By: Larry MacDonald
As of February, Claymore Investments Inc. will be offering a dividend-reinvestment plan (DRiP) for its family of exchange-traded funds (ETFs) on the Toronto Stock Exchange. Under its Automatic Dividend Reinvestment Plan (Auto DRIP), dividends will be automatically reinvested without trading commissions. As well, unitholders will be able to acquire additional units without trading fees.
This is a breakthrough in making ETFs more convenient. Until now, index mutual funds were the only way for index investors to reinvest dividends without charge. Now they can DRiP with Claymore ETFs, which have much lower annual expense ratios.
Claymore will also be offering commission-free, dollar-cost averaging through its Pre-Authorized Cash Contribution Plan (PACC Plan), as well as commission-free, systematic withdrawals through its Systematic Withdrawal Plan (SWP). Those features will be quite convenient too.
5 Responses to “ Making ETFs user-friendly ”
Now this is good news. Hope iShares follow suit.
By CanadianInvestor on Jan 30, 2009
It would be so much simpler for the Big Boys to simply cut their MER’s and go back to the days when there was no negative impact to moving money from fund to fund on a daily/weekly basis.
The trend towards ETF’s this season is derived from not just the belief that the bank MER’s are a waste of money, but also the unwillingness of new money to want to be hit by a 2% fees if they changes their minds, once committed to a fund, in less than 30 days.
ETF’s solve these problems.The new Claymore changes will encourage more people surely to treat them more like mainstream mutal funds.
However, I would still rather have the Big-Boys holding my investments than ishares/Barclay’s over a long haul.
I have a nagging concern about who owns the actually ETF companies, could they also have problems long term.
In fact Larry, any chance you give us some back ground on the major ETF companies and what happens if one of them goes belly up?
By goldeneye on Jan 31, 2009
I think this is great news even though I don’t own any Claymore ETFs. Larry, can you post where you found the information on PACC plan? I couldn’t find it on their website.
By Canadian Capitalist on Feb 5, 2009
goldeneye
I understand that the ETFs are trusts held separately from the assets of the ETF provider. If a provider went under, the ETF assets should be safe, not part of the division of assets.
CC
Here is the news release (which should also be available by clicking on the word Claymore in the third paragraph — maybe there is a bug in the RSS?):
http://www.claymoreinvestments.ca/docs/ci-pr-drip-pacc-swp-1-28-09.pdf
By Larry MacDonald on Feb 5, 2009