How to ”profit” from new financial ”products”.

Recently, TD Bank which has an ownership interest in TD Ameritrade came out with another new service — yet another new service! Called the TD Active Global Enhanced Dividend ETF, (exchange-traded fund), it mainly invests in dividend-paying equities around the world and is actively managed. The graph above shows the fund’s portfolio make up.

”Actively managed” is the primary reason why, over the course of a decade, over 90% of these funds fail to match the simple act of buying and holding an index ETF which replicates the S&P 500. The managers need to buy groceries and pay the rent. They need to get paid. Their wages subtract from fund performance.

It is possible that the TD Active Global Enhanced Dividend ETF will outperform the S&P 500 — possible but highly unlikely. Knowing well that ”free” and ”new” sell, Wall Street/Bay Street are constantly spewing out new ”products”.

The best way, absolutely, to profit from these is to stay away from them and seek the very high probability of outperforming them through the Monday Morning Millionaire Program approach to investing.

The TD Active Global Enhanced Dividend ETF  investment method which you can read below is taken directly from their promotional material. Read it to see what does not work most of the time.

”The portfolio managers seek to achieve the investment objective by investing primarily in dividend-paying equity securities of companies located in developed markets around the world. They may invest in securities of issuers located in emerging market countries. Eligible securities will be selected through an active fundamental methodology that considers an issuer’s ability to profitably generate and grow free cash flow and its efficiency at allocating capital. Non-dividend-paying companies may make up to 15% of the overall portfolio. The portfolio managers may use options to enhance income and hedge any or all foreign currency exposure in the TGED.”

The best that one can say about new ”products” is that they provide jobs for those who create and who manage them. They do so at inexperienced investors’ expense.  The Monday Morning Millionaire Program investing philosophy protects us from them.

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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