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Som Seif, President and CEO, Claymore Investments, Inc., Toronto. (Claymore Investments, Inc.)
Som Seif, President and CEO, Claymore Investments, Inc., Toronto. (Claymore Investments, Inc.)

Earlier Discussion

Dispelling the myths about ETFs Add to ...

The popularity of exchange traded funds is exploding. There are hundreds of these investments now in the marketplace, and they're no longer just tracking well-known indexes. There are now ETFs that are actively managed and many are using increasingly complex financial instruments and strategies to try to outperform the market.

So where are the pitfalls and dangers? Which ones should Canadian investors focus on, especially with the volatile markets? And why should they be considered in the first place instead of a well-managed, low cost mutual fund?

Industry expert Som Seif joined us in a live discussion Thursday that covered these topics.

Som started Claymore Investments in Canada in January 2005 and leads the implementation of the company's business development and corporate strategies. Prior to joining Claymore, Som was an investment banker with RBC Capital Markets, where he worked since 1999. Som played a key role in developing the structured products group at RBC Capital Markets in both Canada and the U.S., where he structured and raised capital for both Canadian and U.S. asset managers.

Som is a Chartered Financial Analyst and has a Bachelor of Applied Science with an emphasis on Industrial and Systems Engineering from the University of Toronto. In 2011, Som was recognized for his vision and leadership by Caldwell Partners International with the Top 40 Under 40 award.

A full transcript follows:

Darcy Keith - Good morning everyone, I'm Darcy Keith, web editor with Globe Investor.

Darcy Keith - Welcome to this live discussion with Som Seif

Darcy Keith - We look forward to an informative discussion today on exchange traded funds. Please submit your questions at any time

Darcy Keith - Good morning Som

[Comment From Som Seif]

hello, looking forward to a great discussion

Darcy Keith - Let's start with a very broad question, coming from Brendan:

[Comment From Brendan ]

Why choose an ETF over mutual fund?

[Comment From Som Seif]

Hi Brendan, first ETFs and mutual funds actually compliment one another. But ETFs really are great at providing low cost, tax efficient investment products. There is a lot of focus on them because of their flexibility to invest how you want, but also their transparency, which most ETFs provide daily disclosure of holdings and strategy

[Comment From Chad Tennant, IA ]

As a fellow ETF advocate, the advantages far outweigh the benefits of traditional actively managed mutual funds. How many years before we see ETF AUM exceed that of mutual funds?

[Comment From Som Seif]

Hi Chad, i personally dont believe ETFs will exceed mutual funds in Assets. I think what you are seeing is a more leveling of the asset mix. See Canadians have historically been highly exposed to active management. Today, more and more people are differentiating the good active managers from the bad, and switching to ETFs in their place. I see ETFs and Mutual Funds having similar levels of assets 10 years out

[Comment From robbie ]

What is the best ETF for investing in the resource and precious metals area?

[Comment From Som Seif]

Robbie, first you need to decide if you want to buy equities or physical exposure (such as gold or silver). For energy equities, there are plenty products (broad such as XEG and broken down by segment, oil and gas, such as CLO and ZJO and ZJG. All provide different exposures...

[Comment From Som Seif]

For Precious metals, look at Broad Gold equity ETFs like XGD and ZJG, or Broader commodity ETFs like CMW. For physical metal, look at CGL for Gold and SVR for Silver

Darcy Keith - Just before we get to the next question, I thought our readers would be interested in checking out today’s number cruncher. Rob Carrick took a look at which equity-focused mutual funds beat similar-themed ETFs. It was a pretty short list. http://www.theglobeandmail.com/globe-investor/investment-ideas/number-cruncher/funds-that-give-etfs-a-run-for-their-money/article2231066/

Darcy Keith - Our next question is from Chad:

[Comment From Chad Tennant, IA ]

Do you think actively managed ETFs counter the original intent and design of their first generation counterparts? Are you for? After all less and less active managers are beating the index to your previous point.

[Comment From Som Seif]

Its a great article by Rob, and it highlights the first point as to why more and more investors are looking at ETFs to replace mutual funds for long term investing.

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