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Mutual Fund News

Reward is a long-term business

president, Investment Funds Institute of Canada -- Derek DeCloet's article (Why Fund Investors Are Voting With Their Feet - Report on Business, Feb. 12) dismisses the central reason why mutual fund assets have dropped in recent months. Mutual funds buy the stocks, bonds and other assets that are traded on markets around the world. When markets do well, investors are more likely to buy in. Conversely, when markets drop, some investors become fearful and leave the markets. This is a decision individual investors make.

Statistics show that investors who are in mutual funds for the long term have done well, thanks to the built-in diversification of their mutual funds. According to Morningstar's PALtrak, the average Canadian equity mutual fund had a five-year return of 15.7 per cent and a 10-year return of 8.5 per cent as of Dec. 31.

During the same 10 years, the average five-year GIC had a return of 3 per cent, while the average 10-year GIC had a return of 3.8 per cent.

© 2007 The Globe and Mail. All rights reserved.

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