Let Me Mail YOU a $10 Bill!!

There are loads of mutual funds that have done well for investors. 

We can’t ever know what they’re going to be ahead of time, but after the fact, we can applaud them for having skilled managers or dismiss their performances as lucky.

Here’s my challenge to you.

I believe that companies selling actively managed mutual funds are incredibly profitable for their shareholders. They sell expensive products that benefit the institutions first, with the investor a distant second. My thesis is that their stocks (over 20+ years) have outperformed their best long term mutual funds, when reinvesting dividends for both the stocks and the funds.

Find a Canadian example that proves me wrong before June 1st, 2010, and I’ll mail you a crisp $10 bill.*

Let’s have a look at the best long term stock market mutual fund offered by The Royal Bank of Canada—the RBC Canadian dividend fund.

Since 1993, it has appreciated by roughly 437%.  That’s superb!

As for the institution that created it, how has it performed since 1993?

I have the data from 1995 below.  And the stock for the Royal Bank of Canada has increased by 1000% since then.  The shareholders of the bank’s stock have easily beaten the investment performance of the people who have bought the bank’s investment products, over the long term.

How about another example?  Without even reinvesting dividends, the TD Bank has appreciated by 775% since 1995.  Find the 20 year data, and show me that one of TD’s stock funds has beaten the TD Bank stock since 1990, and I’ll mail you that well-deserved $10 bill.

Maybe you’ll get lucky to find an Investor’s Group fund that has beaten its parent company, Power Corp.  I only dug up data back to 1995, but dig back to 1990 and find one of Investors Group’s mutual funds that has beaten this stock and I’ll send you that $10 bill.  Since 1995, this company’s stock is up 650%, not including reinvested dividends.

Here’s your list of Canadian mutual fund companies to get you started on the hunt. 

They don’t all have publically traded stock available, so weed through those that do. 

And don’t forget.  We’re looking at the past 20 years.  If you’re the first to find one, let me send you that $10 bill!

Good luck!

  • IGM Financial (InvestorsGroup & Mackenzie):
  • Royal Bank of Canada (RBC Asset Management):
  • CI Fund Management Inc. (CI Mutual Funds Inc.):
  • Toronto-Dominion Bank (TD Asset Management):
  • AMVESCAP (AIM Trimark):
  • Canadian Imperial Bank of Commerce (CIBC Asset Management):
  • FMR Corporation (Fidelity):
  • Bank of Montreal (BMO Investments/Guardian Group of Funds):
  • AGF Management Limited (AGF Funds):
  • Franklin Resources (Franklin Templeton Investments):
  • Phillips Hager & North Ltd.:
  • Dundee Corporation (Dynamic):
  • Bank of Nova Scotia:
  • CMA Holdings Incorporated:
  • National Bank of Canada (Natcan/Altamira):
  • Fédération des caisses Desjardins du Québec:
  • Manulife:
  • AIC:
  • Industrial Alliance Insurance and Financial Services Inc.:
  • Brandes Investment Partners:
  • HSBC (Canada) Investments:
  • Standard Life:
  • Acuity Funds:
  • Saxon Financial:
  • Ethical Funds Inc.:
  • Mawer Investment Management:
  • Sentry Select Capital Corp.:
  • Sceptre Investment Counsel:

* Note $10 will be paid to each person who finds a specific (and not previously selected) Canadian mutual fund where the mutual fund has out-performed the mutual fund company’s stock for the past 20 years (Ends 31st May 2010). 





Andrew Hallam

I’m a financial columnist for Canada’s national paper, The Globe and Mail, as well as for AssetBuilder, a financial service firm based in Texas. I’m also the author of Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School (2nd Ed. Wiley 2017) and The Global Expatriate’s Guide To Investing: From Millionaire Teacher to Millionaire Expat (Wiley 2015). My mission is to educate, motivate and inspire people on basic retirement planning and best practices for investing, using evidence-based strategies. I’m happy to comment on your questions. However, please read the Terms of Use, Privacy Policy and the Comments Policy.

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8 Responses

  1. Hey Andrew,

    I never looked at it this way before, but that's interesting that these companies' stocks outperformed their mutual funds. I guess it's to be expected with all of the fees!

  2. Hey Kevin,

    It falls in line with that other post I did, "Dancing With The Devil"

    I remember the first "3 bagger" I ever had was with the company, Investors Group, before Powercorp took them over completely. IG has no inventory, didn't loan money to people, didn't pay salaries (all employees were paid commissions) and their average fund charged 2.5% for the MER, and they paid their salespeople a 2.5% front end load directly from the investor. I made 300% on the stock, and it seemed like such a long term no-brainer. What a fabulous business model! What's even funnier, is that they were both the biggest fund company in Canada at the time—-AND the worst performing, as an aggregate (for their funds). That's when I realized that people weren't discriminating when it came to where they bought their mutual funds, and I realized that people were entirely influenced by salesmanship.

  3. Love the challenge Andrew! I'm on it. Great examples in your post by the way. Hopefully I can make the June 1st deadline 🙂 Mutual funds are certainly driven by sales and very powerful marketing. The banks, life co's and other institutions in the financial sectore know this game very well: you can't sell and profit from what you don't advertise! Being an owner of those companies you mentioned above, I must say, I love them for it.

  4. Andrew Hallam says:

    Thanks Financial Cents!

    I should have offered $100 for that challenge though. Of course, I did a bit of research on this myself, and I couldn't find an example where a company's long term fund beat its stock. That's not to say it isn't out there. I just wasn't able to find it.

    I really think you have a killer company when you can sift money from people without them even knowing or caring. Gotta love the mutual fund industry (and the banks!) for that.

  5. Monevator says:

    Andrew – I presume you have all your money invested in mutual fund providers, not their funds? 😉 (Not a facetious point, I broadly agree with you and have bought a couple of UK financial firms who have been beating down in the bear market as a geared play on a recovery).

  6. Andrew Hallam says:

    Unfortunately Monevator, I looked through the rear-view mirror on this one. That said, seven years ago my wife (who I wasn't yet married to) was invested with a company called Raymond James. She paid fees of roughly 1.5% annually on the funds they bought her and there was a 1.75% annual advisor's fee as well. I looked at buying stock in Raymond James because I saw it as a giant fleecing machine, but I made the decision not to, based on ethics. I know, I know…. I buy loads of other stocks that wouldn't be considered "ethical", but I'm predictably irrational, as Dan Ariely would suggest:

    http://www.nytimes.com/2008/03/16/books/review/Be

    Cheers,

    Andrew

  7. Monevator says:

    @Andrew Hallam

    There are some interesting UK value investors running UK investment trusts whose portfolios also include exposure to a chunk of their fund management business. For instance the Lindsell Train Investment Trust (http://www.lindselltrain.com/p/fLTIT1.htm)

    Not suggesting an investment, just FYI – though I have to say I'd love to have strong US or Canadian dollars to spend on at most fair-value UK equities that cost pound sterling right now! *slobber*

  8. Andrew Hallam says:

    Monevator:

    So they have a 25% minumum exposure to their own company in their unit trust? They obviously know something a lot of others don't. But I guess we know what that is, correct?

    As for Canadian dollars, I only wish I was paid in them. My salary comes in Singapore dollars. That said, you've made me interested in looking up what a UK equity ETF trades for on the New York Stock Exchange. Based on what you've suggested, it's pretty cheap, yes?

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