Comments on: Active Management versus Index Shootout, Part 1

By: Mutual Fund Fee Comparison Report Deeply Flawed | Canadian Capitalist

Mutual Fund Fee Comparison Report Deeply Flawed | Canadian Capitalist — Sun, 12 Sep 2010 20:26:03 +0000

[...] this blog. In the past, they’ve put out such research reports as I thought I wanted an ETF or how top ten active funds are allegedly better than index funds that for the most part tried to pass along marketing spin as serious research and provided us with [...]

By: Returns of the Top 10 Canadian Equity Funds (by assets) of 2004 | Canadian Capitalist

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By: A Week in Review: Edition #5 | My Findependence Day

A Week in Review: Edition #5 | My Findependence Day — Fri, 03 Apr 2009 21:24:30 +0000

[...] – Canadian Capitalist looks at challenging the assertion that actively managed funds perform better than passive [...]

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By: Active Management versus Index Shootout, Part 2

Active Management versus Index Shootout, Part 2 — Wed, 01 Apr 2009 22:22:48 +0000

[...] Contact ← Active Management versus Index Shootout, Part 1 [...]

By: gpsguy55

gpsguy55 — Wed, 01 Apr 2009 21:04:51 +0000

After many years being charged by the “industry” I finally moved our RRSPs to Shareowners where I can invest in ETFs and some good individual stocks, sometimes referred to as the Core/Satellite method I believe. My timing was right as the market tanked and I was able to keep cash for a while. If I hadn’t, I would have paid 2.3% for someone else to lose 28-38 % of the portfolio, no thanks. Don’t get me going on Trailer fees! Too bad I can’t move an open account without major tax consequences.
Reading William Bernstein will change any investors mind.

By: ioana

ioana — Wed, 01 Apr 2009 20:18:46 +0000

Thank you, that’s very helpful! Didn’t know about the dividents not being included, that makes sense, I guess “the miracle of compounding” will not work in my favour in this case…. didn’t know about the PF factor… though I don’t think in this case there is a PF factor… I think it would be a serious omission in their literature. (I actually think it says “100% of the returns up to the maximum).

I actually purchased these back in dec. 07, by moving pretty much all my rrsp to GIC (4.10% at the time) and the market linked ones. I had zero knowledge about investment at the time.

Since I timed the market just right, through sheer luck, it might not have been the worse idea in retrospect… but point learned!!

Thanks again,
ioana

By: Dan B

Dan B — Wed, 01 Apr 2009 20:05:09 +0000

Tony: Just went back and read your post about the power of hindsight, and it’s excellent. As you reveal so nicely, it is easy for advisers to present clients with a list of top-performing funds and say, “These beat the indexes over the last 10 years.” The proper response is, “Can I assume that you were recommending these funds 10 years ago?”

Four Pillars: Many thanks for your kind words about my article in MoneySense!

By: Mat H

Mat H — Wed, 01 Apr 2009 19:35:57 +0000

ioana – I found a little more information on those. The possible return is capped at a maximum return – didn’t find the exact number used though. Also, dividends won’t be included when determining the final return, so if you purchased one of these GICs for the TSX right now – that would be the equivalent of a 3.5% MER. Add that with the capped return, and these things look great for TD, not so good for the consumer.

By: Canadian Capitalist

Canadian Capitalist — Wed, 01 Apr 2009 19:28:35 +0000

@mcf: Exactly! And in fact, I’m suspicious whether this list is even correct. For instance, the Investors Dividend Fund with $9 billion + in AUM is missing from the list presumably because it doesn’t have a 10-year history.

http://www.morningstar.ca/globalhome/QuickTakes/Fund_Performance.asp?fundid=74178

Darryl: I think the two reasons you point out (a) poor performing funds being merged away and (b) better performing funds attracting lots of new money is the reason for these numbers (assuming it is correct, of course).

LEB: It’s a huge problem figuring out an appropriate benchmark to compare. The current asset allocation of these funds are all over the map. Who knows what to compare these with!

Dave: You probably missed the marketing spin on Ivy Canadian’s poor performance — it has the lowest volatility!

Ioana: You may want to check out this article:

http://michaeljamesmoney.blogspot.com/2009/02/analyzing-scotiabanks-market-powered.html