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Desjardins Group buying a piece of Qtrade

Desjardins Group invests in Qtrade for the long-term

Desjardins Group, parent to discount brokerage Disnat, announced earlier this week that they are taking a significant ownership stake in Qtrade Financial Group.  Desjardins has committed to purchasing between 25 to 40% of Qtrade’s outstanding shares initially with the option to acquire the remaining shares within six years.

According to the arrangement between the two companies, Qtrade will continue to operate independently retaining its brand name and current leadership.  With regards to the discount brokerage component specifically, both Desjardins and Qtrade state that for the foreseeable future it will be business as usual.

Ron Cann, Qtrade’s VP of Marketing and Communications, says that the focus will continue to be on delivering a quality experience, something that Qtrade’s discount brokerage has earned top honours for from the Globe and Mail and Morningstar in recent years.  From Desjardins perspective, director of media relations André Chapleau says that the near term will be a time of learning – one in which the opportunities to build synergies will be explored.

Even though these two companies are going to operate independently, and they both seem committed to continuously improving their offerings for Canadian investors, there are still some wrinkles to iron out. Specifically, will Disnat, the discount brokerage side of Desjardins and Qtrade’s discount brokerage business compete directly with one another?  While there might be some overlap, each side seems to feel that their respective target client base is diverse enough in terms of trading style (active trader vs long term investor) and geography (Quebec vs Western Canada) that competition is not really a focal point.  The alignment of Qtrade and Disnat as alternatives to the big-bank owned discount brokerages is what both parties see as a value add for their respective clients and partners.

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Event Review – Equity Strategy Using ETFs with iShares Canada – Scotia iTrade

This one hour webinar organized by Scotia iTrade covered quite a bit of ground on how exchange-traded funds (ETFs) can be used as part of a number of different portfolio and investment strategies.  The presenter for this session was Steve Eng, an associate at iShares, who did a great job of leading attendees through how ETFs can be used in many portfolio management scenarios.

Two key takeaways from the session were:

  1. Make sure to do your due diligence. When considering an ETF, investors should ensure they understand what the ETF holds, what the mandate of the particular fund is and what fees are involved.  This has implications for helping to manage both risk and expectations.
  2. ETFs can be used as a tactical tool.  There are lots of ways in which ETFs can be used as part of investment strategies. For example, they can be used to focus on specific sectors, countries or asset classes. The diversity of ETFs means that there is some choice when trying to build a portfolio around a strategy or idea.

The Q&A session was also handled well, with a number of questions around tax implications of foreign income and dividend reinvestment programs (which iShares have recently introduced).

As a cautionary note for individuals attending sessions like these, while presenters may have expertise or knowledge in one area, such as ETFs, it can be difficult to get reliable answers when asking questions about taxation to the speakers as they are not certified tax experts.

The lesson for do-it-yourself investors is not to avoid asking the questions, but rather to ensure that you verify the information you gather with a professional, such as an accountant, on what the tax implications are of your ETF investment strategies.

To learn more about the different webinars/seminars for do-it-yourself investors, check out our investor education calendar, which lists the different events being run by various discount brokerages.

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The Mindless Investor Chapter 7 – Don’t Be Average

Chapter 7 of The Mindless Investor focuses on the idea that aiming to be average is only going to get you average results.  In order to outperform the market, individual investors have to be willing to use tools and strategies that are different from “conventional” approaches.  It is important to remember that trading involves one party being right and one party being wrong.  To help shift the odds of being right in their favour, investors must be prepared to challenge traditional ideas of risk management and portfolio selection and adapt their approach to the modern market.

Key Point #1: You can’t outperform the market if you do what everyone else is doing

Mindless Investor Ch.7 - Outperform the Market

Being “normal” unfortunately is not something worth gloating about when it comes to investing.  By using strategies and approaches to the market that everyone else is using, the chances of outperforming the market diminish.  To get ahead of the pack, you have to be willing to use tools and strategies that help give you an edge.

