Jan 16, 2017
Personal Investor: U.S. equity gains slashed in half for Canadian mutual fund holders
By Dale Jackson
2016 was a great year to be in U.S. equities. The benchmark S&P 500 total return index advanced 12 per cent.
Not so much if you invested in Canadian dollars. A rising loonie trimmed that gain to just over eight per cent.
Now, the really bad news. Gains were further diluted if you got exposure to U.S. stocks through a U.S. equity mutual fund. Of the 550 U.S. equity funds available on the Canadian market, the average fund only managed to post a gain of 6.2 per cent.
It makes sense considering a typical annual management fee on a U.S. mutual fund is between two per cent and 2.5 per cent. That’s the price you pay for active management.
But it’s important to note many U.S. equity funds beat the benchmark – some by a wide margin.
