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Active Management versus Index Shootout, Part 1

by Ram Balakrishnan
March 31, 2009
Reading Time: 3 mins read
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Dan Bortolotti, a writer for MoneySense magazine, wrote in a recent issue about how he became a convert to passive investing and moved all his savings into a version of MoneySense’s Couch Potato Portfolios. He received a lot of feedback on his article, including a response from a reader who asked his advisor about passive investing and the advisor responded with two charts that showed a purported superiority of active management. The first table compared the performance of large mutual funds with a blended index:

Largest Canadian Equity Mutual Funds vs Index over 10-Years (January 31, 2009)

  • 9 of 10 Largest Canadian equity mutual funds outperform the blended index
  • 9 of 10 Largest Canadian equity mutual funds have lower volatility than the index. Ivy Canadian Fund is the least volatile fund
FundAssets $Millions10 Year Annualized Return %10 Year Outperformance vs Index10 Year Standard Deviation
70% S&P/TSX Capped Total Return / 30% MSCI World Index—3.3%—13.3
RBC Canadian Dividend$6,7606.4%3.1%10.2
CI Harbour$4,0846.9%3.6%11.6
CI Canadian Investment$3,5206.2%2.9%11.1
BMO Dividend$3,3857.0%3.7%10.3
RBC Cdn Equity$3,2645.0%1.7%14.1
CI Signature Select Canadian$2,7909.8%6.5%12.4
AGF Canadian Large Cap Div-Classic$2,0543.8%0.5%12.7
TD Dividend Growth$2,0216.5%3.2%11.2
Mackenzie Ivy Canadian$1,9552.3%-1.0%8.4
Trimark Select Canadian Growth$1,8304.5%1.2%10.8


Source: Mackenzie Investments

I’ll post the second table that compared the performance of Global funds with the MSCI World Index in Canadian Dollars. In a subsequent post, I’ll discuss why these numbers should be treated with caution. Meanwhile, you may want to weigh in with your thoughts on the comparison.

Related posts:

  1. Finding a Financial Advisor, Part 1
  2. Carnival of Debt Reduction # 19
  3. The Income Tax Cut is Better
  4. This and That
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Active Management versus Index Shootout, Part 2

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