Key Point #2: Everyone can’t be right at the same time

The Mindless Investor Ch.7 - Everyone Can't be Right

Every trade has two sides, but only one can be right at any given time.  Even though you might be confident in your decision to buy or sell, remember there is always another side to your trade. A good internal check is to ask why someone would want to sell when you’re buying or vice versa.

Key Point #3: Traditional methods of investing and managing risk don’t always work

The Mindless Investor Ch. 7 - Traditional methods of investing don't always work

Using traditional approaches to identifying investing/trading opportunities as well as traditional strategies to manage risk have proven themselves to be more susceptible to losses than “conventional” wisdom would have you believe, especially over the past 10 years.  According to The Mindless Investor, just because approaches to investing and managing risk are widely used, it doesn’t necessarily make them “safer” than other approaches.

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Questrade Launches Commission Free Exchange Traded Fund (ETF) Buying

Questrade Commission Free ETF

Commission Free ETFs – The New Normal?

Earlier this month, Questrade made a major announcement that impacts the commission fees associated with trading or investing in exchange traded funds (ETFs).   Specifically, Questrade has eliminated the commission fees associated with purchasing ETFs so that now any Canadian or American listed ETF is available for purchase commission free.  Naturally with a deal this compelling, there has to be a catch and in fact there are several important ones to take note of.

First, when purchasing an ETF, customers will get charged the commission fee, which will then be rebated within two business days. Second, customers can only buy ETFs for free by using one of the IQ platforms. Third, when selling the ETF, regular commission charges apply.  Lastly, some ECN (electronic communications network) fees may still apply for certain order types.  Even so, purchasing ETFs through Questrade just got way cheaper.

Given the popularity of ETFs with investors and traders alike, this announcement is sure to make waves with do-it-yourself investors as well as with other discount brokerages.  Message boards, forums and blogs have been buzzing with this latest offering from a company already well known for offering low commission fees.

Lowering Prices and Lowering the Boom

While some other discount brokerages such as Scotia iTrade, Qtrade and Virtual Brokers offer totally commission free ETFs (i.e. buying and selling) there are a number of conditions attached to how long one has to hold them and which ETFs are eligible for “commission free” status.   In addition, there are also restrictions on which ETFs are available with iTrade offering 50 commission-free ETFs and Virtual Brokers offering 100.  In Canada, data from last year puts the number of ETFs at about 250, trading across a wide variety of sectors, commodities and currencies.  In the US, there are over 1400 ETFs totaling over US$1 trillion in assets.

So, as a result of this announcement, Questrade’s reduction in pricing across all ETFs addresses one of the major pain points for self-directed investors – selection.  Getting affordable access to the most liquid or popular ETFs, or those with low management fees is no longer a problem for Questrade’s clients under this new pricing structure.

How Low Can You Go?

Of course, the other providers of commission free ETFs may be expected to follow suit with some improved ETF offerings of their own, but when combined with some of the lowest commission fees in the Canadian discount brokerage market, competing on pricing and selection will be difficult.

We’ll be watching to see how the other discount brokerages respond, but for now it is clear that the race for Canadian investors’ business has touched off a race to the bottom on fees.

Reference Links:

Questrade Community post announcing free ETF buying – Jan 30, 2013

David Francis – The ETF Boom. Exchange-traded funds are increasingly popular but severe risks exist. June 18, 2012

Megan Harman. Global ETF Assets Hit an All Time High. September 7, 2012

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Discount Brokerage Deals & Promotions – February 2013

ArchivedDealsThis February will be the busiest month for football, love and RRSP deals.  Winning new business is clearly on the minds of big and small discount brokerages with a number of promotions aimed squarely at Canadian investors looking to open RRSP accounts.

