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Posts Tagged ‘rbc’

Actively Managed Funds vs. Index Funds

July 9th, 2010

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.

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Comparing Canadian Index Funds

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Tags: active canadian equity index fund Mawer mutual fund O'Shaughnessy passive PH&N rbc

Comparing Canadian Index Fund

June 27th, 2010

Before today, we were thinking that all Canadian index mutual funds should have the same (or at least similar) return over a couple of years. We are just surprised learning that it is not the case.

There are a couple of Canadian index mutual funds from major institutions in Canada, e.g.:

If we use chart comparison from The Globe and Mail, the chart of those funds in the last 10 year looks like the following:

The chart above assumes that we invest $10,000 in January 2000.

As we can see here, the four funds above have different result. CIBC Canadian Index has the lowest return, i.e. $15,713. Meanwhile, RBC Canadian Index has the highest return, i.e. $16.529.

There is more than 6% difference between the return of CIBC Canadian Index and RBC Canadian Index. We are not really sure why. We are also not sure why the gap between S&P/TSX total return and those funds are quite significant.