WHAT WE'RE UP TO
Returns from global equity funds over the past decade are appalling. That you know if you've listened to all manner of advice and diversified your holdings outside Canada. What you may not realize is that global funds have been charging their usual fees without letup during this period. Could it be possible that some funds have generated more in fees for the companies that run them than they have in returns for investors? Let's investigate.
The average management expense ratio in the global equity category is 2.87 per cent, pretty much where it has been for years. It's not out of line, then, to say that fund companies have been making 2.87-per-cent returns on average from their global funds over the past decade. In today's cruncher, we present a list of the global funds that have made less than that for their unfortunate unitholders. The funds are ordered by asset size, and we've also included their quartile ranking for the year to date so you can see if any of these coma patients show signs of revival.
SO WHAT DID WE TURN UP?
Several big funds with billions of dollar in assets. If you don't own one of these funds, there's a good chance that someone you know does. Especially dismaying is how many funds on our list lost money over the past 10 years. Even a do-nothing money market fund would have given you 3 per cent annually over this period.
There are 51 global equity funds with a 10-year record, and 38 of them made less than 2.87 per cent annually over the past decade (we have room to show only the largest of them). What this tells you is that global funds in general were horrendous over the past decade. How can this be, when investors are so often urged to expand their horizons beyond Canada?
Blame the strength in our dollar versus the U.S. currency, which undermines returns from the U.S. stocks that are often heavily featured in global funds. Also, Canada has been a stock market dynamo in the past five years because it has a higher concentration of the commodity stocks that have been so strong.
Here's a contrarian thought for anyone tempted to give up on global investing: what if both Canada and global markets revert to their average returns in the years ahead? Global funds might just outperform Canada by a large margin. Just a thought.
Global Equity funds with 10-yr return less than 2.87%
|Assets (000s)||Last reported||10-yr % return||YTD|
|Fund name||as of Feb. 2008||MER||MER||as of Feb. 2008||quartile|
|Templeton Growth Fund Ltd.||3,693,671||2/29/2008||2.23||1.67||4|
|TD Global Select||935,191||2/29/2008||2.44||-0.03||4|
|Fidelity Global - A||434,883||9/28/2007||2.55||0.71||4|
|Desjardins Global Equity Value||304,280||1/31/2007||2.48||0.43||4|
|Renaissance Global Markets||229,961||11/30/2007||2.72||-0.61||2|
|AGF Global Equity Class||227,140||2/29/2008||2.70||1.56||1|
|AIM Global Growth Class||214,899||2/29/2008||2.94||1.09||4|
|AGF World Companies||194,426||2/29/2008||2.70||0.05||1|
|CI Global Value||130,575||2/29/2008||2.35||-0.14||3|
|FMOQ International Equity||129,827||2/29/2008||0.95||1.83||3|
|Scotia Global Growth||96,075||2/29/2008||2.83||-2.11||2|
|CIBC Global Equity||92,354||8/31/2007||2.77||-1.08||3|
|Mackenzie Cundill Global Dividend||90,490||6/29/2007||2.51||-2.71||1|
|Northwest Global Equity||88,136||10/31/2006||2.87||2.43||3|
|HSBC Global Equity-I||64,920||12/31/2007||2.53||-0.39||4|
|Artisan Maximum Growth Portfolio||27,217||2/29/2008||2.78||0.62||3|
|Mackenzie STAR Max Equity Growth||17,219||12/31/2007||2.68||-0.11||2|
|Mackenzie Univ Global Growth||13,657||6/29/2007||2.83||0.62||3|
|Bissett Multinational Growth-F||12,672||2/29/2008||1.53||0.42||2|
|Sceptre Global Equity - A||7,393||12/29/2006||2.61||-3.41||3|
|FrontierAlt Opportunistic Global-A||6,800||6/30/2006||2.82||1.62||3|
|Diplomat Maximum Growth Portfolio||6,218||2/29/2008||2.89||-0.49||1|
|Mackenzie STAR For Max Equ Growth||1,816||12/31/2007||2.66||1.20||3|
© 2007 The Globe and Mail. All rights reserved.
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