Actively Managed Funds vs. Index Funds

1stmilliondollar — Sat, 10 Jul 2010 02:10:41 +0000

There have been a lot of discussions recently that average people should just stick with index mutual funds. There are two main reasons, i.e.:

Index funds are usually has lower management fees compared to actively manage funds.
Many actively managed funds cannot beat index funds in the long term.

Recently, we questioned ourselves, can find actively managed funds that can beat the index in the last couple years? If yes, should we switch some of our money to these actively managed funds.

We ran a simple query on Funds Filter from The Globe and Mail; searching for Canadian equity funds that have MER lower than 2% and no load. We found a couple of interesting actively managed funds, i.e.:

Mawer Canadian Equity (MER: 1.26%)
PH&N Canadian Equity D (MER: 1.11%)
RBC O’Shaughnessy Canadian Equity (MER: 1.47%)

Then, we did the same charting to what we did recently with index funds, i.e. comparing the return of these funds to S&P/TSX in the last 10 years.

Links

Comparing Canadian Index Funds

1stmilliondollar.net » Mawer

Actively Managed Funds vs. Index Funds