Kicking off the RRSP-specific deals are a couple transfer deals from the usually quiet TD Direct Investing (formerly TD Waterhouse Discount Brokerage) and Credential Direct.   Credential Direct’s offer of $200 to cover transfer fees for accounts of $10,000 and over is currently the most competitive transfer fee deal. For those looking to transfer with less than $10,000 but who have more than $5,000, Credential Direct is also offering to waive the first year’s account administration fee of $50.  TD Direct Investing, by comparison, is offering to cover up to $150 in transfer fees for a $25,000 account.

Of course, February is also about love so what better way to show someone you care than offering them a referral to your favourite discount brokerage?  Refer-a-friend programs appear to be the preferred strategy for  National Bank Direct Brokerage, Questrade and Scotia iTrade. National Bank Direct Brokerage is willing to pony up $200 for referral business with $100 going to each the referrer and referee, with a catch being that payment will take place after 6 months and a cap of $1000 in referral payouts per client.  The 6 month payout time will give both parties plenty of time to think about where to spend their bonus dough. The Scotia iTrade and National Bank Direct Brokerage deals do come with a number of strings attached (the fine print alone on the iTrade deal is over 1400 words long vs ~450 words on the National Bank Direct Brokerage deal) so be sure to read the details carefully and while fully alert. Questrade’s offer of commission credits for referral business – $50 in credits for the referee and $100 for the referrer,  is much simpler to follow and even comes with a link to share the deal.

We’ll keep our eyes peeled for any more promotions, deals and special offers during February for investors and if you know of any we’ve missed, feel free to message us to have them added.

Discount Brokerage Deals & Promos

Company Brief Description Minimum Deposit Amount Commission/Cash Offer Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitney and receive access to their preferred pricing package and a massive 45% discount on the Real Tick trading platform. n/a Discounted Commission Rates none For more details click here none
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit none none none
Open and fund a new registered, margin or TFSA account and fund it within 30 days with either A)$1,000 B )$25,000 or C)$50,000 and you will be eligible to receive either unlimited free trading for A) 1 month, B) 2 months or C) 3 months depending on your deposit amounts. You must the code RSP2013 to qualify. This is open to new and existing clients. There’s lots of fine print so be sure to read the details link. A) $1,000 B) $25,000 C) $30,000 Unlimited trading (No commissions charged on any trades placed) A) 31 days B) 62 days C) 90 days Unlimited Free Trades Promotion March 1, 2013
Refer a friend to Questrade and when they open an account you receive $100 and they receive $50. To receive this deal you must be an existing client with an equity account and refer a person that does not reside with you and who has not previously opened a Questrade account. $1,000 $50 commission credit (friend) $100 commission credit (referrer bonus) 60 days Refer a friend none
Scotia iTrade If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link. A)$10,000 B)$50,000+ A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$199.80) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $999) 60 days Refer A Friend to Scotia iTrade February 28, 2013
Scotia iTrade Open and fund a new Scotia iTRADE account with at least $25,000 before March 31, 2013 and the commissions associated with your first 100 trades placed within 60 days of the date the account is activated and funded. Also, the new FlightDesk platform is being offered for free for 60 days. Use promo code WAC13-EN. See details link for further terms and conditions. $25,000 100 free trades ($999 value @ $9.99 commission rate) 60 days Scotia iTrade 100 free trades + FlightDesk March 31, 2013
Open and fund a new account with National Bank Direct Brokerage with $25 000 or more, and your commission rate for 6 months will be $6.95 Flat. $25,000 $6.95 Flat commission rate 6 months Take Control of the Markets Promo February 28, 2013
If you refer a friend/family member who is not already a National Bank Direct Brokerage account holder to them, both you and your friend get a bonus of $100 each. The promotion code “FRIEND” must be used on the account application form. Read the details link for full terms and conditions. Note the maximum referral bonus per client is $1000. $25,000 $100 referral bonus (referrer) $100 referee (your “friend”) Payout occurs after 6 months Share $200 with a Friend Promotion October 31, 2013
Open an account with either: A) $25,000 or more and receive a $100 cash credit and 25 free equity trades. or B) $50,000 or more to receive $200 cash back and 50 free equity trades. A) $25,000 B) $50,000+ A) $100 cash credit + 25 free equity trades ($823.75 (min)total value @ standard equity rate $28.95) B) $200 Cash credit +50 free equity trades ($697.50 total value @ active trader rate $9.95) 60 days Cash back offer March 1, 2013
Disnat Disnat is celebrating its 30th anniversary by offering new & existing clients $300 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1 800 268-8471 and mention promo code Disnat30. See details link for more info. $50,000 $300 commission credit 6 months Disnat 30th Anniversary Promo February 1, 2013
BMO InvestorLine Open a new account or upgrade an existing account with either A) $100,000 or B)$250,000 to receive 250 trades (for those who deposit $100K) or 250 trades + $250 (for those who deposit $250K). Use Promo Code: RSP2013. NOTE: There are lots of details/important conditions attached to this promotion. Be sure to read the terms and conditions carefully. A) $100,000 B) $250,000 A) 250 Free Trades ($2497.50 value @ $9.99/trade) B) 250 Free Trades + $250 ( $2747.50 value @$9.99/trade) 90 days Path to Online Investing Promotion March 4, 2013

