Putting Canadian Mutual Funds To The Test

Thomas Edison was dubbed a wizard when he created the electric light bulb.

The Wright Brothers became American icons when they flew the first airplane.

But when John Bogle created the first index fund in 1975, it was labelled Bogle’s folly. That a passive collection of stocks could outperform most professional money managers was considered a joke.

Now, nobody’s laughing.

Vanguard’s Total U.S. Stock Market Index, thanks largely to its popular, lean-cost structure, is now the largest fund on the planet.

Because most money in stocks is actively managed, the average professional trader earns the return of that given market, before fees. After adding management costs, the majority underperform their benchmark index.

But you can’t buy a benchmark index – not exactly. You can purchase index funds and exchange-traded funds. But they also charge fees. Do they beat actively managed funds after doing so?

Taking indexing theory to the street, let’s see how some of Canada’s fund providers compare with indexes you could actually buy.

Read the rest of the article from the Globe and Mail here.