(January 25 – 11:05 ET) – The latest issue of Canadian Business magazine advises investors buying mutual funds to dump their full-service brokers .
In the current issue, the magazine publishes research conducted on its behalf by FundScope of Thornhill, Ont.. It concludes that one of the best ways to improve returns is to dump your full-service broker. Instead, it urges save the commission costs by dealing with discount and no-load brokers.
Canadian Business says its research found that “managing your own fund portfolio may be a frightening prospect but it’s clearly the best way to increase your returns and avoid paying ridiculous commissions and fees. Do-it-yourself investors (or those with fee-based advisers) have fared much better than those who depend on investment planners, according to Fundscope.”
Staff writer Keith Kalawsky interprets the research in the article entitled, “Ignore the Advice and Prosper”.
According to Kalawsky, “When it comes to the allocation of assets within load funds, only 53% of investors’ assets were directed to above-average performers, using three-year returns as a yardstick. As for no-load funds, 62% of assets were invested in above-average performers. The five-year returns expose an even larger spread between loads and no-loads: 54% of investors’ assets were placed in above-average no-load funds, while only 43% of assets in load funds were invested in above-average performers. This suggests that investors–convinced by their full-service brokers to buy load funds–are no further ahead after acting on this advice.”
In the story FundScope’s Suzane Abboud is quoted saying, “One can safely conclude that there is no evidence that the additional commissions paid by investors to financial planners on load funds are justified by higher returns.”
-IE Staff