Index Funds - SP/TSX, MSCI EAFE, SP 500

On the index fund side of my investment philosophy I favour using the following ETFs provided by iShares in Canada.

XIC - Tracks the SP/TSX Capped Composite Index (Domestic Canadian exposure)
XIN - Tracks the MSCI EAFE Hedged to CAD Dollars (International exposure)
XSP - Tracks the SP 500 Hedged to Canadian Dollars (USA Market exposure)

These are classified as ETFs (Exchange Traded Funds) and are purchased as you would a stock (commission fee). Depending on your commission cost, ETF's are more efficient when making lump sum purchases greater than $5000.00 at a time (roughly).

If you are making smaller monthly purchases, then an alternative would be using index mutual funds, although they have higher on-going costs (MERs) they have lower purchase costs (ones I list have no commissions or 'loads' if held over 90 days)

The index mutual fund counterparts I prefer to the ETFs above are

TD Canadian Index - Tracks the SP/TSX Composite Index
TD International Index Currency Neutral - Tracks the MSCI EAFE Hedged to CAD Dollars
TD U.S. Index Currency Neutral - Tracks the SP 500 hedged to Canadian Dollars

Since mutual funds carry higher expense ratios it makes sense to routinely shift from the mutual funds to ETF equivalents whenever the higher MER cost on the mutual funds becomes greater than the commission cost you'd incur by making the move.

If you are restricted from purchasing TD based mutual funds, there's a chart at http://www.bylo.org/idxfunds.html listing other equivalent companies that offer low-MER index funds. Currently though, the TD efunds generally have the lowest MERs (Management Expense Ratios) and that's why I prefer using them when possible.

I've split my index portions equally between SP/TSX, MSCI EAFE and SP 500. This is a simplified coach potato type balance that gives some preferential weighting towards Canada since it's the country my retirement dollars would be based in.