Why I refuse to be sold mutual funds
- EXCESSIVE ANNUAL FEES: Every year, even from no-load funds, the median Canadian equity fund will abscond with $567 in fees for each $25,000 invested (2.27%)…an astonishing amount. And every year, that's annually $567!
- PROFESSIONAL MANAGEMENT virtually guarantees you will lag the market.
- one hundred and seventy five (175) more reasons why I don't buy funds could be linked here soon from my former dividendgrowth dot ca web site.
- 176. The fund's assets might have to be sold suddenly to pay for redemptions.
- 177. How can the manager of a mutual fund take a long-term view knowing that her assets are subject to redemptions?
- 178. “The average equity [mutual fund] investor earned a paltry 2.57% annually, compared to inflation of 3.14% and the 12.22% of the S&P 500 index earned annually for the last 19 years [to 2007].” p19 Active Value Investing
- 179. “for all their stock-picking and do-gooding, the fund's managers could just as well have thrown darts at a board” Economist Feb 6 2010 regarding Norway's pension fund
- 180. In both the one and five-year periods ending December 31 2009, not one Canadian dividend and income equity mutual fund beat the S&P TSX Canadian dividend aristocrats total return index. Not one! R.O.B. March 13 2010 p.10
- 181. “Investors [in dividend funds] may not get all the income from dividends as some may go to offset expenses charged by the fund.” Globe Investor, March 25 2010
- 182. There is no legal requirement that financial advisors put client's interest (a lower fee product, for instance) first.
- 183. Should you hand your savings to a manager you have never met or talked to?
- 184. Fund managers delay the release of the exact contents of their portfolios.
- 185. “the portion of investment return that [is] purely a result of fund managers' skill [is] being reduced at every stage” Economist Jan 8 2011
- 186. 'Window dressing' by mutual fund managers could mean they pay higher prices for shares so that, on the date of their report to fund holders, it appears they are in the popular shares.
- 187. “too little personalized return information provided in client account statements” Tom Bradley, ROB January 22 2011 in Rob Carrick's column
- 188. “too much emphasis on marketing and keeping clients” Tom Bradley
- 189. “The average tenure of a fund manager in was 2.9 years in 2008, down from 4.4 years in 2005.” Financial Post Feb 2011
- 190. Only 42% of the mutual funds that were around in 1990 still exits today. “Most were merged into other mutual funds to erase their poor track records.” MoneySense Feb/March 2011
In the mean time, here are some ideas along the same line…dump your funds
http://www.investored.ca/en/investoranswers/B/26_mutualfund/Pages/3_mutualfundcost.aspx
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