought currency hedging out of fear and speculation; rather than more fundamental investor-specific factors.

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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by Peculiar_Investor » 09 Jan 2017 20:51

DanH wrote:PI I know you grabbed that data in good faith and it's from the fund co's own website but we need to work with more complete data here. Not sure which index that is in terms of currency denominations. I have a time series for each of CAD, USD and local versions of MSCI world and none match what's on that Mackenzie site. Though there are other versions (e.g., gross vs. net) so I'll use another site and data set.
Fair enough, but as you stated I pulled the data from their own site so had no reason to suspect something would be amiss. Thanks for fact-checking and raising the concerns.
As for whether an investor should hold a currency neutral version or not it seems to me that too many investors post-2002 sought currency hedging out of fear and speculation; rather than more fundamental investor-specific factors.
Personally I wouldn't go currency neutral, which I why I asked the OP whether they really wanted currency neutral.
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Re: MACKENZIE IVY FOREIGN EQUITY CURRENCY NEUTRAL CL FE

Post by Pitboard » 10 Jan 2017 10:48

Thanks, lots to think about.

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