For individual securities, not balanced portfolios like a mutual fund AFAIK.Spiff wrote:The low volatility point is bad, IMHO, because, empirically it turns out that volatility has been negatively correlated with returns ...
newguy
For individual securities, not balanced portfolios like a mutual fund AFAIK.Spiff wrote:The low volatility point is bad, IMHO, because, empirically it turns out that volatility has been negatively correlated with returns ...
Do you have a empirical source for that? Or are you referring to balanced funds (i.e. bond/stock mixes)?newguy wrote:For individual securities, not balanced portfolios like a mutual fund AFAIK.Spiff wrote:The low volatility point is bad, IMHO, because, empirically it turns out that volatility has been negatively correlated with returns ...
I'm pretty certain that's what the study is calling conservative funds.Spiff wrote:Do you have a empirical source for that? Or are you referring to balanced funds (i.e. bond/stock mixes)?
I would imagine these funds are trying to reduce volatility, the easiest way is some type of balanced fund.Leaving a margin for error, 23% of funds (74 funds) are between 10-40% less volatile than the TSX. Are these funds even trying to beat the index?
The link: Is performance worth the price?twa2w wrote:There was an article in the FP last week - sorry can't find link - by Laurent Barras from McGill U.
[/beating limping horse]I wrote:My aim isn’t to defend the fund industry. I simply maintain that no study is sufficiently complete to make meaningful global comparisons of the total costs that investors bear to invest in and hold mutual funds. Until that happens, any statement regarding where Canadian fund fees rank among its global peers is simply speculation.
More importantly, I’ve argued that the debate over average fees is simply academic. In the April 2008 issue of Investment Executive I reason that average fees don’t matter if we have enough breadth of choice to satisfy do-it-yourself investors and advice-seeking investors (whether their advisors are paid by commissions or separately-billed fees). In other words, averages are meaningless if everyone has what they need.
The article also links to the full research report.It is in the compensation where the confusion over cost arises. In Canada, most advisors are compensated almost entirely through the trailer fee, which is paid from the MER. Front end load charges are waived in about 95% of purchases, Rodrigues says.
In the U.S., the front end load cannot be waived as it is defined in the prospectus of the fund.
"They have to do that because in the actual total expense ratio (TER) that is reported in the U.S., there is very little in terms of compensation for the distributor," Rodrigues explains. "It is usually in the form of the 12(b)1 fee, but that's only 25 basis points, and that's not enough to compensate your advisor."
On an 'apples to apples' basis, the vast majority of investors in Canada and the U.S. incur a comparable cost of ownership when purchasing mutual funds with the assistance of an advisor, the study finds.
To get the apples-to-apples comparison, researchers focused on funds sold by financial advisors, as the majority of investors on both sides of the border buy their funds through an advisor.
Thanks Dan. I feel so much better now knowing that the US are in as bad shape as Canada!DanH wrote:The article also links to the full research report.
It's not my research and I'm not sure I fully buy Bain & Co's conclusions either. Perhaps it depends on what they mean by "comparable".kcowan wrote:Thanks Dan. I feel so much better now knowing that the US are in as bad shape as Canada!DanH wrote:The article also links to the full research report.