In January, U.S. stocks began to see their first major mutual fund in-flows since July of last year. It took many months, but after a strong 2009 equity rally, investors began to rediscover faith in U.S. stocks.
Well, there goes that trend. All it took was a few bad trading days for the stock market to crush this tiny bud of renewed investor optimism.
Based on fund flow data released today by the Investment Company Institute, over $2.2 billion fled U.S. domestic equity mutual funds during the seven-day period ending February 3rd. The average investor's confidence in stock markets remains paper thin.
"I think retail mutual funds that many Canadians have purchased, and I have recommended to many are dead as we know them.
The reason I believe this is because most fund managers are paid for "relative performance" compared to their benchmark and their peers, as well as their ability to accumulate assets for the investment firm."
Secondly, I believe that the management fees (MERs) that they charge are usually too high. The average equity mutual fund MER is 2.5% per annum. Also, why would you pay a management fee if a large portion of your funds are being held in cash?
Thirdly, I believe that moving forward; the capital markets will not provide the same returns that we have grown a custom to over the past few decades. Our world economy still has tremendous difficulties to overcome, and excesses to reverse.
There is no question that you and I still need to have our money invested (rather than under our mattress), however, we must change the way we approach our investments and demand more from those who are responsible for our life savings.
David Mason, CLU, CFP, RHU of Donnelly Advisors Group Inc. shares this philosophy and has responded by creating a low-cost portfolio solution.
These portfolios offer clients professional management in a tax deductible structure with much lower costs. By lowering your costs, you can ensure that you will have more money in your pocket, regardless of how the markets perform in the future.
Give David a call (1-888-380-1627) to learn more about how lowering your investment expenses can benefit you. He would be happy to provide you with a cost comparison of your current portfolio and lower cost alternatives.
