Dollar-cost averaging

Dollar-cost averaging at work

Dollar-cost averaging is an investment technique used to help reduce the risk of timing a single investment. By investing a fixed dollar amount at regular intervals in specified Manulife products, dollar-cost averaging takes advantage of fluctuating prices. Over time, dollar-cost averaging can lower the average price per unit purchased and provide the potential for higher capital appreciation.

Click here to see our Viewpoints article on dollar-cost averaging

Dollar-cost averaging can give investors a systematic approach to investing in the markets over time. If you’re concerned about the current state of the financial markets and wondering about the right time to invest, Manulife Investment Management has solutions for you to consider.

Mutual funds

Currently, Manulife Investment Management offers two mutual fund options:

  • Manulife Dollar-Cost Averaging Fund — only available for new investments
  • Dollar-Cost Averaging Plan — available for new or existing investments

How the Manulife Dollar-Cost Averaging Fund works

First, investors choose how much to invest and which Manulife mutual fund(s) to switch into. Then, regular weekly switches from the Manulife Dollar-Cost Averaging Fund will be made over the next year (52 weeks). Each switch will be a fixed amount based on the original investment in the Manulife Dollar-Cost Averaging Fund.

While in the Manulife Dollar-Cost Averaging Fund, investors:

  • receive a competitive rate of return equivalent to the interest rate offered by the Manulife Bank Investment Savings Account. As of October 1, 2020, the rate of return is 0.15 per cent annualized on the assets remaining in the Manulife Dollar-Cost Averaging Fund.1
  • pay no management expense ratio (MER) on any balance held in the Manulife Dollar-Cost Averaging Fund.2

The Manulife Dollar-Cost Averaging Fund is available with a wide range of Manulife mutual funds to choose from, including tax-efficient corporate classes for non-registered accounts.

How the Dollar-Cost Averaging Plan works

The Manulife Dollar-Cost Averaging Plan is available to investors currently invested in the Manulife Money Market Fund or another Manulife mutual fund and would like to systematically invest in other Manulife mutual funds over a period of time.

The Dollar-Cost Averaging Plan provides extra flexibility by giving investors the opportunity to customize the frequency of their systematic switches.

When using the Dollar-Cost Averaging Plan, the related MER applies to all investments.

How the Plan and the Fund compare

 

Manulife Dollar-Cost Averaging Fund (DCA Fund)

Dollar-Cost Averaging Plan (DCA Plan)

Objective

The Manulife Dollar-Cost Averaging Fund can give investors a systematic approach to investing in the markets over time.

With this plan, investors can move from Manulife Money Market Fund (or any other Manulife mutual fund) to other mutual funds.

Target investor

For clients investing new money only and wanting to gradually invest in other mutual funds over time.

Anyone currently invested in the Manulife Money Market Fund, or any other Manulife fund except MPIP, who wants to move to other funds over time

Management fee & fixed admin fee

No management fee or fixed admin fee is charged on the Manulife Dollar-Cost Averaging Fund, only on the destination fund(s).

The management fee and fixed admin fee are charged on both the Manulife Money Market Fund (or other source fund) and the destination fund(s).

Timing

Every Friday, starting after the settlement date of the deposit

Any day, as requested. If the requested date isn’t a trading day, transactions will be processed on the next trading day.

Frequency

Every week, for 52 weeks. However, manual switches from the DCA Fund to the target fund are allowed.

As requested — can be set to weekly, bi-weekly (every two weeks), monthly, bi-monthly (every other month), quarterly, semi-annually, or annually

Last switch date

DCA Fund switches end once the 52 weekly switches are completed.

 DCA Plan ends when either:
  • all assets in the fund have been switched to target fund (based on amount and frequency selected)
  • instructions are sent to stop DCA Plan

Switches-in

Switches are not allowed from other funds into the DCA Fund (only full switches between DCA Fund codes are allowed).
  • MMF — Switches are allowed from any fund (except from the DCA Fund codes) within the same series and load option.
  • MPIP — Investors can only start the DCA Plan using assets in MPIP-eligible Money Market series: Advisor Series (MMF44522), Series F (MMF44622), or Series C (MMF4822).3

Switches-out
  • Switches are not allowed from DCA Fund codes into:
    • Manulife Money Market Fund
    • Manulife U.S. Dollar Strategic Balanced Yield Fund
    • Manulife U.S. Dollar U.S. All Cap Equity Fund
    • Manulife U.S. Dollar Strategic Income Fund
  • Full/partial manual switches to the target fund are allowed

Available series
  • MMF — DCA Fund is available in Advisor Series and Series F
  • MPIP — DCA Fund is available in Advisor Series (FE) and Series F only
  • MMF: DCA Plan is available in all Series (within same Series/Load option)
  • MPIP: Only available from MPIP-eligible Money Market series: Advisor Series (MMF44522), Series F (MMF44622), or Series C (MMF4822).3

