Can This Really Be Happening in Canada?

Many ScotiaBank clients walk into their banks every day, looking for investment options.  The bank’s friendly staff sell ScotiaBank’s brand of actively managed mutual funds.  The advisors doing so are like salespeople flogging milk chocolate, potato chips and ice cream, while hugging the unsuspecting customers at a health food store. 

Sadly, the average person walking into ScotiaBank isn’t aware that your local branch has more in common with the WalMart junk food aisle than it does with the Dairy and Produce section.

The bank makes more money selling candy than they make selling fruits and vegetables.  So what do you think they sell?

Of course, you can always find some 90 year old geriatric who credits his longevity with an hourly cigarette, four beers a day, and an aversion to exercise.  But can you really be that guy?

Let’s just use the actively managed Canadian mutual funds offered by ScotiaBank as an example.

These funds invest in Canadian stocks.  They have really smart fund managers at the helm who buy and sell Canadian companies…trying to gain an edge for their investors.

If the markets get too expensive, sometimes they sell some of their stocks.  If there’s dire economic news on the horizon, sometimes they do the same.  Their job, as the sales pitch goes, is to maximize your wealth potential, while minimizing risks.

Here’s what the bank wants its customers to assume:

The past ten years have seen ample opportunities for such fund managers to take advantage of stock swings.  During the financial crisis of 2008/2009, these experts sold stocks before the markets fell.  After all, with their pulses on the economy, they have the skill to do so.

And if they see some new, potentially incredible stocks that the average person hasn’t identified yet, they can scoop some of those stocks for their fund.

It all makes sense, in theory.  But your odds of living to 100 on two packs of cigarettes a day are about as good as their forecasting and trading ability.

Unfortunately, Scotiabank’s fund managers have no such skills.  And the bank charges its unsuspecting clients hidden fees that erode their clients’ potential returns, while making bank shareholders rich.

Ten years ago, let’s imagine that you decided to open your own mutual fund.  You collected money from friends and family members, and because you knew nothing about stocks, you just decided to buy every stock on the Toronto Stock Exchange.

You weren’t skilled enough to pick stock winners.  Nor were you skilled enough to know where the markets were going to go over the next year, five years or ten years.  You weren’t skilled enough to know that the markets were going to get hammered in 2008/2009 and you weren’t adroit enough to avoid stocks that had ominous looking futures.  You just bought every stock on the Toronto Stock Market.

However, you would have had a huge advantage:  a collection of fruits and vegetables, with no sugar, fat or arsenic added.  Sure, some of those veggies may have rotted.  But with no additional preservatives, you would have beaten ScotiaBank’s fund managers so badly that they’d hide their heads in perpetual shame if the truth were ever nationally broadcasted.

How did the high paid folks at ScotiaBank’s Canadian stock mutual funds do over the past decade?

According to the data at, every single one of ScotiaBank’s funds lost to the Canadian stock market index over the past decade.

All of them?  Yep!  Every single one.

The bank disappointed its mutual fund investors, as has TD Bank, CIBC, The Royal Bank of Canada and the Bank of Montreal.

Each of these banks share the same conflicts of interest.  And it hurts the investment returns of hard-working Canadians.

For kicks, let’s elaborate on our former assumption that you bought every Canadian stock on the Canadian market, ten years ago. 

Now let’s compare how you would have performed, compared to the pros at ScotiaBank.

It’s the ten year chart that I’d like you to focus on.   The Canadian stock index would have turned $10,000 into $23,275 over the past ten years.  And ScotiaBank’s Canadian income fund would have turned the same $10,000 into just $16,697.  Check out this screen shot below:


I’m going to take you through EVERY SINGLE ONE of ScotiaBank’s Canadian stock market mutual funds to show you how poorly they have performed, relative to the Canadian stock index, over the past decade.  Look at each fund’s total return on the respective charts below.  You’ll see, in each case, the ten year return of the Canadian stock market outperforming the return of each, respective ScotiaBank Canadian stock fund.






In the world of investing, the Organic Dairy and Organic Produce are represented by a colourful display of index funds:  a green bond index; a darker green Canadian stock index; and a purple international stock index. 

I’ll show you how to open accounts of such indexes in the final instalment of this series.

Doing so will keep the junk food out of your diet.

To read more, buy one of Amazon’s top ranked Personal Finance books, Millionaire Teacher.