As most of you may know, mutual funds can be very expensive, especially in Canada.  What do I mean by expensive?  As a typical mutual fund sold by a bank involves a fund manager,  s/he needs to be paid along with other associated costs.  This results in a Management Expense Ratio (MER) that takes a percentage of the investment returns given to investors.  The problem is that MERs can be quite large which can add quite the drag on the portfolio over the long term.

In a past article about the long term cost of a high MER, I calculated that over a 30 year period, a 1.7% difference in portfolio MER resulted in a 61% difference in portfolio size.  Yes, that’s right, 61% of your total portfolio value and that’s not counting the fact that most mutual funds do not beat an index investment strategy over the long term.

However, not all mutual funds are a bad deal.  In fact, using index based mutual funds with low MERs are an efficient way to invest for new and experienced investors alike.  This leads into why this article was written in the first place.

A beginner investor emailed me to ask my opinion on the ING Streetwise mutual funds.  She is very new to investing but already has an ING mutual fund TFSA setup.  I’ve read relatively positive feedback about the funds, but lets take a closer look.

The Mutual Funds

The ING Streetwise funds keep it simple by offering three basic funds that are each all in one portfolios.  Each fund is index based and with the same MER of 1.0%.  What do I mean by “all in one”?  Each fund is a portfolio of index equity/bonds, so there is no need to re-balance, the investor simply needs to choose the appropriate fund that suits their risk profile (ie. less risk means greater bond allocation) and buy more units when cash is available.

Although the contents of the funds are the same, the main differences lie in the equity/bond allocation to correspond to the investor risk profile. The bond portion replicates the DEX Universe Bond Index (same as iShares XBB), Canadian equity replicates the S&P/TSX 60 index (same as iShares XIU), U.S equity replicates the S&P500 (same as iShares XSP), and international equity seeks to replicate the MSCI EAFE Index (same as iShares XIN).

  1. Balanced Fund – This fund is likely the most popular of the three with its common 60% equity, 40% bond asset allocation.  It is the middle of the road fund that will chug along over the long term.  Their fact sheet indicates that along with the 60/40 allocation, they are 60% in Canada (40% of which are from the bonds and 20% equity), 20.6% U.S and 19.4% other.
  2. Balanced Income Fund – This fund has a higher bond allocation for those with reduced risk profiles. Although this fund will likely face lower volatility than the balanced and growth fund, safety comes at a price of lower overall long term returns (theoretically).  The asset mix is 30.9% equities, 66.5% bonds, and 2.6% cash with a 80% concentration in Canada, 10.9% U.S and 9.6% other.
  3. Balanced Growth Fund – This fund will typically appeal to the investor with a long time horizon and higher risk appetite.  The volatility will be the highest with this fund, but also the highest potential for greater returns.  The asset mix is 74.7% equities, 24.3% bonds, and 1.0% cash with a 50.1% concentration in Canada, 25.8% U.S and 24.1% other.

What I Like

While the MER is similar to other index mutual funds out there, the real advantage with these funds is that they re-balanced automatically.  All the investor needs to do is buy more units and the fund will take care of the rest. Compared to ETFs, these fund portfolios are great for smaller accounts as it eliminates trading commissions.

The Downside

Compared to other index solutions, like the TD e-Series, although the Streetwise products are more convenient, they are more expensive.  More on this in the next section.

As well, for investors with larger accounts (>$25k), these funds may not be the best choice.  For an index ETF portfolio using iShares similar to the Balanced Growth Fund, the MER would average 0.30% vs 1%.  The larger the account, the less the drag of low frequency trading commissions from a discount broker.

How does it Compare to TD e-Series?

Some of you may be comparing this group of funds with the popular TD e-Series.  We are using the TD e-Series for our family RESP and have our portfolio setup very similarly to the Balanced Growth Fund.  While the ING Balanced funds are easier to manage with no re-balancing, TD e-Series remains king with their low fees.  A portfolio similar to the Balanced Growth Fund with TD e-Series has a MER of 0.42% compared to the ING product of 1.0%.


For beginner investors who have no interest in watching the market, or even re-balancing, then I have no problems with the ING fund products as they are convenient with relatively low fees, especially for small accounts.  If the investor is willing to do a bit of annual re-balancing, then the TD e-Series is more cost effective.  However, once a portfolio gets large enough, index ETFs are the lowest cost solution of them all.

What are your thoughts on the ING Streetwise funds?

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Yep, this is about right. Streetwise is the best for a completely hands-off experience (their MER has actually risen recently to 1.07% from the original 1.00%); TD e-series is the best bet for index funds if you want to do some of the rebalancing work yourself. ETFs are best if you have lots of money.

The only thing to mention is that for ETFs to be worth a switch from e-series, I’d suggest something much higher than $25,000. At Canadian Couch Potato (another great site), they suggest $50,000 as a reasonable time to switch, but I might even go higher, depending on how often you contribute. The difference between ETFs and e-series is only about 0.07%, and the huge advantage of index funds relative to ETFs is that you can more effectively use dollar cost averaging through weekly or monthly contributions at no cost.