Minimum
  • MMF — $1,000 minimum investment in the DCA Fund
  • MPIP — $100,000 minimum investment in the MPIP DCA Fund, where the target fund is MPIP
  • MMF — $100 minimum per switch
  • MPIP — $1,000 minimum per switch from MPIP Money Market

Segregated funds

Manulife Investment Management offers a dollar-cost averaging solution for investors looking to make periodic purchases in segregated funds. Initial deposits can be made to the Dollar-Cost Averaging Program Fund (DCA Program Fund) with instructions to process systematic switches over a maximum of 12 months. Each switch will be a fixed amount funded by the original investment in the fund.

Manulife Dollar-Cost Averaging Program — At a glance

 

Dollar-Cost Averaging Program Fund

Investment objective

The fund seeks to provide investors with interest income by generally holding all of its portfolio assets on deposit in a demand deposit (cashable) account with an administered interest rate at its affiliate, Manulife Bank of Canada.

Target investor

The DCA Program Fund is intended to help take advantage of fluctuating prices by systematically investing without the challenge of trying to determine the best times to invest. Over time, dollar-cost averaging can help to lower the average price per unit purchased and provide the potential for higher capital appreciation.

Products
  • GIF Select – InvestmentPlus and EstatePlus
  • GIF Select (Original) — 75 Series
  • MPIP Segregated Pools
  • Segregated Fund RESP
  • Manulife RetirementPlus
  • Ideal Signature Select

Deposit minimums
  • $2,000 in all products except MPIP Segregated Pools
  • $5,000 in MPIP Segregated Pools

MER

Currently, the MER is 0%. As noted in the Fund Facts, Manulife is currently waiving the management fee of this fund. We reserve the right to charge up to 1%.

Timing

Up to 12 months for scheduled switches to destination fund(s). On the form, the options are from six to 12 months, but shorter time periods can be accommodated with a letter of direction (LOD). Funds must be switched out within 12 months of deposit.

Frequency of switches

1st of the month or 15th of the month using the form. Other frequencies (e.g., weekly) can be accommodated with an LOD.

Interest rate

The current rate can be found on the Fund profile.

Switches-in

Switches into the DCA Program Fund are not permitted; the fund is only available to new deposits.

Switches-out

Switches out of the DCA Program Fund are permitted to any fund that pays an upfront commission in the same sales charge.

Manulife Dollar-Cost Averaging Program — Frequently asked questions for advisors

1. How can I submit dollar-cost-averaging instructions?
You can submit dollar-cost averaging instructions electronically using Online Transactions. If you’re submitting paperwork manually to Head Office for processing, you must complete the Dollar-Cost Averaging Program Fund form (MK1412).

2. What happens if switch instructions are not given following the deposit?
Within a few days following a deposit into the new DCA Program Fund, you’ll receive communication confirming that the deposit was made and the required paperwork is needed. If the paperwork is still pending after that initial communication, a reminder will be sent 30 days after the deposit. A final communication will be sent 90 days after the initial deposit. You’ll have five business days to give instructions for the destination fund(s) to Manulife. During the five business days grace period, the contract will be put on hold, and no transactions will be permitted.

3. What happens if Manulife doesn’t receive switch instructions after the communications and grace period?
If Manulife doesn’t receive the paperwork within the grace period, the investment will be moved to the Manulife High Interest Savings Fund, the hold on the contract is lifted and your commissions will be charged back.

4. Is the DCA rate different for mutual funds and segregated funds?
The funds are not the same. The rate credited and the timing of rate changes may be different.

5. Can I switch money that’s already invested in a segregated fund contract into the DCA Program Fund?
No, the DCA Program Fund is only available for new deposits. If you want to dollar-cost average using existing funds, systematic switches can be set up using the Fund Switches and Transitions form (NN0827).

1 The Manulife Dollar-Cost Averaging Fund will provide a 0.15 percent rate of return (annualized), effective October 1, 2020.

2 The Manager pays all of the operating expenses for the Manulife Dollar-Cost Averaging Fund, other than commissions and brokerage fees.

3 MPIP-eligible Money Market series have been capped for new purchases (including PACs and switches-in from non-MPIP funds). Only switches-in from MPIP pools and trusts are allowed.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts as well as the prospectus before investing. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer. There can be no assurances that the fund will be able to maintain its net asset value per security at a constant amount or that the full amount of your investment in the fund will be returned to you. Past performance may not be repeated.

Any amount that is allocated to a segregated fund is invested at the risk of the contractholder and may increase or decrease in value.