Simplii Financial Index Mutual Funds Review 2024

In the quest to lower investment fees, Canadian investors can choose to buy low-cost ETFs directly using a discount brokerage account, or they can hold a basket of ETFs using a Robo-advisor account.

Investors can also purchase index funds like the Simplii or Tangerine index mutual funds and the TD e-Series funds.

The kinds of index funds that Simplii and Tangerine offer are mutual funds designed to replicate the returns of a benchmark index, and they are passively managed. Unlike traditional mutual funds that cost a fortune in Canada, index funds charge a lower fee.

For more details on investing options in Canada, read my posts on:

• Guide To Robo-Advisors in Canada
• Best Stock Trading Apps
• Index Investing For Beginners
• Commission-Free ETF Brokerages in Canada
• How To Buy Stocks in Canada

Simplii Financial (CIBC) Investment Funds

Simplii Financial is the direct banking arm of CIBC, and the mutual funds it offers are selected from the stable of funds at CIBC Securities Inc.

Simplii Investment Portfolios are diversified with various investor risk profiles in mind, and you can hold them in your RRSP, TFSA, RESP, RRIF, or LIF accounts.

This review of Simplii mutual funds covers the seven different portfolios they offer, the index funds that make them up, and associated fees (MER).

1. Simplii Invest Conservative Income Portfolio

This portfolio is Simplii’s most conservative and maximizes interest income while preserving your capital. Its average management expense ratio (MER) is 0.95%.

The invest conservative income portfolio is made up of mostly money market/bond instruments and some stocks (5%) using the following funds:

• CIBC Money Market Fund 15%
• CIBC Canadian Short-Term Bond Index Fund 40%
• CIBC Canadian Bond Index Fund 35%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 5%

2. Simplii Invest Income Portfolio

This portfolio targets capital preservation, income, and some growth. It holds roughly 75% in bonds, 5% in cash, and 20% in stocks using:

• CIBC Money Market Fund 5%
• CIBC Canadian Short-Term Bond Index Fund 35%
• CIBC Canadian Bond Index Fund 35%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 5%
• CIBC U.S. Index Fund 8%
• CIBC European Index Fund 7%

The Invest Income portfolio has a 1.03% MER.

3. Simplii Invest Income Plus Portfolio

This portfolio aims to generate long-term capital growth and income. It holds about 35% stocks, 60% bonds, and some cash using:

• CIBC Money Market Fund 3%
• CIBC Canadian Short-Term Bond Index Fund 27%
• CIBC Canadian Bond Index Fund 30%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 10%
• CIBC U.S. Index Fund 13%
• CIBC European Index Fund 8%
• CIBC Asia Pacific Index Fund 4%

The Invest Income Plus Portfolio has a 1.05% MER.

4. Simplii Invest Balanced Portfolio

A balanced fund offers a balance between stocks and fixed-income securities and is for investors looking to earn income and long-term growth using the power of equities. The funds that make up this portfolio are:

• CIBC Canadian Short-Term Bond Index Fund 15%
• CIBC Canadian Bond Index Fund 30%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 16%
• CIBC U.S. Index Fund 18%
• CIBC European Index Fund 10%
• CIBC Asia Pacific Index Fund 6%

Asset allocation in this portfolio is roughly 50% bonds and 50% stocks, and its MER is 1.09%.

5. Simplii Invest Balanced Growth Portfolio

This portfolio takes on more risk in exchange for capital growth and income. It has an MER of 1.11%, and asset allocation is 65% stocks and 35% bonds using:

• CIBC Canadian Short-Term Bond Index Fund 5%
• CIBC Canadian Bond Index Fund 25%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 17%
• CIBC U.S. Index Fund 23%
• CIBC European Index Fund 13%
• CIBC Asia Pacific Index Fund 8%
• CIBC Emerging Markets Index Fund 4%

6. Simplii Invest Growth Portfolio

This portfolio’s asset allocation is weighted toward stocks at 80% and bonds at 20% using:

• CIBC Canadian Bond Index Fund 15%
• CIBC Global Bond Index Fund 5%
• CIBC Canadian Index Fund 23%
• CIBC U.S. Index Fund 28%
• CIBC European Index Fund 15%
• CIBC Asia Pacific Index Fund 10%
• CIBC Emerging Markets Index Fund 4%

The Invest Growth Portfolio has an MER of 1.11%.

7. Simplii Invest Aggressive Growth Portfolio

This portfolio is focused on long-term growth through capital appreciation with 90% invested in stocks and 10% in bonds.

• CIBC Canadian Bond Index Fund 10%
• CIBC Canadian Index Fund 20%
• CIBC U.S. Index Fund 32%
• CIBC European Index Fund 20%
• CIBC Asia Pacific Index Fund 12%
• CIBC Emerging Markets Index Fund 6%

The Invest Aggressive Growth Portfolio has an MER of 1.12%.

