WHAT'S OUR OBJECTIVE?
Provide a lesson in the importance of low fees when choosing a money market fund. Nothing is more important than fees - that's our thesis going into this screen.
All Canadian money market funds with assets of more than $100-million were thrown into the mix and then ranked from highest management expense ratio on down.
Why look only at larger funds? Because that's where the money is. All funds are displayed with the quartile rankings for their one-, three-, and five-year returns for periods ending Jan. 31. Quartiles divide funds into four groups, with the first quartile being the elite and the fourth being the dross.
SO WHAT DID WE TURN UP?
Enough evidence to suggest that owning a money market fund with a high MER is, well, dumb. The average MER in the Canadian money market category is 1.05 per cent, which is a joke when you consider that T-Bills yield about 3.2 per cent these days. You can see by our screening results what happens when you end up in a fund that is expensive to own. Has a single one of our highest-fee funds managed to reach the upper echelons of performance? Not a chance.
Let's remember as well that running a money market fund isn't brain surgery. All you do is keep rolling over short-term securities that include government T-Bills and corporate borrowings. There's no need for virtuoso fund management here, just a steady hand.
In this context, there's simply no justification for a money market fund to charge high fees. Equity funds can say the manager's a star, and that's why the fees are high (be skeptical, my friends). But money market funds are just commodity products that should be bought at the lowest price possible.
Why are there millions of dollars in those high-fee funds? Answer: inattentive investors and lazy investment advisers. It's time to get with the program, guys. With money market funds, low MERs rule.
Canadian Money Market funds with over $100 Million in assets
|Last reported||(as of Jan. 31, 2008)||(as of Jan. 31, 2008)||(as of Jan. 31, 2008)|
|Fund name Net assets||MER date||MER||1-yr rank||3-yr rank||5-yr rank|
|Trimark Interest - DSC||113.9||1/31/2008||1.86||4||4||4|
|AGF Canadian Money Market Account||381.8||1/31/2008||1.58||4||4||4|
|Manulife Money Fund - D||596.2||12/29/2006||1.55||3||4||4|
|Dynamic Money Market||267.5||6/29/2007||1.38||4||4||4|
|AIM Canada Money Market||188.8||1/31/2008||1.33||4||3||4|
|Mackenzie Sentinel Money Market||301.9||6/30/2006||1.24||3||3||3|
|BMO Money Market||561.3||9/28/2007||1.19||3||3||3|
|CI Short-Term Corporate Class||655.0||1/31/2008||1.18||3||3||3|
|CIBC Money Market||4,388.9||6/29/2007||1.16||2||2||3|
|Desjardins Money Market||254.4||1/31/2007||1.15||3||3||3|
|Scotia Money Market||1,647.4||1/31/2008||1.14||2||3||2|
|Investors Canadian Money Market||654.8||1/31/2008||1.13||2||2||3|
|CIBC Canadian T-Bill||329.8||8/31/2007||1.12||3||3||3|
|Renaissance Money Market||1,027.8||8/31/2007||1.09||2||2||2|
|CI Money Market||992.8||1/31/2008||1.06||2||2||2|
|Frk Tmp Money Market - A||671.5||1/31/2008||1.06||2||2||2|
|AIC Money Market||187.6||6/29/2007||1.06||1||2||2|
|National Bank Money Market||492.3||1/31/2008||1.04||2||2||2|
|HSBC Canadian Money Market-I||471.0||11/30/2007||1.02||3||2||2|
|Fidelity Canadian Money Market-A||371.5||6/29/2007||1.01||2||2||2|
|RBC Canadian Money Market||3,538.8||1/31/2008||0.98||2||2||2|
|RBC Canadian T-Bill||1,412.7||1/31/2008||0.97||2||2||2|
|TD Canadian T-Bill||301.1||1/31/2008||0.94||3||2||2|
|TD Canadian Money Market||4,182.8||1/31/2008||0.93||2||2||2|
|Frk Tmp Treasury Bill||217.9||1/31/2008||0.8||2||2||2|
|Manulife Money Fund||596.2||12/29/2006||0.79||1||1||2|
|Social Housing Cdn Money Market||107.3||1/31/2008||0.72||1||1||1|
|Fidelity Canadian Money Market-B||363.6||6/29/2007||0.71||1||3||2|
|Investors Premium Money Market||570.7||1/31/2008||0.66||1||1||1|
|CIBC Premium T-Bill||1,597.1||8/31/2007||0.58||1||1||1|
|Scotia Premium T-Bill||1,022.1||1/31/2008||0.55||2||1||1|
|Mackenzie Sentinel Cash Management||414.9||6/30/2006||0.54||1||1||1|
© 2007 The Globe and Mail. All rights reserved.
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