Connect with us

Sponsored

Can a Mutual Fund Get Better With Age?

Published

on

The following content is sponsored by TD Asset Management

Can a Mutual Fund Get Better With Age?

Can a Mutual Fund Get Better With Age?

The average age of a mutual fund is just 8.6 years, which makes it quite a rare achievement for a fund to cross the 30 year mark.

However, after making it through two major recessions and countless global events, the TD Dividend Growth Fund has done just that.

In late 2017, the fund celebrated its 30th anniversary.

The Fund’s Purpose

Formed in 1987, the TD Dividend Growth Fund has the objective of providing high level of after-tax income for medium and long term focused investors and steady growth. It does this by investing in dividend stocks.

Key Reasons to Own:

  • Aims to combine strong performance with less volatility
  • Primarily invests in the stocks of high-quality companies
  • Focusing on Canadian dividends may gain favourable tax treatment
  • Dividends can provide income during retirement
  • Dividends accelerate through the power of compounding
  • If your dividends grow, it’s like getting a raise each year

For any investor that put $100,000 in the TD Dividend Growth Fund in 1987, they would have over $1.5 million today – beating the S&P/TSX Total Return by over $400,000.

This puts the fund in the top quartile of funds for performance over the last 30 years (as of Dec 31, 2017), as per Morningstar.

Why The Fund Could Last Another 30 Years

The fund’s portfolio managers understand the importance of collaboration, and work closely with the Fundamental Equity Research team to find and invest in dividend-growth companies. Further, they also work closely with the fixed income and asset allocation teams to create secured, well-diversified portfolios.

The portfolio managers also follow a disciplined investment process and conduct detailed fundamental research to identify high quality companies that feature consistent, growing dividends.

The outcome?

This approach offers growth potential plus a stream of dividends, which can help to provide both income and portfolio stability.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Comments

Sponsored

The 26-Year History of ETFs, in One Infographic

This graphic timeline highlights how the exchange-traded fund (ETF) came into existence, as well as the 26-year history of ETFs as an investment vehicle.

Published

on

The 26-Year History of ETFs, in One Infographic

In recent decades, there have been many breakthrough technologies that have re-shaped the nature of entire industries.

In finance, perhaps the most notable disruption has come from the rise of the exchange-traded fund (ETF) — an investment vehicle that has quadrupled in size over the last decade alone. But how did the ETF originate, and how has its use evolved through to today?

Today’s infographic comes to us from iShares by BlackRock, and it shows how the ETF has gone from an obscure index tracking tool to becoming a mainstream investing vehicle that encompasses trillions of dollars of assets around the world.

The Origin and History of ETFs

ETFs emerged out of the index investing phenomenon in the late 1980s and early 1990s, and there are two early examples that can be referenced as a starting point:

  • Index Participation Shares – 1989
    This initial attempt to create an ETF was set to track the S&P 500, and garnered significant investor interest. However, it was ruled to work like a futures contract according to a federal court in Chicago, so it never made it to the exchange.
  • Toronto 35 Index Participation Units – 1990
    These were a warehouse, receipt-based instrument that tracked Canada’s major index, the TSE-35. They allowed investors to participate in the performance in the index, without owning individual shares of stocks in the index.

Since these pioneering ETF endeavors, the investment vehicle has caught on in popularity — and it is now clear that ETFs provide a range of important benefits to investors, such as: low costs, liquidity, diversification, tax efficiency, flexibility, accessibility, and transparency.

Key Milestones in U.S. ETF History:

  • 1993 – The First ETF launches in the U.S., tracking the S&P 500
  • 1998 – Sector ETFs debut, tracking individual S&P 500 sectors
  • 2004 – The first U.S.-listed commodity ETF is formed, offering exposure to gold bullion
  • 2008 – Actively-managed ETFs get the green light from the SEC
  • 2010 – Term-maturity ETFs debut, holding bonds that all mature in same year
  • 2015 – First factor-based bond ETFs are launched
  • 2019 – U.S.-listed ETFs hit $4 trillion in AUM, and global bond ETF AUM crosses $1 trillion

How ETFs are Used Today

Today, the U.S. ETF industry has $4.04 trillion of assets under management (AUM), covering a wide spectrum of assets including equities, bonds, alternatives, and money markets.