Transfer Fee Deals

Below are the discount brokerages deals that cover transfer out fees from other discount brokerages.

Company Brief Description Maximum Transfer Fee Coverage Amount Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Transfer an RRSP worth at least $10,000 to Credential Direct and they will cover up to $200 worth of transfer fees. The promo code RRSP must be used on the application $200 $10,000 RRSP Transfer Promo March 1, 2013
Qtrade Investor Qtrade Investor will reimburse your transfer fee up to $125 when transferring a balance of $25,000 or more. For reimbursement, please mail or fax a copy of your statement from the transferring institution that shows the transfer charge to Qtrade Investor at 604.484.2627 and indicate your Qtrade Investor account number. $125 $10,000 Transfer Fee Promo March 31, 2013
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 $25,000 Transfer Fee Promo none
TD Waterhouse Open a TD Direct Investing account with a minimum of $25,000 by March 1, 2013, and get up to $150 to cover your account transfer fees. $150 $25,000 Switch for free March 31, 2013
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees $135 $25,000 Transfer Fee Rebate none
Disnat Disnat is celebrating its 30th anniversary by offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1 800 268-8471 and mention promo code Disnat30. See details link for more info. $150 $50,000 Disnat 30th Anniversary Promo March 1, 2013
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Digging for Opportunities with a Mercenary Geologist – An Interview with Mickey Fulp

If there’s one truth about a mercenary – it’s that they mean business. In a resource conference filled with stories, opinions and “potential”, it’s a challenge for professionals and novices alike to identify real opportunities from the pipe dreams.  Enter a mercenary geologist. We had a chance to speak to Mickey Fulp, otherwise known as “The Mercenary Geologist” about his take on the companies attending the Vancouver Resource Investment Conference, what his outlook was for the overall junior mining and exploration space and how investors can capitalize on the current environment.

Looking first at the big picture, Fulp described the investing climate as being “risk off”.  What that means is that the venture capital is looking for less risky opportunities as the perceived rewards for investing in highly speculative stocks are low.   The junior mining and exploration sector is, according to Fulp, “the riskiest game on the planet” and as such investing in companies in this space is not something venture capital has an appetite for at this time.   He also pointed that lack of confidence may also be why the appetite for investment in this sector is waning.   At issue, said Fulp, was his opinion that many of the junior mining and exploration companies tend to over promise and under deliver.

So how does a mercenary geologist find opportunities amidst all of this pessimism?  Ironically, it is actually pessimism that Fulp keeps his eye out for as a cue to hunt for bargains.  His strategy involves buying companies “when nobody wants them” and wait for prices to significantly appreciate, which he believes, they often do.   With so many companies to choose from, not just any company makes the cut.  Fulp focuses on three key aspects of a company: a tightly held share structure, the experience and track record of the people in a company and the project itself and whether that project is likely to turn into a mine. By comparing companies against their peers in this way, opportunities can become easier to spot.

