Canadian Fund Watch

The Scorpion and the Frog

A report prepared for the Consumers Council of Canada for presentation to the Office of Consumer Affairs Industry Canada

OSC Investor Advisory Panel

An in-depth analysis by Dr. P. Reeve.

September 2010 News

:news-201009.pdf

August 2010 News

:news-201008.pdf

The Value of Advice -- an Investor Viewpoint

Canadian retail investors are exposed to financial markets that are among the most developed yet poorly regulated in the world. They enjoy an overwhelming supply of products and services to address their financial and investment needs. Advice is a component of this unduly complex marketplace. Canadians historically have chosen to invest and manage their financial decisions with the help of advisors. But things are changing . According to J. D. Power and Associates, one third of full service brokerage clients also do some investing online, and 26% of bank mutual fund investors are also using the online channel.

Recommendations for Regulating Investment Funds in Canada

The core challenge is to what extent the industry is prepared to take hold of the matters
that require regulation and to operate a self-regulatory system that will deal effectively and
efficiently with the issues raised in this report and that will result in fair and equitable
treatment of investors.

Are Index Funds Worth a Second Look?

With all the media hype over exchange-traded funds (ETF's) , the lonely Index fund provides a acceptable vehicle for index investing. Index funds are sold mainly by the big banks, and they offer exposure to a wide variety of stock and bond indexes. The key distinguishing feature is fees. Because management fees and sales commissions are relatively low, fund companies and dealer representatives don't promote them. Index funds have some features that make them attractive to some investors. The ability to make small dollar investments and easily reinvest distributions is a plus. Some investors shudder at opening a brokerage account to buy ETF's - they find it easier and less intimidating to hold a mutual fund account. Additionally, some sort of advice, albeit conflicted , comes with owning an Index mutual fund.

July 2010 News

:news-201007.pdf

Socially Repsonsible Investing -- Myths and Reality

Socially responsible investing (SRI), also known as socially-conscious or ethical investing, describes an investment strategy which seeks to achieve both financial return and social good.

Mutual Fund Investors: Sharp Enough?

Who are mutual fund investors? The answer is critical to regulatory policy. The mutual fund industry portrays fund investors as diligent, fairly sophisticated, and guided by professional financial advisors. The SEC paints a more cautious portrait of fund investors, though touts improved disclosure by the fund industry as a sufficient antidote. However, an extensive academic literature finds that fund investors are unaware of the basics of their funds, pay insufficient attention to fund costs, and chase past performance despite little evidence that high past fund returns predict future returns. These findings suggest that policymakers should rethink current regulatory policy. Disclosure may not be enough.