The RBC Canadian Dividend Fund is a favorite among Canadians. The fund has over 18 billion dollars invested and offers multiple share classes, but no matter what share class you look at, the performance is impacted negatively by the large Management Expense Ratio ("MER") which can be as high as 1.76% for the series A.
There are many ETFs in the Canadian Dividend Equity universe with smaller Expense Ratios than the RBC mutual fund, but the two most interesting are the Invesco Canadian Dividend Index ETF (ticker: PDC) and Vanguard's FTSE Canadian High Dividend Yield Index ETF (Ticker: VDY).
Invesco's Canadian Dividend ETF has stellar performance and beats the RBC mutual fund over both the short term and long term, while the Vanguard ETF has the smallest MER of the three (only 0.22%) and therefore has a head start hand when it comes to future performance.
Both Dividend ETFs are highly correlated with the this dividend mutual fund (>90%) and the asset allocations are almost identical. Anyone who purchased one of these ETFs instead of the mutual fund has already benefited from the out-performance. The larger MER means it will only get harder for the RBC Canadian Dividend mutual fund to outperform in the long term.
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