Performance of Canadian Mutual Funds and Investors
Posted: 25 Aug 2004
Date Written: August 17, 2004
The study examines the performance of a comprehensive sample of Canadian open end equity mutual funds and investors. Our results show that while majority of funds do outperform their chosen benchmarks, the performance is lackluster in comparison to some well recognized bench marks like the TSE 300 and the 90 day T-Bill rates. These returns are even lower when one accounts for the timing of entry and exit by mutual fund investors. We also find that returns of mutual funds are adversely affected by active trading. Advisory and non advisory expenses are negatively related to performance. Accordingly, we conclude that investors are likely to be better off by following a passive and indexed based investment approach in the long term.
Keywords: Open end mutual funds, Mutual funds performance, Investor returns
JEL Classification: D14, G23
Suggested Citation: Suggested Citation