Ultimately, however, the decision to enter or exit a stock is based on a suggestion we’ve heard time and again from other savvy and experienced investors: have a plan for entry and exit.  From the perspective of a mercenary geologist, knowledge is important to have on a company and a stock, but if the reason(s) why you entered the stock ceases to be true, look for the exit and move on.

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. To learn more about Mickey Fulp, you can visit his website at www.themercenarygeologist.com. 

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3 Tips For Do It Yourself Investors Researching Online

In another discount brokerage survey confirming that Canadian do it yourself investors are turning to online resources to help manage their financial futures, TD Direct Investing recently released results of a survey it commissioned in December 2012 that explored the online habits of Canadians.   According to the TD Direct Investing survey, convenience, control and content are what online channels of information offer to Canadian investors.

For most individuals, the notion that Canadians are turning to online resources for research is probably not surprising.  In fact, earlier in 2012, BMO Investorline conducted a similar study that found Canadian online investors research in order to help make effective investment decisions.  These types of discount brokerage sponsored surveys, however, stretch back across the past decade and largely confirm one another in the observation that do it yourself investors are, in fact, doing it themselves.

Not surprisingly, if you are reading this post, you are probably part of that group of do it yourself investors that is looking online for resources they can use to help navigate the management of their personal finances.   Looking to online resources generally means having to wade through lots of opinions, in order to find quality tools and resources – something we at SparxTrading.com know all too well.

So, given that so many Canadians are going online to do their research on financial products and services, here are several tips that we can offer when looking for discount brokerage accounts and resources offered by them.

  1. Be skeptical.  Even though you don’t need to be a stick in the mud, don’t take everything you read at face value.  Ask yourself whether the “facts” presented to you by writers, advertisers, surveys or other sites support the claims they make – i.e. “what makes someone the best discount brokerage?”
  2. Ask how the writer/source is compensated.  Many independent blogs or writers online earn their living by the quality of their content – usually by advertising dollars.  Others, however, have affiliate relationships or are clearly savvy marketers.  Learning the difference between them isn’t easy, however take note of whether there is a balance of perspectives presented.
  3. Take your time. Great timing is what savvy investing is all about, but stepping in for fear of missing out is the enemy of investors everywhere.  Knowing when a discount brokerage deal is actually a deal versus when it is a sales tool comes with experience and, you guessed it, research.

Comparing features, pricing and promotions are what can make you a savvier shopper when it comes to finding a discount brokerage or any financial product online.  Our comparisons sections are designed around making discount brokerage research not only easy but also value-focused.

While it does take time and effort to research online, often some research ahead of time is the best investment to avoid costly experiences and heartache in the end.  Keep your wits about you and happy hunting.

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Event Review – 2013 Vancouver Resource Investment Conference – Cambridge House International

Continuing in its tradition of providing a forum for investors to connect with resource and exploration companies, great speakers and one another, the 2013 edition of the Vancouver Resource Investment Conference by Cambridge House International was by many accounts, a successful event.

The official numbers reported over 10,000 individuals in attendance over the two days, taking in just over 500 companies, 50 speakers and 130 company presentations.  Some of the highlights of this year’s show were a treasure hunt and an art exhibition and of course, the iconic bull.  The presentations ranged from topics as diverse as gold market manipulation to mining on asteroids ensuring there was something entertaining, relevant and engaging for all types of investors to think about.

Even though the junior mining sector was well represented at this show, there were some heavyweight names in the room, such as Silver Wheaton and Detour Gold.  Interestingly, the combined market capitalization of the top 6 companies was about equal to the combined market cap of 230 other companies present, so there was no mistaking the room was full of companies hopeful to grow.   Our pre-show analysis showed that about 80% of the companies exhibiting were precious metals-related companies, highlighting the popularity of these metals in spurring companies looking to cash in on the historically high prices of gold and silver.  Of course, one of the burning questions on the mind of many investors is why, in spite of the performance of gold prices, share prices of producers and explorers of gold have not rallied in step – questions that were tackled by several speakers.

