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
| Fund | Assets $Millions | 10 Year Annualized Return % | 10 Year Outperformance vs Index | 10 Year Standard Deviation |
|---|---|---|---|---|
| 70% S&P/TSX Capped Total Return / 30% MSCI World Index | — | 3.3% | — | 13.3 |
| RBC Canadian Dividend | $6,760 | 6.4% | 3.1% | 10.2 |
| CI Harbour | $4,084 | 6.9% | 3.6% | 11.6 |
| CI Canadian Investment | $3,520 | 6.2% | 2.9% | 11.1 |
| BMO Dividend | $3,385 | 7.0% | 3.7% | 10.3 |
| RBC Cdn Equity | $3,264 | 5.0% | 1.7% | 14.1 |
| CI Signature Select Canadian | $2,790 | 9.8% | 6.5% | 12.4 |
| AGF Canadian Large Cap Div-Classic | $2,054 | 3.8% | 0.5% | 12.7 |
| TD Dividend Growth | $2,021 | 6.5% | 3.2% | 11.2 |
| Mackenzie Ivy Canadian | $1,955 | 2.3% | -1.0% | 8.4 |
| Trimark Select Canadian Growth | $1,830 | 4.5% | 1.2% | 10.8 |
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.