ETFs are now the go-to index vehicle for 78% of institutional investors, according to a study by Greenwich Associates. Here are the 10 most popular applications for ETFs based on the same data:

ETF Application Description
Tactical adjustments72%Over- or underweight certain styles, regions, or countries on the basis of short term views.
Core allocation68%Build a long-term strategic holding in a portfolio.
Rebalancing60%Manage portfolio risk in between rebalancing cycles.
Portfolio completion57%Fill in gaps in a strategic asset allocation.
International diversification56%Gain efficient access to foreign markets.
Liquidity management54%Maintain exposure in a liquid investment vehicle to meet cash flow needs.
Transition management44%Facilitate manager transitions with ETFs.
Risk management42%Mitigate undesired portfolio risk and hedge asset allocation decisions.
Interim beta37%Maintain market exposure while refining a long-term view.
Cash equitization37%Put long-term cash positions to work with ETFs to minimize cash drag.

In the 26 years since the introduction of ETFs, they have grown and evolved to cover almost every aspect of the market. The next stage of growth for the ETF will be driven by investors finding even more uses for these versatile tools.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading

Sponsored

Why Telcos Must Get in the Game for the Rise of Esports

Telcos failed to capitalize on the ‘Netflix’ opportunity — however, the birth of a new multi-billion dollar industry (esports) could change the game.

Published

on

Why Telcos Must Get in the Game for the Rise of Esports

Over the last century, the world’s telecommunications companies have built out the complex infrastructure that makes the information age possible.

Hundreds of billions of dollars has been invested into phone lines, submarine cables, wireless towers, and fiber optics to connect the world. And with 5G innovations in the pipeline, the world has never been able to communicate faster and more effectively.

Despite this impressive accomplishment, telcos find themselves in an awkward situation: their revenue growth is stagnating and margins continue to shrink, all while companies like Netflix are monetizing internet bandwidth around the world.

Today’s infographic is from Swarmio Media, and it highlights challenges faced by telcos — and how they can potentially capitalize on the emergence of esports and a massive gaming market.

A Missed Opportunity

Habits around content consumption can change abruptly, and fast-moving technology companies have been able to capitalize on these changes.

That’s why, in recent years, there’s been a boom in over-the-top (OTT) media services (Netflix, Amazon Prime, Skype, etc.) that have found effective ways to operate on top of the telco infrastructure, streaming content or providing VoIP services to end consumers.

 TelevisionVoice & MessagingAudio
Example OTT services- Netflix
- Disney+
- Amazon Prime
- YouTube
- HBO
- Skype
- WhatsApp
- Messenger
- WeChat
- Viber
- Spotify
- Apple Music
- Podcasts
- Internet Radio
- YouTube
Global market size (2018)$68.7 billion$26.7 billion$8.9 billion
Growth rate (2017-2018):28%15%33%

Although telcos arguably missed the boat on video streaming, voice, and messaging, there is now an emerging segment that could help fill the gap.

The rising popularity of esports could be the multi-billion dollar industry that provides telcos a much-needed growth area to better monetize their infrastructure.

The Esports Boom

In recent years, the growth in professional gaming has been explosive.

Already worth over $1 billion, the market is projected by experts to triple by 2025. Esports is regularly packing stadiums with avid fans, spawning new professional teams, and selling massive sponsorship deals.

This boom in esports – and in online multiplayer gaming in general — has created a commercial audience of digital natives that is both young and affluent. It’s a growing segment that sees gaming as a lifestyle, and they see professional esports gamers and personalities as their heroes.

The Need For Speed

Any multiplayer gamer will tell you that there is one surefire way to ruin the gaming experience: high latencies (or as they call it, “lag”). This is an area telecoms are uniquely positioned to help with, especially with the advent of edge computing technology and 5G.

When it comes to online gaming, a sophisticated edge computing system will be able to detect where each player is located, while creating a server in an optimal location that provides all the players with the same high bandwidth, low latency, and experience.

By leveraging technology that enables edge computing at scale, forward-looking telcos can take gamers to where they want to go – and with plenty of value-adds.

Living on the Edge

To compete against growing outside threats like Netflix and Google, telcos must make bold investments in enabling technologies that bring edge computing to their customers at scale.

Beyond acting as the gatekeeper to lightning fast connections, telcos can take advantage of esports and gaming by building internal online communities, delivering tailored esports content, and enabling and promoting esports tournaments.

If done right, this can help telcos engage with digital natives, create meaningful experiences, win lifelong customers and advocates, and maximize average revenue per user (ARPU).

For many of the 2.5 billion gamers globally, there is little reason to be loyal to a telco – until now.

Subscribe to Visual Capitalist

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Continue Reading
Gen III Company Spotlight

Subscribe

Join the 130,000+ subscribers who receive our daily email

Thank you!
Given email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.

Popular