While a conference dedicated to resources and exploration will usually have a lot of junior companies jockeying to tell their story, there were a couple of noteworthy speakers, such as Brent Cook, Sid Rajeev and Danielle Park that painted a picture in numbers that put the enthusiasm of the conference floor into perspective.  A common thread among many speakers was that a lot of junior mining companies are facing challenging times raising money or have to confront increased costs to exploration.

The bottom line: there is good data suggesting investors have to work harder to understand what they’re stepping into, especially in the commodity space, because many companies around today may not be around by year’s end.

In spite of the darker clouds, there were some ‘silver’ linings.   The treasure hunt put on by Visual Capitalist managed to literally net some lucky conference attendees pieces of silver.  Also, the sentiment from exhibitors we polled was positive overall.  On twitter, the comments we measured from exhibitors, attendees and media were also mostly positive.

Overall this conference was a great experience filled with lots of walking as well as opportunities to meet and engage with junior mining and exploration companies.  The Cambridge House conference tour will return to Vancouver in May for the World Resource Investment Conference, however between now and then there will be shows in Calgary (April 5/6) and Saskatoon (April 19).  It will be interesting to see how many of the forecasts play out between now and the next time the show comes to town.

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Special Series: Review of Globe and Mail’s Discount Brokerage Rankings – Part II

In part one of this series, we looked at the background of the Globe and Mail discount brokerage rankings as well as how they’re structured and who they’re targeted towards. In this next part, we take a detailed look at what the discount brokerage rankings are actually measuring and some interesting observations we made about the Canadian discount brokerage industry over time.  Lastly, we provide some important tips to keep in mind when using rankings as part of your product research.

What Do the Discount Brokerage Rankings Measure?

When looking at any ranking or rating, one of the most important questions to be clear on is what the ranking or rating is actually measuring.  In our review of the J.D. Power Investor Satisfaction Survey, we saw that “investor satisfaction” was being measured by six components: interaction, trading charges and fees, account information, account offerings, information resources and problem resolution. By comparison, the Globe and Mail discount brokerage rankings are measuring what Rob Carrick thinks is the “best discount brokerage” for “mainstream” investors.

As we saw in part one, when looking across the last eleven rankings, it appears that the categories that go into defining “the best” discount brokerage are not static. The most stable characteristics of what it means to be “the best” seem to cluster around costs, trading and tools. According to Carrick, the categories that he chooses vary in large part because they are based on a combination of data from reader surveys and his perceptions of what mainstream investors are curious about or would find worthwhile.

Strengths of the Discount Brokerage Rankings

A strength of this approach is that the discount brokerage rankings are somewhat reflective of the mood or sentiment of mainstream Canadian investors.  If investors are curious about certain features, such as commission free ETFs or user experience of a discount brokerage, the rankings have incorporated these kinds of innovations into their structure.  Having looked at a decade of results, it is fair to say that the rankings reflect the pulse of what mainstream investors are exposed to from the discount brokerage industry and hence curious about.

Limitations of the Discount Brokerage Rankings

While Rob Carrick’s opinion is certainly informed by monitoring Canadian discount brokerages for over 14 years, his opinion may not necessarily be shared by other investors, something that readers should keep in mind when doing their research.  The degree to which his opinion can be generalized rests on how accurately the needs of “mainstream investors”, a term that is loosely defined, are captured in the questions he uses to survey discount brokerages and in the process he uses to evaluate their products and services.

A second limitation of the rankings is historical comparability.  Because the criteria have changed as often as they have, it is difficult to compare historical performance of Canadian discount brokerages in a meaningful way.  It may be possible to compare results on costs, trading and tools because of their relative stability as categories however the total scores from year to year are largely incomparable.

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