August 13, 2008 Morning Spot

This is Jeff Wareham, ScotiaMcLeod Wealth Advisor, with some thoughts for investors outgrowing their mutual funds.



I frequently discuss the impact of fund management fees on overall fund returns.

Yesterday, I encountered two major funds with management expenses well over 3 percent. That is nearly thirty percent of the historical return of equities.

No matter how smart the manager may be, a fund with this high an expense ratio has a real challenge…the manager has to deliver about thirty percent better returns to match the return of the index. This means either greater risk, greater volatility or both. Ultimately, you, the investor, must tolerate greater risk, or lesser returns.

No wonder nearly ninety percent of mutual funds fail to meet the index against which they are measured.



Have you outgrown your mutual funds?



For a review your portfolio, or a complimentary copy of my CD, visit, www.beyondfunds.ca or call me, Jeff Wareham, at 519 660 3260.

This program is for information purposes only. Fees, management fees, and commissions may be associated with mutual fund investing.

Investors should consult their prospectus before investing. Views expressed are those of the author, not Scotia Capital. ScotiaMcLeod is a division of Scotia Capital Inc, member CIPF.