If you are interested in the benchmark indexes that are being tracked by the individual funds, they are:

• CIBC Canadian Short-Term Bond Index Fund: DEX Short-Term Bond Index
• CIBC Canadian Bond Index Fund: DEX Universe Bond Index
• CIBC Global Bond Index Fund: JP Morgan Global Government Bond Index (ex. Canada)
• CIBC Canadian Index Fund: S&P/TSX Composite Index
• CIBC U.S. Index Fund: S&P 500 Index Fund
• CIBC European Index Fund: MSCI Europe Index
• CIBC Asia Pacific Index Fund: MSCI All Country Pacific Index
• CIBC Emerging Markets Index Fund: MSCI Emerging Markets Index

Simplii Mutual Fund Fees

When you buy one or a combination of these index mutual funds, you will pay an MER fee that comprises a management fee and other trading fees and commissions. For the available 7 portfolios at Simplii, the MER ranged from 0.95% to 1.12%.

Registered investment plans may also charge additional administration fees, withdrawal, transfer, and account closing fees. Simplii Financial customers (except for Quebec residents) get a fee rebate of 10% off the basic management fee.

Simplii Financial Mutual Funds – Pros and Cons

The advantages of using these index funds are:

• Lower cost: Not as expensive as traditional mutual funds
• Automatic re-balancing
• Diversification
• Low minimum investment requirement, and you can start with as little as $25 a month

The disadvantages are mostly related to a higher cost as compared to Robo-advisors or some other cheaper index funds (e.g. TD e-Series funds).

Simplii vs. Tangerine Index Mutual Funds

Simplii and Tangerine are both online-only banks. Simplii is owned by CIBC, while Tangerine is owned by Scotiabank. Tangerine offers 5 different core portfolios:

• Tangerine Balanced Income Portfolio (INI210)
• Tangerine Balanced Portfolio (INI220)
• Tangerine Balanced Growth Portfolio (INI230)
• Tangerine Equity Growth Portfolio (INI240)
• Tangerine Dividend Portfolio (INI235)

Tangerine also offers three global ETF portfolios:

• Tangerine Balanced ETF Portfolio (INI420)
• Tangerine Balanced Growth ETF Portfolio (INI430)
• Tangerine Equity Growth ETF Portfolio (INI440)

Both banks have similar MERs on their portfolios, with Tangerine at 1.06% and Simplii ranging from 0.95% to 1.12%. Compared to the TD e-Series index funds at 0.33% to 0.51%, Tangerine and Simplii funds are more expensive.

Investment Comparison: Simplii Index Funds vs. Robo-Advisors vs. Traditional Mutual Funds

Below I provide a quick overview of how investment costs compare when you invest with Simplii, robo-advisors, and traditional mutual funds.

Assuming your portfolio has $100,000 in assets:

• Simplii Funds: @ 1.09% annual fee (MER of Balanced Portfolio) = $1,090 per year in fees.
• Robo-Advisor, e.g. Wealthsimple: @ 0.65% annual fee (including ETF fees) = $650 per year in fees.
• Traditional Mutual Funds: @ 1.98% annual fee for equity mutual funds = $1,980 per year in fees.

What is it with investment fees? Well, the fees you pay your fund manager and other costs (brokerage fees, commissions, etc.) add up and impact your portfolio performance over time.

When you purchase ETFs directly on an exchange, you could get them individually for as cheap as 0.06% (e.g. Vanguard FTSE Canada All Canada Index ETF).

Even better, you can avoid the hassle of rebalancing your portfolio 1-2x per year by purchasing an all-in asset allocation ETF (aka one-fund solutions) with a management fee as low as 0.18%, e.g. the iShares Core Balanced ETF Portfolio (XBAL).

Alternatively, with ETFs, you can let a robo-advisor do all the grunt work and pay them about 0.50% in management fees plus the cost of the underlying ETFs making up your portfolio.

If you are not comfortable trading ETFs directly and do not want to use a robo-advisor or are investing smaller amounts, index funds are a worthy alternative. An investor can purchase tailored index funds at an average cost of 1% or less.

Compared to the three options above, traditional equity mutual funds cost more at an average of 1.98%.

While active mutual fund managers want you to think you are paying for their ‘expertise’ in outperforming the markets and achieving stellar returns, historical data is not on their side. Active mutual funds rarely beat their benchmark indexes.

Closing

Newbie investors may not be comfortable purchasing ETFs from an exchange and rebalancing their portfolios 1-2 times a year. This does not mean that you cannot cut your investment costs.

Take a closer look at index funds, Robo-advisors, or one-fund ETF solutions that can save you tons of money in the long run!

Related:

• Wealthsimple Review
• Best TFSA Investments
• Best RRSP Investments
• Registered vs Non-Registered Investment Accounts