Good article. I like your point that these ING funds might be the best choice for some investors, even though they aren’t the cheapest.

I haven’t dived into investing yet, but I trust ING based on the great things I hear from other PF bloggers out there. I’ll keep mutual funds in mind. I can afford to do some riskier investments since retirement is a ways off.

Let’s not forget that ING’s Streetwise funds are *managed* index funds (co-managed by SSGA I believe) and should not be compared to TD’s e-Series index funds which are passive. If we compared the managed index funds category, ING’s funds are in fact cheaper than TD’s alternate offering (around 1.30%).

As mentioned previously, ING’s Streetwise funds are a good product for new and/or passive investors with small accounts who like to stay diverse, don’t want to worry about re-balancing on a regular basis, and prefer investing through dollar-cost-averaging without having to pay a commission. With that said, once your portfolio reaches a certain threshold, there are more competitive products out there than the Streetwise funds that offer not only lower fees but more diverse choices.

Here’s a blog we wrote about the streetwise funds that you might find interesting:

I think this review is very accurate. However, as we do with all of our products, streetwise was built for the typical Canadian. A simple straightforward low cost great service option for the Canadian who works hard and wants to invest for the long term in a hands off way. Put 10% of your salary every 2 weeks into streetwise with an automatic savings plan and you wont lose sleep and you’ll retire well. Peter.


I was a strong supporter of ING until we were undermined by ING in a way that I think was quite unfair to us.

We are a financial planning firm that had recommended many clients open ING savings accounts as an emergency fund for quite a few years. ING paid us a small fee as a percent of the savings and gave us some support in case any of our clients had service issues. We were also given a nicer web site and low volume phone number for our clients. We appreciated being able to offer this to our clients.

However, a few months ago, ING just cut us off without even advising us. I only found that we were being cut off because we were opening another savings account for a client.

We were told that there was a notice posted on your web site somewhere, but we were not advised directly by ING that we were being cut off.

We were then told that we would be cutoff as of August 31 and would have on-line access until then. However, our access was cut off several days early. We had fortunately printed off a client list and have been moving our clients to higher interest savings accounts with Manulife and Ally.

I think this process was quite unfair, considering how loyal we were over the years and how many clients we referred to ING.

Clearly, ING decided that working with advisors was not profitable. But since ING tries to create an image of openness, why did ING not advise us directly, and why choose this unfair methods to cutoff loyal advisors, Peter?


The financial industry screwing people?
Just no honour among thieves any more.

@Ed Rempel:

Ed, you are making great points and I can understand your disappointment with the level of communication that you received.

We have sent a letter to all broker head offices on June 15, approximately 2.5 months prior to FAS channel discontinuation. It is unfortunate that some firms did not pass the message to their advisors. Due to contract restrictions we could not communicate this directly to advisors aside from posting a message on the website.

I would be happy to discuss this with you further and to explain the overall rationale for the decision. Feel free to email me

Hm, I looked through the prospectus for ING, and it states the MER is at .8? Am I not considering other costs, and where would I find those?

@FrugalTrader – Thanks for the review. I think you hit it mostly right on – especially with your mention that the Streetwise Funds are all-in-one portfolios.

The Streetwise Funds often get compared to other index funds in the market, most notably the TD e-Series funds, which are hands-down the leaders in the low-cost index mutual fund market here in Canada. So yes, we absolutely agree that you can replicate the makeup of the Streetwise Funds by choosing individual TD e-Series funds, but as mentioned in the article, the re-balancing aspect is what’s missing from the individual TD e-Series funds.

As @Lior mentioned above, a more direct comparison for Streetwise would be the managed TD e-Series portfolios, which include the re-balancing component, and have MERs ranging in the 1.15%-1.35% range. The Streetwise Funds are actually not individual index funds. They are managed portfolios that use an indexing strategy.

With that in mind, the 1.07% MER for the Streetwise “Portfolios” can’t beat an individual TD e-Series fund at say 0.30% on cost alone. But when compared with a 1.30% managed portfolio, the Streetwise Funds come out as the lowest-cost “portfolio” option out there.

(A quick point on ETFs: yes, they can beat out Streetwise and even the individual TD e-Series funds on cost alone, but as mentioned in the comments above, are usually best suited to the absolute DIY investor who takes care of their own re-balancing – and has the discipline to do so! – and who holds a larger balance, usually around $50,000 or so.)

Hopefully that provides some clarity, and remember, we’re always happy to answer questions and see reviews and comments about our products.

@christy – to clarify your MER question, the prospectus states that the Management Fees are 0.80%, but the MER also includes the administrative/operating costs. The MER is 1.07% (HST upped it from 1.00%).

What will happen to the funds, now that ING is about to be sold? fees rising, profitability droping? Should you sell your parts and move away?

They streetwise portfolios are garbage. After 14 years all ing has is 4 mutual funds. Who is running that joint ??

I wouldn’t call them “garbage”. I have a small portion invested in the equity growth, and it has performed similarly to better than the actively managed funds at RBC. ING isn’t a big bank like the big five who have many different types of funds. They do have enough choices covering the different levels of risk people would be willing to take